Rowe reports $3.4M loss in 1Q
By Furniture Today Staff -- Furniture Today, April 16, 2006
McLean, Va. — The Rowe Companies reported a $3.4 million net loss in its first quarter ended Feb. 26, and said it has eliminated about 200 jobs as it continues cutting costs in its manufacturing operations.
Chairman and President Gerald Birnbach said he has cut his own salary in half starting April 1. Last year, according to the company's proxy statement, his salary was $939,924.
Shipments in the quarter increased 2.3% from the same period a year ago to $67 million, the company reported. Gross profit increased to 34.7% of sales from 30.9% as price increases took effect, manufacturing efficiencies improved, and higher-margin retail sales grew faster than manufacturing shipments.
Rowe manufactures upholstered furniture and operates the Atlanta-based Storehouse retail chain.
The latest quarter's $3.4 million net loss was comparable to a net loss of $2.9 million on continuing operations a year earlier. A gain on the sale of investment property cut the actual loss last year to $149,000.
"During the first quarter we made progress in implementing cost reductions in our manufacturing operations. We also increased our prices in response to raw material price increases," said Birnbach.
He said the latest cost-cutting moves are in response to a decline in incoming orders in the first quarter. The reductions should result in about $5.9 million in savings over the remainder of the fiscal year in the manufacturing unit, he said.
"With the help of consultants we brought in late last year, we continue to review ways to improve our operations; and if business conditions weaken further, we will take additional steps to keep our costs in line," said Birnbach.
Rowe said its financial advisor, Morgan Joseph & Co., is in discussions with "a number of parties who have expressed preliminary interest in providing capital to the company, and is also evaluating other potential transactions to raise funds for the company."
| The Rowe Cos. | |||
|---|---|---|---|
| Owns Rowe Furniture and Storehouse | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 2/26 | 2006 | 2005 | Change |
| (a) Includes a net gain of $2.7 million on the sale of investment property in the 2005 quarter, and tax benefit of $1.9 million in the 2006 quarter and $1.7 million in the 2005 quarter. | |||
| Sales | $67,049,000 | $65,511,000 | 2.3% |
| Operating income | (4,385,000) | (4,857,000) | — |
| Net income (a) | (3,366,000) | (149,000) | — |
| Earnings per share | (0.25) | (0.01) | — |
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