Quaker posts $4.1M loss as sales slide 21.8%
By Furniture Today Staff -- Furniture Today, April 25, 2006
Fall River, Mass. — Textile major Quaker Fabrics' difficulties continued in the first quarter despite cost-cutting measures, with sales of $46.3 million, down 21.8% compared with $59.2 million in the same period last year, and a net loss of $4.1 million, compared to a $3.1 million loss last year.
Domestic sales for the quarter were $38.1 million, down 17.6% from a year ago, and international sales were $6.6 million, 8.2% less than last year. Net yarn sales of $1.5 million were down 73.1% from the same period of 2005.
The first-quarter report also included $296,000 in restructuring costs and $406,000 in miscellaneous expenses, offset by a $2.2 million income tax benefit stemming from prior losses.
Larry Liebenow, president and CEO, said that the company's biggest problem continues to be sales volume, which is suffering from competition from imported leather, faux suede and woven fabrics. To build business, he said, the company plans to put more focus on its contract and outdoor fabric lines, as well as aggressively market its own outsourced fabrics from China and Korea.
Quaker recently signed deals with Hangzhou Zhongwang in China and Daewoo International in Korea. Liebenow said these deals are expected to increase sales incrementally by the end of the fiscal year.
"We have an ongoing restructuring effort underway that is intended to restore the company to profitability," said Liebenow.
He said key elements of the Quaker's plan include:
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Stabilizing revenues from its U.S.-based residential fabric business by focusing on markets least sensitive to imports.
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Reduce operating costs to compensate for its decline in revenues in the past few years.
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Sell excess assets.
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Developing relationships with "a limited number of carefully chosen offshore fabric mills" to recapture the share of the domestic residential market Quaker has lost to imports in recent years.
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Generate additional profitable sales by penetrating the outdoor and contract fabric markets and expanding the specialty yarns business.
Liebenow added that Quaker took another $10 million out of its cost structure on an annualized basis, by making "further significant reductions in our salaried and hourly staffing levels as well as $2.3 million of non-staffing related cost cuts.
"We are continuing to work with our lenders and the financial consultants we have retained to execute a plan to meet our long-term financing needs," said Liebenow.
| Quaker Fabric | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 4/1 | 2006 | 2005 | Change |
| (a) Includes a $296,000 pretax restructuring charge and a $2.2 million income tax benefit. (b) Includes a $2.2 million income tax benefit. |
|||
| Sales | $46,280,000 | $59,215,000 | (21.8%) |
| Operating income | 4,891,000) | (4,468,000) | — |
| Net income | (a)(4,135,000) | (b)(3,090,000) | — |
| Earnings per share | (0.25) | (0.18) | — |
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