FBI 1Q sales increase 3.1%
By Jay McIntosh -- Furniture Today, May 22, 2006
St. Louis — Furniture Brands International's first-quarter sales were up 3.1% from a year ago to $661.4 million, but the company still is seeing "mixed results" in the performance of its divisions, said Chairman and CEO Mickey Holliman.
Earnings jumped 21.9% to $30.2 million, but the increase was due largely to a $5.4 million accounting gain stemming from a refinancing of the company's revolving credit facility.
"We were generally pleased with the results of the quarter," Holliman said. "We continue to see mixed results between our brands, with weakness in one being offset by strength in another. As a whole, however, the stronger-performing brands — particularly Thomasville and Lane — drove meaningful year-over-year improvements."
He added that, in part, Furniture Brands is still waiting to benefit from its transition to overseas sourcing. The company has been closing U.S. plants for several years, and announced the shutdown of another Thomasville plant last week. Sourced product will have higher profit margins for FBI, Holliman said.
Broyhill, for example, has been a weak division, but should "bring more value" as its new products come on line, he said. Broyhill's backlog is up significantly from a year ago, which should translate into sales in the second and third quarters, he said.
Last year the company closed six Broyhill and Thomasville factories, shifting 12 or 13 large-volume collections to offshore plants, Holliman said.
"None of that product is yet in the system and has found its way into the revenue stream," he said. "Once that takes place, we should start to realize more of the benefits of these lower-cost collections."
HDM, the high-end division made up of Henredon, Drexel Heritage and Maitland-Smith, also has been in transition as product has been shifted among plants at Henredon and Drexel, he added.
In comments to financial analysts, he also mentioned a coming change in Thomasville stores under the leadership of Nancy Webster, the former Target executive named president and CEO of the division in September. A prototype, 10,000-square-foot store set up in the Thomasville showroom during the recent High Point market included more accessories and impulse-purchase items.
"It will address a younger consumer than what Thomasville traditionally has been selling," said Holliman, adding that the company plans to launch the concept in 10 or 12 stores and eventually roll it out to all 165 or so.
For the second quarter, Furniture Brands is forecasting that sales will be up in the low single digits from a year earlier, with earnings of 29 to 33 cents per share. Last year, hurt by plant-closing charges, second-quarter earnings were 18 cents per share.
