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Furniture Brands 2Q sales rise 1.2%

Holliman praises Lane and Maitland-Smith, predicts improvement at Broyhill

Janice Chamberlain -- Furniture Today, July 27, 2006

ST. LOUIS — With Lane and Maitland-Smith leading the way, Furniture Brands International said sales were up 1.3% in its second quarter and 2.2% in the six months ended June 30. Net profits, excluding special charges and credits, rose 6.2% in the latest quarter and were flat for the six months.

Sales in the latest quarter for the second-largest U.S. furniture maker and importer came to $601.3 million, versus $593.8 million in the year-earlier period, as unadjusted net earnings increased to $17 million from $9.6 million.

Six-month sales reached $1.3 billion, measured against $1.2 billion a year ago. Net income in the latest six months stood at an unadjusted $47.2 million, up from $34.4 million.

Furniture Brands Chairman and CEO Mickey Holliman cited Lane Furniture for its strong business, adding that other divisions were either up or flat, with the exception of the company’s Virginia operations, which were down in the quarter and up in the six months.

At HDM, the company’s high-end division comprised of Henredon, Drexel Heritage and Maitland-Smith, he praised Maitland-Smith for its “outstanding results,” despite the division’s overall flat numbers.

Holliman predicted that Broyhill Furniture, which has undergone a restructuring, would see “comparative improvements year-over-year” in the second half of this year.

FBI had both gross margin and operating margin gains in the latest quarter, Holliman said in a conference call with analysts. He added the company expects “steady, measurable improvement” in both figures going forward.

Chief Financial Officer Denise Ramos attributed a $50 million buildup in inventories over the past six months to a variety of factors, including timing issues, market introductions, changes in product lines and service levels. She said the company planned to reduce inventories in the coming months.

Holliman said the lead time for imported goods was about 90 days for re-ordered goods and 120 days for new products. FBI has been shifting production overseas and now imports 43.7% of its product, including 71.3% of case goods and 19.6% of upholstery.

In the coming months, Holliman said the company would continue to “drive change throughout the entire company to gain the benefits afforded us by our strong brands, the leverage of our size, and our talented and unified leadership team. We will continue to focus on building our brands, optimizing our logistics and supply chain processes and other strategic initiatives to drive both growth and margin expansion throughout the company.”

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FBI sales rise 1.3% in 2Q

Aug 13, 2006

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