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Furniture Brands posts $23.5 million loss

Third-quarter sales decline 28.9%

Larry Thomas -- Furniture Today, November 5, 2009

ST. LOUIS — Furniture Brands International reported a third-quarter net loss of $23.5 million Wednesday as sales fell 28.9%.

The net loss, which equals 48 cents per share, was well below the loss registered in last year's third quarter, when the company lost $41.7 million, or 86 cents per share.

Ralph Scozzafava, chairman and CEO, said that despite the sales shortfall, the company's balance sheet remains strong. He pointed out that gross margin for the quarter was 23.1% - an improvement of nearly seven percentage points over last year's third quarter - and noted that debt has been reduced by nearly $200 million since the third quarter of 2007.

"Furniture Brands' actions during this unprecedented economic downturn have enabled the company to improve its balance sheet and gross margin while creating the opportunity for significant earnings leverage that will enhance financial results as industry fundamentals stabilize and improve," Scozzafava said.

He said he believes gross margin can be further improved by additional consolidation of the supply chain, lean manufacturing processes, shared services among its operating companies, and continued reliance on consumer-tested products.

"Many of the revenue-enhancing initiatives the company has implemented in the past 18 months have been hindered by the severe decline in consumer spending," he added. "These programs are building traction and in a more stable marketplace will help product the operating leverage that has always been a key focus of our strategic plan."

Sales for the quarter ended Sept. 30 totaled $293.7 million, down from $412.8 million in the same quarter last year.

The most recent quarter's loss included about $7.1 million in one-time charges from factory downtime, severance costs, and expenses from closed retail stores.

Last year's third quarter included about $48.4 million in one-time charges - the largest components being $15.6 million in inventory write-downs and $13.6 million in bad debt charges.

For the nine months ended Sept. 30, sales were $938.8 million, a drop of 29.9% from the first nine months of 2008.

The nine-month net loss totaled $43.7 million or 90 cents per share. That compares with a loss of $32 million or 66 cents per share in the first nine months of last year.

Furniture Brands is the parent company of Broyhill, Lane, Thomasville, Drexel Heritage, Henredon and Maitland-Smith.

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