Shermag 4Q sales drop 29.2%, but loss shrinks
By Michael J. Knell -- Furniture Today, June 17, 2007
Sherbrooke, Quebec — Shermag continues to bleed red ink, although the full-line manufacturer and importer slashed losses in its fourth quarter in the face of a 29.2% drop in revenues.
The company said it would continue to restructure, shedding expenses at home and shifting more production to Asia.
President and CEO Jeff Casselman said, "The industry has experienced a general softness in the U.S. home furnishings retail market, and this is having a clear impact on our sales. This challenge is exaggerated by further significant weakening of the U.S. dollar during the past few weeks."
In its fourth quarter ended March 30, revenues came to C$32.6 million, compared with C$46 million last year. The net loss was C$4.1 million or 31 Canadian cents per share, an improvement from the loss of C$22.7 million or C$1.70 per share in last year's fourth quarter.
Shermag said it recorded C$1.7 million in restructuring costs in the latest quarter. Last year's fourth quarter was hurt by several unusual items totalling C$19.5 million, largely attributed to employee severance payments and the write-down of goodwill associated with its acquisition of upholstery maker Jaymar.
For the year, revenues were C$155.9 million, down 17.4% from last year's C$188.7 million. The net loss for the year was C$17.4 million or C$1.30 per share, compared with a loss of C$30.6 million or C$2.29 per share in the prior year.
The rise in the value of the Canadian dollar versus the U.S. greenback continues to hurt sales and earnings, since most of its sales are to U.S. retailers, Shermag said. The currency shift makes its products relatively more expensive south of the border.
For the year, sales to Canadian retailers fell 16% from C$65.6 million last year to C$55.1 million this year.
Sales to U.S. retailers declined 10% from US$109.2 million in fiscal to US$98.1 million in the latest year.
During the year, Shermag closed factories in Disraeli and St-Etienne-de-Lauzon, Quebec.
Casselman said that at the end of the fiscal year, 36% of the company's shipments were produced outside Canada. Over the past two years, the company's workforce has been cut in half, he said.
"Shermag currently employs approximately 1,200 workers and operates nine factories, down from 2,400 employees and 16 plants in 2005," Casselman said. "Notwithstanding these measures, further consolidation will likely be required. The current conditions of market and currency mean that we must further reduce our expense base to bring costs in line with revenues. Shermag's Asian production will continue to increase."
| Shermag(a) | |||
|---|---|---|---|
| Owns Jaymar, Mobilier HPL, Mobilier Shermag, Nadeau, Scanway Chanderic and Sofas International | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 3/30 | 2007 | 2006 | Change |
| (a) In Canadian dollars. (b) Includes pretax charges for unusual items including goodwill impairment and restructuring costs of C$1.7 million in the 2007 quarter, C$19.5 million in the 2006 quarter, C$5.2 million in the 2007 year and C$25.8 million in the 2006 year. Also includes pretax maintenance expenses for assets held for sale of C$295,000 in the 2007 quarter and year. |
|||
| Revenues | C$32,551,000 | C$45,970,000 | (29.2%) |
| Operating income | (3,433,000) | (3,308,000) | |
| Net income (b) | (4,145,000) | (22,730,000) | |
| Earnings per share | (0.31) | (1.70) | |
| Year ended 3/30 | 2007 | 2006 | Change |
| Revenues | C$155,919,000 | C$188,709,000 | (17.4%) |
| Operating income | (14,502,000) | (3,546,000) | |
| Net income (b) | (17,379,000) | (30,624,000) | |
| Earnings per share | (1.30) | (2.29) | |
-
Shermag's 2Q revenue falls 11.5%
Dec 10, 2006 -
Sealy 2Q sales drop 20.5%
Jul 6, 2009 -
Shermag will close 2 plants
Mar 4, 2007 -
Shermag losses mount in 4th quarter, year
Jul 2, 2006 -
Shermag revenues off 3.1%
Sep 4, 2005
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