Stanley 2Q sales slip 12.6%
By Larry Thomas -- Furniture Today, July 23, 2007
Stanleytown, Va. — Stanley Furniture said second-quarter sales dropped 12.6% from the comparable period last year, which the case goods major attributed to an industry-wide slump.
The company recorded a net loss of $2.4 million, or 23 cents per share in the quarter, but the figure included a one-time charge of $6.6 million or 43 cents per share for the termination of a pension plan.
Without the pension plan charge, the company had net income of $2.1 million or 20 cents per share. In last year's second quarter, Stanley had net income of $3.9 million or 32 cents per share.
Sales in the most recent quarter totaled $67.7 million, down from $77.5 million a year earlier.
"Business conditions deteriorated slightly as the second quarter progressed," said President and CEO Jeff Scheffer. "While we are disappointed with the lower sales and earnings, we believe this is consistent with current industry-wide conditions."
For the first six months, sales fell 11.3% to $142.8 million, and the company recorded a net loss of $700,000 or 7 cents per share, including the pension plan charge. In the first half of 2006, sales were $161 million and net income was $9.3 million or 75 cents per share.
During a conference call with securities analysts, Scheffer said the company isn't looking for business conditions to improve anytime soon, and said an upturn isn't likely to occur until the housing industry improves.
"It now appears the current downturn will be both deeper and longer than we expected," he told analysts. "Retailers are just not getting as many people through the door as they were a year ago."
However, he believes that Stanley, which produces the majority of its line domestically, is well-positioned for the inevitable turnaround because it can ramp up production more quickly as consumer demand increases.
"History tells us that when business comes back, it comes back hard and fast," said Scheffer. "We think we've got a business model that is extremely difficult to replicate out of China."
As a result of what it sees as a longer-than-expected industry slump, the company trimmed its sales and earnings estimates for the third quarter and calendar year 2007. Stanley now says it expects sales for the year to be $280 million to $290 million, with earnings pegged at 65 to 75 cents per share, excluding the pension plan charge.
In 2006, the company recorded sales of $307.6 million and earned $1.17 per share.
Third-quarter sales are now projected at $70 million to $74 million, with earnings of 16 to 20 cents per share.
In last year's third quarter, sales were $75.9 million and earnings were 26 cents per share.
| Stanley Furniture | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 6/30 | 2007 | 2006 | Change |
| (a) Includes a charge of $6.6 million in the 2007 quarter and six months for pension plan termination. | |||
| Sales | $67,722,000 | $77,476,000 | (12.6%) |
| Operating income | 3,547,000 | 6,295,000 | (43.7%) |
| Net income (a) | (2,376,000) | 3,937,000 | |
| Earnings per share | (0.23) | 0.32 | |
| 6 months ended 6/30 | 2007 | 2006 | Change |
| Sales | $142,830,000 | $161,000,000 | (11.3%) |
| Operating income | 6,626,000 | 14,925,000 | (55.6%) |
| Net income (a) | (700,000) | 9,329,000 | |
| Earnings per share | (0.07) | 0.75 | |
