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Shermag reports C$3.7 million loss in latest quarter

Board initiates ‘complete review of operations’

By Furniture Today Staff -- Furniture Today, November 13, 2007

SHERBROOKE, Quebec — Stung by a strong Canadian dollar and a weak U.S. housing market, manufacturer and importer Shermag reported a 40% decline in revenue and a C$3.7 million loss for its fiscal second quarter, ended Sept. 28.

Jeff Casselman, president and CEO, said the company’s board “has initiated a complete review of operations” to respond to market conditions.

“We are pursuing all efforts to align our fixed costs in the face of the potent combination of the weakened U.S. dollar and lower sales. Notwithstanding the focus on managing our cost structure, additional measures are required,” said Casselman.

Shermag reported net revenue of C$25.6 million, down from C$42.5 million in the comparable quarter a year ago. The net loss amounted to 28 cents per share and was more than triple the loss of C$1.1 million or 9 cents per share posted a year earlier.

The company said its strategy to consolidate its Canadian manufacturing, increase global sourcing, and raise quality and pricing for custom-made domestic product has “generated important economies.” But difficult market conditions and the weaker U.S. dollar — which recently has been valued at less than the Canadian dollar — have taken a toll.

“The Canadian dollar continues to move against us at an unprecedented rate…. This will further affect our results as additional increases in pricing may further impact our revenues,” Casselman said.

For the first half of its fiscal year, Shermag’s net revenue of $54.9 million was down 35% from a year earlier. The company reported a net loss of C$7.6 million or 57 cents per share, compared with a loss of C$5.5 million or 41 cents per share a year earlier.

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Shermag 2Q revenues off 39.7%; loss mounts C$3.7M loss in 2nd qtr.

Nov 25, 2007

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