FBI rebounds to profit
First quarter in black since mid-2008
By Jay McIntosh -- Furniture Today, May 10, 2010
ST. LOUIS —
Furniture Brands International rebounded to a $3.5 million profit in the first quarter despite a sales decline of 9.7% from the same period a year earlier, the manufacturer and retailer reported.
Sales of $322 million in the first quarter were up 12.9% from sales in the fourth quarter of 2009, a sequential improvement that “reflects the momentum that our new product offerings are creating in the marketplace,” said Ralph Scozzafava, chairman and CEO.
The first-quarter profit, which amounted to 7 cents per share, was a turnaround from a loss of $4.2 million or 9 cents per share in the same period a year earlier. Showing the effects of significant cost cuts, the gross margin in the latest quarter strengthened to 26.2% from 22.5% in the 2009 first period. It was the highest gross margin since the fourth quarter of 2004, officials said.
The quarterly profit also was the company's first since the second quarter of 2008.
“Furniture Brands' improved financial performance reflects the strategic actions taken to strengthen the balance sheet, build our brand power, win with customers and deliver operational excellence,” Scozzafava said. “This transformation of Furniture Brands over the past two years has positioned the company to compete better in a weak retail environment, and today's financial results are clear evidence that our hard work is gaining traction.”
In a conference call with analysts, he said that about 40% of the sales decline was related to the liquidation of some Ralph Lauren and ready-to-assemble furniture a year earlier. The company no longer produces those lines, which were unprofitable, he said.
Scozzafava noted the improvement in gross margin, and said more than half of the gain was due to supply chain initiatives and the implementation of lean manufacturing practices in its plants.
First-quarter sales at the 65 company-owned stores were $35.6 million, up from $29.8 million a year earlier. The retail gross margin improved to 42.3% from 39.9% a year ago.
Same-store sales at the 40 Thomasville stores the company has owned for more than 15 months jumped 16% from a year earlier, FBI reported.
The company also said its net debt on March 31 was $17 million, down from $97 million a year earlier. And it received a $57 million tax refund on April 12, leaving it with net cash of $37 million.
“Furniture Brands' strong balance sheet provides the needed liquidity to support increased working capital demands as we focus on driving our top-line sales while improving gross margin,” Scozzafava said. “We have much work to do and clearly understand that increasing our revenue is a top priority that will enable us to fully leverage our improved cost structure and deliver solid results.”
Furniture Brands International
Owns Broyhill, Drexel Heritage, Henredon, Lane, Maitland-Smith and Thomasville Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
| Quarter ended 3/31 | 2010 | 2009 | Change |
| Sales | $322,391,000 | $356,871,000 | (9.7%) |
| Operating income | 4,585,000 | (2,873,000) | — |
| Net income | 3,497,000 | (4,176,000) | — |
| Earnings per share | 0.07 | (0.09) | — |
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Furniture Brands posts $3.5 million profit in 1Q
May 6, 2010
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