Freight rates, one-time charges lead to $182,000 loss at Hooker Furniture
Sales rise 4.3% in fourth quarter, 5.9% in fiscal year
Larry Thomas -- Furniture Today, April 13, 2011
MARTINSVILLE, Va. — Hooker Furniture said its sales rose 4.3% in its fiscal fourth quarter, but the company recorded a net loss of $182,000 due to higher shipping costs and several one-time charges.
The manufacturer and importer said sales rose in both its upholstery and case goods divisions, the third consecutive quarter of year-over-year increases.
Sales for the quarter ended Jan. 30 totaled $55 million, up from $52.7 million in the quarter ended Jan. 31, 2010. The net loss, which equals 2 cents per share, compares with net income of $2.97 million or 28 cents per share in last year's fourth fiscal quarter.
The loss included a restructuring charge of $1.4 million related to the consolidation of two Bradington-Young upholstery plants into a single facility in Hickory, N.C., and an asset impairment charge of $396,000 for the write-off of the Opus Designs by Hooker Furniture trade name.
"We can't overstate the negative impact on case goods profitability of inflation driven by higher freight rates," said Paul Toms, chairman and CEO. "The inventory we shipped in the fourth quarter reflected the unusually higher freight rates on products we received during midyear. Dramatic swings in shipping capacity out of Asia over the last two years resulted in a 10 percentage point variance in case goods gross margins from the fiscal 2011 fourth quarter compared to the fiscal 2010 fourth quarter."
For the fiscal year ended Jan. 30, sales rose 5.9% to $215.4 million and net income was up 7.7% to $3.24 million, or 30 cents per share.
Toms said case goods sales increased 2% for the year, while upholstery sales were up nearly 15%.
The upholstery sales increase included a 47% jump in imported leather upholstery unit volume and a 12% jump in sales of Bradington-Young's domestically produced leather upholstery. It was the first increase in domestic leather upholstery sales since 2005, the company said.
Looking ahead, Toms said the company is seeing an uptick in consumer demand and is expecting "modest improvements" the rest of the year.
"The remerchandising and updating of our line over the last couple of years has helped us grow share of market and share of customer, as we've aligned with some of the largest and healthiest retailers, who have also gained market share during the downturn," Toms said.
He noted that freight rates have stabilized, and said the company is planning a price increase to offset the rising cost of raw materials.
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