Bestar sales drop 10.5% in first quarter
Company posts positive earnings, compared with loss last year
Michael Knell -- Furniture Today, June 13, 2011
Bestar's sales were C$9.1 million, compared with C$10.1 million for same period of 2010. Net earnings were C$31,925 or zero cents per share, reversing the net loss of C$131,816 or one cent per share.
The company noted that furniture sales in the U.S. fell 7% in the first quarter, with 75% of the decline attributed directly to the impact of a stronger Canadian dollar.
"February's promotion with a major customer did not generate comparable results to those realized last year by the same client," Bestar added.
The improved profit picture was the result of the company's ongoing efforts to reduce expenses and provincial government assistance with the early retirement program offered to employees in October.
Bestar noted that at the end of the quarter, it obtained a new C$6 million revolving line of credit and a new C$1 million term loan agreement. The line of credit will be available for an initial three-year period with an interest rate of prime plus 1.5%. The term loan bears interest at prime plus 2% and is payable in monthly principal instalments of C$20,833 beginning Sept. 15.
Looking out to the rest of the year, Bestar President Daniel Mercier said he doesn't anticipate an immediate turnaround in sales.
"The strength of the Canadian dollar coupled with a weak Canadian and American economic recovery in our business segment will limit growth perspective for the next few months," he said in a statement. "Indeed, we anticipate few opportunities for significant improvement in sales for the current year, and given the weak U.S. dollar we must redouble our efforts to maintain profitability at current levels."
Mercier said that in the past 10 months, management has been working to improve the company's financial situation.
"Several elements of the recovery plan are in constant progression, including reducing supply costs of many raw materials and subcomponents, as well as reduction of operating costs," he said.