American Furniture reports operating loss as sales decline 26.2%
Larry Thomas -- Furniture Today, November 9, 2011
ECRU, Miss. — Promotional upholstery producer American Furniture recorded a third-quarter operating loss of $2.51 million as sales tumbled 26.2%, its parent company reported.
According to a Securities and Exchange Commission filing by parent company Compass Diversified Holdings, about two-thirds of the decline was due to decreased sales to American's two largest retail customers.
The retailers weren't named, but earlier SEC filings have said the company's largest customer is Value City Furniture.
"The decrease in net sales in the stationary and motion product categories is the result of an extremely soft current retail environment and increased competition in the promotional furniture category during the third quarter," Compass said in the filing.
Sales for the quarter ended Sept. 30 totaled $23.7 million. That's down from $32.1 million in last year's third quarter.
The third quarter operating loss was well below the $42.7 million operating loss in last year's third quarter, but the 2010 figure included non-cash impairment charges of $42.4 million.
For the nine months ended Sept. 30, sales totaled $83.1 million, down 24% from $109.4 million in the first nine months of 2010.
The nine-month operating loss totaled $12.1 million, including impairment charges of $7.7 million. That compares with an operating loss of $38.8 million in the same period last year, a figure that included the $42.4 million impairment charges in last year's third quarter.
In the SEC filing, Compass said it expects American's fourth-quarter sales to be even with or below last year's fourth quarter.