Hooker Furniture 1Q Sales Off 1.4%, Net Income Up

June 7, 2010  by in UnCategorized   

By Home Furnishings Business in Case Goods on June 8, 2010

Hooker Furniture Corp., Martinsville, Va., (NASDAQ: HOFT) on Monday reported net sales of $51.4 million and a net income of $1.1 million, for its fiscal 2011 first quarter ended May 2.

Results included a $500,000 charge, representing the Company's insurance deductible for a fire at one of its distribution facilities during the fiscal 2011 first quarter.

Net sales for the period were off 1.4 percent compared with the same period a year ago. Net income for the quarter increased $1.5 million from a net loss of $456,000 for the comparable period last year. Last year's first quarter included an intangible asset impairment charge on the company's Bradington-Young trade name of $673,000.

Lower sales were driven primarily by sourcing delays, along with continued sluggish business conditions. The industry-wide slow down which began in the fall of 2008 prompted the company's Asian sourcing partners to reduce manufacturing capacity. While longer production and shipping lead times are believed to be temporary, the company expects some short-term delays as additional capacity is added in Asia in both manufacturing and shipping. The Company had approximately 8.2 weeks of order backlog at quarter-end as compared to 4.6 weeks at the prior-year quarter end.

"We're gratified to report another profitable quarter, as we improved profit margins despite a slight sales decline and a still struggling economy," said Paul B. Toms Jr., chairman, chief executive and president. "Our sales performance was a mixed bag. Upholstery sales continued to rebound with double digit increases in orders and shipments at both upholstery companies. Our wood furniture division has not yet rebounded as strongly, partially due to lower demand, but also because of lengthened lead times out of Asia."

Toms noted that both production levels and shipping capacity have improved in recent weeks.

"By late July or August, we expect to be in a better inventory position, which will allow us to reduce our backlog and increase volume as shipments begin to exceed orders," he said.

While Hooker is entering its traditionally weakest sales quarter, Toms noted that the company is growing market share in upholstery and demand for wood furniture has stabilized.

"We had a very strong April High Point Market at all three companies, and pre-ordered our market introductions to put us in the position to ship many of them this summer," Toms said. "We expect that deliveries from our vendors will continue to improve. While we don't anticipate a significant increase in demand at retail, we do expect to improve our volume by shipping down our backlog and getting fresh new products out on retail floors more quickly than is typical. We're seeing some positive signs in the economy including stability in the housing market, increased demand for luxury goods and recovery in some retail sectors. Barring unforeseen circumstances, we expect overall demand, including demand for wood furniture in the upper-medium price points, to gradually improve as we move through the year."