Furniture Brands 3Q Sales Down 7.4%

November 3, 2010  by in UnCategorized   

By Home Furnishings Business in Financial Reports on November 4, 2010

Furniture Brands International's (NYSE: FBN) third-quarter 2010 sales fell 7.4 percent to $272 million, the full-line furniture vendor reported Wednesday.

Net sales for the third quarter of 2010 reflect the timing of the company's annual mid-year manufacturing shutdown, which occurred in the third quarter of 2010 versus the second quarter of 2009, resulting in an estimated $11 million negative variance in the comparison of third quarter 2010 and 2009 net sales. The year-over-year sales comparison was also negatively affected by the company's exiting two unprofitable lines of ready-to-assemble business.

Despite lower sales, St. Louis-based Furniture Brands trimmed its third-quarter loss from $23.5 million in 2009 to $2.1 million this year. Results for the quarter include $3.8 million in restructuring charges primarily associated with the company's previously announced closure in early 2011 of a casegoods facility in Appomattox, Va. Financial results for the quarter also reflect a reversal of year-to-date compensation accruals totaling approximately $6.8 million.

For the nine months ended Sept. 30, FBI reported net sales of $883.8 million and net income of $5.7 million, compared with net sales of $938.8 million and a net loss of $43.7 million, for the nine months ended Sept. 30, 2009. Results for all periods include selected items that are detailed in a table attached to this press release.

"Earlier this year, Furniture Brands elected to increase stocks of essential raw materials and finished products to protect against any potential disruptions in the Asian supply chain, to meet current consumer demand for recently introduced products as well as support our commitments to dealers at the October High Point Market," said Chairman and Chief Executive Officer Ralph P. Scozzafava. "The increased inventory is primarily related to our newest and best-selling products so that we're ready to take advantage of the fourth and first quarters, which have historically been our strongest revenue periods."

Third-quarter 2010 retail sales at 70 company-owned stores and showrooms totaled $36.9 million with a gross margin of 38.7 percent, compared with sales of $32.8 million and gross margin of 38.3 percent at the 71 stores and showrooms the company owned during the third quarter of 2009. Third-quarter 2010 same-store sales at the 42 Thomasville stores that the company has owned for more than 15 months showed an increase of 22 percent from the third quarter of 2009.

"In a very challenging consumer spending environment, Thomasville continues to deliver improved top-line performance," Scozzafava said. "This brand's mixture of exciting new products, increased marketing support, and a great in-store experience is a winning combination. Our Thomasville company-owned store base is steadily moving toward a break-even point, aided by the strength of the Thomasville brand and an aggressive corporate program to improve store locations and lease terms."