Hooker Nets More on Lower 1st-Half Sales

September 5, 2012  by in UnCategorized   

By Home Furnishings Business in Financial Reports on September 6, 2012

Hooker Furniture (NASDAQ :HOFT) reported fiscal second-quarter 2013 net sales of $50.2 million, a 9.7 percent drop from the same period last year.

Martinsville, Va.-based Hooker's net income for the period of $1.5 million was down from $1.6 million in prior-year quarter.

For the fiscal 2013 first half, sales decreased 10.6 percent, or $12.1 million, but net income increased 15 percent, or $325,000, compared to the prior-year period.

Performance in both fiscal 2013 periods was primarily driven by lower net sales, reduced sales discounting, lower freight costs on imported products and lower domestic manufacturing costs.

"We're disappointed in our sales performance so far this year, but pleased that we have been able to achieve comparable to higher profitability on lower sales for both case goods and upholstery," said Paul B. Toms Jr., chairman and chief executive officer. "We've maintained profitability by improving our domestic upholstery manufacturing operations and by managing costs. In addition, we believe we are now positioned to stabilize and grow sales again. We are almost re-stocked on best-selling products, and we believe we have both the heavy discounting and higher freight rates behind us. We're also preparing to ship several new, well-received collections that will be debuting on retail floors during the historically strong fall selling season," he added.

Looking ahead, Toms said that while retail business hasn't seen a significant upturn, the industry is entering its strongest selling season.

"While housing activity has recently improved by some measures, both housing activity and consumer confidence are still below historically healthy levels," Toms said. "Demand for casegoods remains subdued with incoming orders decreasing in the high single digit range during the second quarter compared to the same period last year, but we are encouraged that incoming order rates for upholstery were up 12 percent year-over-year in the second quarter."

The company is closely monitoring the possibility of a strike by the International Longshoremen's Association on Oct. 1.

"We increased ordering five months ago in order to mitigate the potential impact of a strike and expect to receive about twice the normal amount of inventory for the six weeks ahead of October 1st. We are hopeful that the two parties can reach an agreement before the deadline," he said. "On the internal operations side of our business, our Enterprise Resource Planning (ERP) system became operational this week for our case goods segment after nearly two years of design, planning, conversion and training efforts by our associates and implementation partner. At this point, it appears that our operations are stable and everything is proceeding according to expectations."

Click here for the complete Hooker Furniture second-quarter 2013 release.