Hooker Has Good 3rd Quarter

December 3, 2012  by in UnCategorized   

By Home Furnishings Business in Financial Reports on December 4, 2012

Hooker Furniture (NASDAQ: HOFT) reported fiscal 2013 third-quarter sales of $56.8 million, a 4.8 percent rise over the prior year.

Net income for the period ended Oct. 28 rose 7.7 percent to $2.4 million, compared withn last year's third quarter.

Through fiscal 2013's first nine months, net sales were $158.7 million, a 5.6 percent drop; but net income rose 11.3 percent to $4.9 million.

Improved profitability in both 2013 fiscal periods was driven by lower sales discounting, reduced costs and greater domestic manufacturing efficiency. In case goods, higher revenues were driven by improved shipments of backlogs and a better in-stock position. Upholstery sales improvements, especially at Sam Moore and at Bradington-Young's import division, were driven by higher demand.

"Across both segments in the company, orders and shipments increased this quarter over the prior year," said Paul B. Toms Jr., chairman and chief executive officer. "We were able to increase net income over 11 percent for the first nine months of the year on lower sales, which indicates greater efficiency, particularly in upholstery manufacturing. We believe there's room for further improvement," Toms said.

In the upholstery segment, Bradington-Young has "achieved sustained profitability for several months as well as increased sales and order rates," said Michael Delgatti, president of Hooker Upholstery. "Sam Moore, on the other hand, came close to break-even as we work through a short-term profit challenge that relates directly to the most robust incoming order rate at Sam Moore in several years."

Brisk demand for Sam Moore's fully upholstered sofa line and other new product lines has necessitated a ramping up of production with accompanying higher labor rates and costs of goods sold.

"We expect to have our incoming order rates and production capacity better aligned by the end of our fiscal fourth quarter," Delgatti added.

Moving forward, Toms said that improved service levels and in-stock position in the third quarter bode well.

"Our improved in-stock position should also drive higher sales from special orders at retail," he said. "We've also been gratified that the Rhapsody Collection we introduced last spring has been performing very well at retail since it began shipping in September, and other collections are also retailing well. Demand is positive in every segment of our business, with our consolidated incoming order rate up just under 5 percent for the third quarter versus the same period last year.

"Our outlook is more bullish looking out to the second quarter of our next fiscal year and beyond than in the shorter term. Longer term, there are many positive signs from the housing sector, with increased housing activity, prices stabilizing and the highest home builder sentiment in six years. Consumer confidence is improving to more historically healthy levels driven by improvements in housing and gains in the stock market this year. All this bodes well for our industry longer term. In the shorter term, we believe the uncertainty around negotiations in Washington, D.C. regarding the so-called 'fiscal cliff' may create enough uncertainty for consumers to postpone big-ticket purchases."

Internally, Toms referred to successful implementation of Phase 1 of Hooker's enterprise resource planning  system over Labor Day weekend.

"While we are still working through numerous issues, we were pleased to have had a normal shipping month in September given the magnitude and scope of the project," he said. "We plan to begin Phase 2 in our upholstery segment in January with full implementation scheduled for late in the fourth quarter of fiscal 2014."