Hooker's 3Q Sales Down 17.6%; Net Income Off 50.1%

December 9, 2008  by in UnCategorized   

By Home Furnishings Business in Financial Reports on December 10, 2008 Hooker Furniture Corp., Martinsville, Va., reported sales of $69 million and net income of $3 million for its fiscal 2009 third quarter, which ended Nov. 2. Those figures represent respective decreases of 17.6 percent and 50.1 percent compared with the same period in fiscal 2008.

"Given the unprecedented economic stress and historically low levels of consumer confidence, we're modestly pleased with our third quarter results," said Paul B. Toms Jr., chairman, chief executive officer and president. "In this environment, we're gratified not only that we've remained profitable, but also to have improved our operating income margin compared to the second quarter and first half. Obviously we're disappointed that we weren't able to stabilize sales and operate at historical profit levels. We believe our business model has proven once again the ability to keep us competitive, well-positioned and profitable despite economic adversity."

The year-over-year decrease in income and profitability was driven primarily by the net sales reduction, along with other factors including the rising cost of imported wood products and higher raw material costs for upholstered products, increased overhead absorption as a percentage of net sales for domestically produced upholstered furniture, and an increase in selling and administrative expenses as a percentage of net sales.

During the 2009 fiscal third quarter, the company continued to address profitability by increasing selling prices on most of its products; deferring, reducing or eliminating certain spending plans; and reducing its work force by approximately 80 employees at its wood and upholstered furniture divisions.  
 
Looking ahead, management noted that the economy has worsened in recent months with continued business closings, cutbacks and layoffs across many industries, including home furnishings; and that consumer confidence levels are at historical lows. With continued instability in the real estate, financial and credit markets, prospects for a near-term economic recovery appear dim.  

During the third quarter however, Hooker saw a modest increase in incoming order rates compared with the 2009 second quarter, and that despite low attendance at October's High Point Market, order writing stayed consistent with recent Markets.

"Until we start to see the real estate and financial markets stabilize and some improvement in credit availability and consumer confidence, we believe the consumer will continue to stay on the sidelines," said Toms. "We've seen a significant decline in year-over-year incoming order rates over the past two months. We could possibly have to operate in this current environment for another nine to 12 months. That being said, we do see reassuring signs of progress and strength across our company that keep us optimistic about our business model and long-term future."