Daily News Archive
Brought to you by Home Furnishings Business
December 10,
2008 by in UnCategorized 
By Home Furnishings Business in economic news on December 11, 2008
Furniture Brands International, St. Louis, announced on Thursday that the company will eliminate around 1,400 management, professional and hourly positions across all functions in reaction to ongoing soft conditions in the market for furniture.
The move represents a decrease of approximately 15 percent in Furniture Brands' domestic workforce. Severance costs associated with this reduction are expected to total between $8 million and $9 million, most of which will be reflected in the company's fourth quarter 2008 reported financial results. The cash impact of the severance will be incurred in the first quarter of 2009. The elimination of management and professional positions not related to direct production costs is expected to result in annual, run-rate cost savings in excess of $20 million beginning in early 2009. The elimination of direct production positions matches anticipated lower sales volumes stemming from soft market conditions and is expected to lessen the company's exposure to factory down days. Through the first nine months of 2008, factory down day costs totaled $14 million.
"These reductions are an inevitable response to the recessionary environment and are necessary to strengthen Furniture Brands for the future," said Chairman and Chief Executive Officer Ralph P. Scozzafava. "By aligning our costs with anticipated lower sales volumes, we are positioning the company for 2009 and beyond. With the eventual return of historical consumer spending patterns, Furniture Brands will be well positioned to leverage our more efficient cost base into improved profitability."
"Our efforts at delivering value for Furniture Brands' shareholders go beyond cost reductions," he continued. "Our new product introductions and consumer testing initiatives are leading the industry, and retailers are seeing the value that this process delivers. We are also targeting a greater portion of our consolidated advertising budget to working media in order to maximize the power of our brand portfolio. These programs are in addition to established operational efficiency initiatives such as the Pacemaker plant consolidation at Broyhill, the near completion of a centralized shared services organization, and the creation of FBN Asia."
The severance costs are a component of the $56 million to $72 million in estimated fourth quarter 2008 pre-tax charges that were projected in the company's third-quarter 2008 earnings announcement of Oct. 30.
December 9,
2008 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on December 10, 2008
Simmons Bedding Company, Atlanta, announced Tuesday that it has reached an agreement with its senior lender that is designed to give the company sufficient time to pursue an organized financial restructuring.
On Monday, President and COO Stephen Fendrich said extending the forbearance period would allow the company to continue to operate and deliver products normally. The agreement announced Tuesday extends the current “forbearance period” to March 31, 2009, subject to certain terms. The agreement is expected to become effective today. With the agreement in place, “Simmons plans to work with its various stakeholders to design and implement the restructuring in a manner that maximizes value and preserves and protects its relationships with customers and suppliers,” officials stated in an announcement.
In November, the company said it was delaying its third quarter earnings announcement and disclosed that it was seeking to amend its senior credit facility after falling out of compliance with a “maximum leverage ratio covenant.”
The company cut its salaried workforce in November in response to challenging economic conditions.
December 9,
2008 by in UnCategorized
By Home Furnishings Business in on December 10, 2008
The International Trade Commission ruled last Thursday that manufacturers in South Africa and Vietnam are selling uncovered innerspring units for the production of mattresses in the U.S. market at less than fair value, according to a notice in Wednesday's Federal Register.
The ruling opens the way for duties on the subject merchandise. ITC instituted an investigation by the U.S. Department of Commerce on Dec. 31, 2007, after receipt of a petition from Leggett & Platt, Carthage, Mo.
In October, the U.S. Department of Commerce issued a final determination for its investigation, and assigned a duty of 116.31 percent to Vietnam-made innersprings; while BCM—sole respondent to the investigation in South Africa—received a duty of 121.39 percent, which also extends to any other innersprings from the country.
DOC also amended the scope of its ruling to exclude non-bedding innersprings that are used in the manufacture of upholstered living room seating.
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."
December 9,
2008 by in UnCategorized
By Home Furnishings Business in Financial Reports on December 10, 2008
Shares of Stanley Furniture rose 16 percent after an analyst's upgrade, Thomson Financial News reported Tuesday.
Stifel Nicolaus analyst John Baugh upgraded Stanley stock to "buy" from "hold," and noted that the U.S. furniture industry could be nearing the bottom of a down cycle, with national furniture spending perhaps recovering in 2009.
The report noted that other furniture stocks improved. La-Z-Boy was up 13 cents, or 4.6 percent; and Ethan Allen Interiors was up 41 cents, or 2.6 percent.