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From Home Furnishing Business

Hooker Sales up 4.5 Percent in Fiscal 2014

April 17, 2014  by in Financial Reports, Industry   

Net income for the year ended Feb. 2 was down 8.1 percent to $7.9 million.

The decrease in annual net income was attributed primarily to start-up costs for the Company's two new businesses, H Contract, which furnishes upscale senior living facilities, and Homeware, a direct-to-consumer e-commerce operation. Collectively, these new ventures negatively impacted operating income by approximately $1.5 million pre-tax for the 2014 fiscal year and approximately $292,000 pre-tax for the fourth quarter of fiscal 2014.

The fiscal 2014 consolidated net sales increase was primarily due to higher average selling prices in both of the company's operating segments, case goods and upholstery, partially offset by higher discounting and returns and allowances in the case goods segment and five fewer shipping days in fiscal 2014 than in fiscal 2013.

"We accomplished a great deal this year, growing sales across both segments while launching two new businesses," said Paul B. Toms Jr., chairman and chief executive officer. "We improved upholstery profitability and properly sized and aligned our inventories. We ended the year with a broad spectrum of collections and product lines performing well.

"Although earnings were down slightly, we were comparing against a very strong prior year in which we had an extra week in the fourth quarter. If you exclude the start-up costs for our new ventures, we would have been more profitable this year compared to last year."

For the fiscal 2014 fourth quarter, consolidated net sales decreased 3.5 percent to $57.6 million as compared to $59.6 million for the fiscal 2013 fourth quarter, which had an extra week in the fiscal period. Consolidated net income for the fiscal 2014 fourth quarter decreased $1.7 million to $2 million due to lower net sales, increased discounting in the case goods segment, a lower year-end LIFO adjustment compared to the prior year quarter, as well as startup costs related to H Contract and Homeware.

"We are beginning to see retail conditions improve after a slow December and January and some weather-related impacts in February," Toms said. "The improvement was confirmed as we talked with retail customers during the Spring International Home Furnishings Market. The overall economy seems resilient and able to shake-off bad news. There's a firmer foundation under key indicators for our industry, like housing, jobs, the stock market and consumer confidence. For both the near and long term, we are fairly bullish. We are planning for growth by expanding our domestic upholstery capacity, warehousing and distribution in both the U.S. and Asia, and capital spending on information systems. With our strongest product line in years and the bright potential of our two new ventures targeting Millennials and Baby Boomers seeking senior living options, we are planning for a larger business going forward."