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From Home Furnishing Business

Stanley Reports Flat Q2 Sales

Stanley Furniture Co. (NASDAQ-GS:STLY) reported second quarter sales of $24 million, essentially flat compared with the prior-year period.

The company had a net loss of $19.1 million for the second quarter. Restructuring charges of $16 million, mostly non-cash, consisted of asset impairments, the write-down of inventories, severance and other termination costs related to Stanley's exit from the youth furniture business. The company expects cash expenses of $300,000 to $500,000 during the third quarter consisting of mostly severance and other termination costs, as it finalizes efforts to close its domestic production facility and adjust its overhead structure.

While the Stanley Furniture brand's sales grew almost 11 percent compared with second-quarter 2013, the company's sales performance was impacted by a 17.6 percent decline on the Young America product line as custom orders were not accepted after April 29.

“We were pleased to see our Stanley brand grow nicely as shipments were buoyed from strong order growth in the previous quarter," said President and CEO Glenn Prillaman. "We are successfully adjusting the size of the company’s overhead structure without sacrificing service to customers or momentum behind initiatives to grow the Stanley brand.”

“As we guided when we announced the closing of our Robbinsville plant in April, we expected to use cash initially in order to satisfy all open orders, including the large influx of orders we received when we announced ceasing domestic production,” Prillaman said. “The company maintains a healthy cash position and should generate cash in the coming quarter through the sale of assets associated with the Young America operation. Also, we should generate more cash than we use in ceasing domestic production, and we anticipate ending this year with more cash than we exited the last.”

The company enters the third quarter with a $2.3 million Young America backlog and approximately $3 million of unsold inventory. It expects to end domestic production and ship the current backlog in July and the remaining inventory throughout the balance of 2014.

“As we collect Young America receivables and proceeds from the sale of related assets, our balance sheet will strengthen,” Prillaman said. “With the end of our domestic production effort, comes a clear path to profitability and improved results for the company. Our organization’s focus is on growth of the Stanley brand and helping our customers increase store traffic.”

The company also announced that Chief Operating and Financial Officer Micah S. Goldstein plans to resign in mid-August. Goldstein joined the company in August 2010. In addition to his responsibilities in finance, he presided primarily over the company’s manufacturing operations.

“Micah has been an integral part of the team here at our company as we did everything we knew possible over the last several years to make our domestic manufacturing model successful," Prillaman said. "From now until his departure, Micah will focus mostly on maximizing value from the assets at our Robbinsville plant and assisting with several other financial matters.”

Anita Wimmer, the company’s current vice president of finance and an executive who has been promoted through the finance department throughout her career of 20 years, assumes the role of the company’s principal financial officer upon Goldstein’s departure.

“I am confident in our go-forward strategy as a design, marketing and logistics company now operating an overseas sourcing operations model only," Prillaman said. "Our financial and operating model is simpler than it has been in the past. I am both pleased and proud to see several key managers, including Anita, ready and prepared to step into expanded roles as our company adjusts for its smaller size and profitable future.”

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