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From Home Furnishing Business

Acquisition Fuels Sales, Profit Growth at Hooker Furniture

Driven by its recently completed acquisition of Home Meridian, Hooker Furniture (HOFT) said sales more than doubled to $136.2 million in the quarter ended July 31.

Net income also shot up more than 35% to $5.35 million or 46 cents per share.

The company said the sales increase was partially offset by a 7% decline in sales at Hooker Furniture’s legacy business. Hooker case goods sales were lower due to sluggish demand at retail, while a quality control problem with a vendor in Hooker Upholstery’s imported leather line cost the company about $1 million in sales.

"In spite of these challenges, operating margins improved across all segments of our legacy business in the quarter and remained flat at Home Meridian despite the addition of amortization expense on acquisition related intangibles," said Paul Toms, Chairman and CEO.

At Home Meridian, sales and orders were up slightly during the quarter, said George Revington, President and CEO of the Home Meridian segment.

"Our core strategies are working and we are having tremendous growth in our emerging channels and product categories. Additionally, we ended the quarter with a sales order backlog near record levels due to improved orders," said Revington. "However, the double-digit growth in our emerging channels has been offset by weakness in our traditional customer base, with a large part of the sales decline concentrated in a few accounts stressed by the competitive environment."

The acquisition of Home Meridian was completed Feb. 1, the first day of Hooker Furniture’s fiscal year.

"With the acquisition of Home Meridian, we are now large enough, diverse enough and distributed through a wide variety of distribution channels so that weakness in some channels is offset by growth in others,” said Toms. "Based on the strategies we have in place at Hooker Casegoods to stimulate business, and the strong backlog at Home Meridian, we have a cautiously optimistic outlook.”

For the six months ended July 31, sales totaled $258 million, up from $121.1 million in the same period last year, which didn’t include Home Meridian.

Six-month net income totaled $7.85 million or 68 cents per share. That compares with $7.41 million or 69 cents per share in the first half of the previous fiscal year.



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