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Hooker Furniture Reports Increased Sales, Income for Fiscal 2013 Third Quarter



Hooker Furniture Reports Increased Sales, Income for Fiscal 2013 Third Quarter

MARTINSVILLE, Va., Dec. 3, 2012 (GLOBE NEWSWIRE) -- Hooker Furniture
Corporation (Nasdaq:HOFT) today reported net sales of $56.8 million for its
fiscal 2013 third quarter, a 4.8%, or $2.6 million, increase over the same
period a year ago. Net income rose 7.7%, or $175,000, to $2.4 million, or
$0.23 per share compared to $0.21 per share in last year's third quarter.

Hooker's fiscal 2013 third quarter began July 30 and ended on October 28,
2012.

For the fiscal 2013 first nine months, net sales were $158.7 million and net
income was $4.9 million, or $0.46 per share.

For the fiscal 2013 first nine months, sales decreased 5.6%, or $9.4 million,
compared to the same period in fiscal 2012. However, net income increased
11.3%, or $499,000, compared to the prior-year period. Earnings per share for
the fiscal 2013 first nine months increased to $0.46 per share compared to
$0.41 per share in the same prior-year period.

Improved profitability in both 2013 fiscal periods was driven by lower sales
discounting, reduced costs and greater domestic manufacturing efficiency. In
casegoods, higher revenues were driven by improved shipments of backlogs and a
better in-stock position. Upholstery sales improvements, especially at Sam
Moore and at Bradington-Young's import division, were driven by higher demand.

"Across both segments in the company, orders and shipments increased this
quarter over the prior year," said Paul B. Toms Jr., chairman and chief
executive officer.

"We were able to increase net income over 11 percent for the first nine months
of the year on lower sales, which indicates greater efficiency, particularly
in upholstery manufacturing. We believe there's room for further improvement,"
Toms said.

In the upholstery segment, Bradington-Young has "achieved sustained
profitability for several months as well as increased sales and order rates,"
said Michael Delgatti, president of Hooker Upholstery. "Sam Moore, on the
other hand, came close to break-even as we work through a short-term profit
challenge that relates directly to the most robust incoming order rate at Sam
Moore in several years," he said. Brisk demand for Sam Moore's fully
upholstered sofa line and other new product lines has necessitated a ramping
up of production with accompanying higher labor rates and costs of goods sold.
"We expect to have our incoming order rates and production capacity better
aligned by the end of our fiscal fourth quarter," he added.

The Company's effective income tax rates were 36.2% and 20.0%, respectively,
in the fiscal 2013 and fiscal 2012 third quarters and were 36.2% and 27.9%,
respectively, for the fiscal 2013 and fiscal 2012 nine-month periods. The
fiscal 2013 tax rates are in the range of what the Company expects for normal
operations. The lower rates in the fiscal 2012 periods were due primarily to
the convergence of several tax benefits during these periods which are not
expected to re-occur.

Additional fiscal 2013 third quarter highlights (compared to the fiscal 2012
third quarter):

  * Gross profit increased as a percentage of net sales to 23.9%, from 23.5%,
    and increased in absolute terms by 6.5%, or $823,000, to $13.6 million.
    These changes were primarily due to higher average selling prices,
    decreased casegoods segment discounting and reduced upholstery segment
    manufacturing costs as a percentage of net sales.
  * Selling and administrative expenses decreased in absolute terms by 2.5%,
    or $250,000, to $9.8 million, and decreased as a percentage of net sales
    from 18.5% to 17.2%.
  * Operating income increased to 6.7% of net sales, from 5.0% and increased
    in absolute terms by 39.7%, or $1.1 million, to $3.8 million.
  * Net income increased as a percentage of net sales to 4.3% from 4.2% and
    increased in absolute terms by 7.7%, or $175,000, to $2.4 million, or
    $0.23 per share, compared to $2.3 million, or $0.21 per share, in the
    prior-year period.

Additional fiscal 2013 first nine-months highlights (compared to the fiscal
2012 first nine months):

  * Gross profit increased as a percentage of net sales to 22.5%, from 21.4%,
    primarily due to higher average selling prices, decreased casegoods and
    upholstery segment discounting and reduced upholstery segment
    manufacturing costs; however, gross profit decreased in absolute terms by
    0.5%, or $186,000, to $35.7 million, primarily due to lower sales volume.
  * Selling and administrative expenses decreased in absolute terms by 6.2%,
    or $1.9 million, to $28.1 million and decreased as a percentage of net
    sales to 17.7% from 17.8%.
  * Operating income increased both as a percentage of net sales to 4.8%, from
    3.5%, and in absolute terms by $1.7 million, or 28.3%, from $5.9 million
    to $7.6 million.
  * Net income increased both as a percentage of net sales to 3.1%, from 2.6%,
    and in absolute terms by 11.3%, or $499,000, to $4.9 million, or $0.46 per
    share, compared to $4.4 million, or $0.41 per share, in the prior-year
    period.  

Cash, Inventory and Debt

Cash and cash equivalents decreased $7.3 million to $33.1 million as of
October 28, 2012, from $40.4 million on January 29, 2012, due principally to:

  * a $4.7 million increase in inventories, due to case goods and imported
    upholstery restocking efforts; and
  * a $3.6 million increase in accounts receivable, due to increased sales.   

"We're currently within our targeted inventory ranges, although we are still
refining our product mix as we look to further improve our in-stock position
on best sellers," said Toms. "Our cash has drawn down somewhat, primarily due
to spending on inventories and increased accounts receivable, as well as our
ERP system conversion and dividends. We do expect to rebuild cash from
profitable operations moving forward," he said.

The Company had no long-term debt at October 28, 2012 and had $13.2 million
available on its $15.0 million revolving credit facility, net of $1.8 million
reserved for standby letters of credit.

Business Outlook

"As service levels and in-stock position improved this quarter, we realized
the kinds of top-line benefits we expect will continue from better flow of
best-selling products and recent well-received introductions," said Toms. "Our
improved in-stock position should also drive higher sales from special orders
at retail. We've also been gratified that the Rhapsody Collection we
introduced last spring has been performing very well at retail since it began
shipping in September, and other collections are also retailing well.

"Demand is positive in every segment of our business, with our consolidated
incoming order rate up just under 5 percent for the third quarter versus the
same period last year.

"Our outlook is more bullish looking out to the second quarter of our next
fiscal year and beyond than in the shorter term," Toms continued. "Longer
term, there are many positive signs from the housing sector, with increased
housing activity, prices stabilizing and the highest home builder sentiment in
six years. Consumer confidence is improving to more historically healthy
levels driven by improvements in housing and gains in the stock market this
year. All this bodes well for our industry longer term. In the shorter term,
we believe the uncertainty around negotiations in Washington, D.C. regarding
the so-called 'fiscal cliff' may create enough uncertainty for consumers to
postpone big-ticket purchases.

"We are bullish enough about the future to continue investing in people,
systems, our manufacturing facilities and long-term strategies for growth.

"On the internal side of our business, we had a successful implementation of
Phase 1 of our Enterprise Resource Planning (ERP) system over Labor Day
weekend. While we are still working through numerous issues, we were pleased
to have had a normal shipping month in September given the magnitude and scope
of the project. We plan to begin Phase 2 in our upholstery segment in January
with full implementation scheduled for late in the fourth quarter of fiscal
2014," Toms said.

Conference Call Details

Hooker Furniture will present its fiscal 2013 third quarter results via
teleconference and live internet web cast on Wednesday morning, December 5,
2012 at 9:00 AM Eastern Time. The dial-in number for domestic callers is
877-665-2466 and the number for international callers is 678-894-3031. The
call will be simultaneously web cast and archived for replay on the Company's
web site at www.hookerfurniture.com in the Investor Relations section.

Ranked among the nation's top 10 largest publicly traded furniture sources
based on 2011 shipments to U.S. retailers, Hooker Furniture Corporation is an
88-year old residential wood, metal and upholstered furniture resource. Major
casegoods product categories include home entertainment, home office, accent,
dining, and bedroom furniture in the upper-medium price points sold under the
Hooker Furniture brand, and youth bedroom furniture sold under the Opus
Designs by Hooker Furniture brand. Hooker's residential upholstered seating
companies include Bradington-Young, a specialist in upscale motion and
stationary leather furniture, and Sam Moore Furniture, a specialist in upscale
fabric occasional chairs with an emphasis on cover-to-frame customization.
Please visit our websites at www.hookerfurniture.com,
www.bradington-young.com, www.sammoore.com and www.opusdesigns.com.

The Hooker Furniture Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4305

Certain statements made in this report, other than those based on historical
facts, are forward-looking statements. These statements reflect our reasonable
judgment with respect to future events and typically can be identified by the
use of forward-looking terminology such as "believes," "expects," "projects,"
"intends," "plans," "may," "will," "should," "would," "could" or
"anticipates," or the negative thereof, or other variations thereon, or
comparable terminology, or by discussions of strategy. Forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements.
Those risks and uncertainties include but are not limited to: (1) general
economic or business conditions, both domestically and internationally, and
instability in the financial and credit markets, including their potential
impact on our (i) sales and operating costs and access to financing, (ii)
customers and suppliers and their ability to obtain financing or generate the
cash necessary to conduct their respective businesses; (2) risks associated
with domestic manufacturing operations, including fluctuations in capacity
utilization and the prices and availability of key raw materials as well as
transportation, warehousing and domestic labor costs and environmental
compliance and remediation costs; (3) disruptions involving our vendors or the
transportation and handling industries, particularly those affecting imported
products, including customs issues, labor stoppages, strikes or slowdowns and
the availability of shipping containers and cargo ships; (4) our ability to
successfully implement our business plan to increase sales and improve
financial performance, including possible adverse effects on our results due
to material restructuring or asset impairment charges if we are unsuccessful;
(5) volatility in the increased costs of imported goods, including
fluctuations and increases in the prices of purchased finished goods and
transportation and warehousing costs; (6) higher than expected costs
associated with product quality and safety, including costs related to
defective or non-compliant products as well as regulatory compliance costs
related to the sale of consumer products; (7) the direct and indirect costs
associated with the implementation of our Enterprise Resource Planning system,
including costs resulting from unanticipated disruptions to our business; (8)
price competition in the furniture industry; (9) changes in domestic and
international monetary policies and fluctuations in foreign currency exchange
rates affecting the price of our imported products and raw materials; (10) the
cyclical nature of the furniture industry, which is particularly sensitive to
changes in the housing markets, consumer confidence, the amount of consumers'
income available for discretionary purchases, and the availability and terms
of consumer credit; (11) supply, transportation and distribution disruptions,
particularly those affecting imported products, including the availability of
shipping containers and cargo ships; (12) achieving and managing growth and
change, and the risks associated with international operations, acquisitions,
restructurings, and strategic alliances; (13) adverse political acts or
developments in, or affecting, the international markets from which we import
products, including duties or tariffs imposed on those products; (14) risks
associated with distribution through third-party retailers, such as
non-binding dealership arrangements; (15) capital requirements and costs; and
(16) competition from non-traditional outlets, such as catalogs and internet
retailers and home improvement centers; changes in consumer preferences,
including increased demand for lower-quality, lower-priced furniture due to
declines in consumer confidence and/or discretionary income available for
furniture purchases and the availability of consumer credit. Any forward
looking statement that we make speaks only as of the date of that statement,
and we undertake no obligation, except as required by law, to update any
forward-looking statements whether as a result of new information, future
events or otherwise.

 
Table I
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                    
                                                                    
                               Thirteen Weeks Ended    Thirty-nine Weeks Ended
                               October 28, October 30, October 28, October 30,
                               2012        2011        2012        2011
                                                                    
Net sales                       $ 56,803    $ 54,180    $ 158,718   $ 168,147
                                                                    
Cost of sales                   43,243      41,443      122,971     132,214
                                                                    
Gross profit                    13,560      12,737      35,747      35,933
                                                                    
Selling and administrative      9,781       10,031      28,118      29,986
expenses
                                                                    
Operating income                3,779       2,706       7,629       5,947
                                                                    
Other income, net               34          117         98          198
                                                                    
Income before income taxes      3,813       2,823       7,727       6,145
                                                                    
Income tax expense              1,379       563         2,799       1,716
                                                                    
Net income                      $ 2,434     $ 2,260     $ 4,928     $ 4,429
                                                                    
Earnings per share:                                                 
Basic                           $ 0.23      $ 0.21      $ 0.46      $ 0.41
Diluted                         $ 0.23      $ 0.21      $ 0.46      $ 0.41
                                                                    
Weighted average shares                                             
outstanding:
Basic                          10,723      10,762      10,755      10,762
Diluted                        10,742      10,783      10,787      10,788

 
 
Table II
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
 
                               Thirteen Weeks Ended    Thirty-nine Weeks Ended
                               October 28, October 30, October 28, October 30,
                               2012        2011        2012        2011
                                                                    
Net Income                      $ 2,434     $ 2,260     $ 4,928     $ 4,429
Other comprehensive income:                                         
Amortization of actuarial       (14)        (82)        (43)        (244)
gains
Income tax effect on
amortization of actuarial       5           31          16          92
gains
Adjustments to net periodic     (9)         (51)        (27)        (152)
benefit cost
                                                                    
Comprehensive Income            $ 2,425     $ 2,209     $ 4,901     $ 4,277

 
 
Table III
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, including share data)
                                                       October 28, January 29,
                                                       2012        2012
Assets                                                              
Current assets                                                      
Cash and cash equivalents                               $ 33,052    $ 40,355
Accounts receivable, less allowance for doubtful       29,456       25,807
accounts of $1,482 and $1,632, respectively
Inventories                                            38,854       34,136
Prepaid expenses and other current assets              4,593        4,194
Total current assets                                    105,955     104,492
Property, plant and equipment, net                     22,913       21,669
Intangible assets                                      1,257        1,257
Cash surrender value of life insurance policies        17,495       16,217
Other assets                                            4,844       5,536
Total assets                                            $ 152,464   $ 149,171
                                                                    
Liabilities and Shareholders' Equity                                
Current liabilities                                                 
Trade accounts payable                                  $ 9,404     $ 9,233
Accrued salaries, wages and benefits                   3,585        3,855
Other accrued expenses                                 2,728        792
Accrued dividends                                       1,075       1,078
Total current liabilities                               16,792      14,958
Deferred compensation                                  7,425        7,100
Total liabilities                                       24,217      22,058
                                                                    
Shareholders' equity                                                
Common stock, no par value, 20,000 shares authorized,
10,746 and 10,793 shares issued and outstanding on     17,305       17,262
each date
Retained earnings                                      110,860      109,742
Accumulated other comprehensive income                  82          109
Total shareholders' equity                              128,247     127,113
Total liabilities and shareholders' equity              $ 152,464   $ 149,171

 
 
 Table IV 
 HOOKER FURNITURE CORPORATION AND SUBSIDIARIES 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (In thousands) 
                                                                  
                                                    Thirty-Nine Weeks Ended 
                                                    October 28,   October 30, 
                                                   2012          2011
 Cash flows from operating activities                             
 Cash received from customers                       $ 155,192     $ 169,581
 Cash paid to suppliers and employees              (153,461)     (146,365)
 Income taxes (paid), net                          (900)         (1,079)
 Interest (paid)/received, net                     (28)          17
 Net cash provided by operating activities         803           22,154
                                                                  
 Cash flows from investing activities                             
 Purchase of property, plant and equipment         (3,850)       (2,443)
 Proceeds received on notes issued for the sale of 24             26
property 
 Proceeds from the sale of property and equipment  403            125
 Premiums paid on life insurance policies          (870)         (1,112)
 Proceeds received on life insurance policies       --           560
 Net cash used in investing activities             (4,293)       (2,844)
                                                                  
 Cash flows from financing activities                             
 Cash dividends paid                               (3,235)       (3,235)
 Purchase and retirement of common stock           (578)          -- 
 Net cash used in financing activities             (3,813)       (3,235)
                                                                  
 Net (decrease) / increase in cash and cash        (7,303)       16,075
equivalents 
 Cash and cash equivalents at beginning of period  40,355        16,623
 Cash and cash equivalents at end of period         $ 33,052      $ 32,698
                                                                  
 Reconciliation of net income to net cash                         
provided 
 by operating activities:                                         
 Net income                                         $ 4,928       $ 4,429
 Depreciation and amortization                     2,248         1,926
 Non-cash restricted stock awards and performance  207           (70)
grants 
 Provision for doubtful accounts                   (87)          170
 Deferred income taxes                             260           16
 (Gain) / loss on disposal of property              (45)          108
 (Gain) on insurance policies                       (545)         (461)
 Changes in assets and liabilities:                               
 Accounts receivable                               (3,562)       1,096
 Inventories                                       (4,718)       14,501
 Prepaid expenses and other current assets         160           264
 Trade accounts payable                            171           (632)
 Accrued salaries, wages and benefits              (270)         (41)
 Accrued income taxes                              1,636         621
 Other accrued expenses                            303           (164)
 Deferred compensation                             117           391
 Net cash provided by operating activities          $ 803         $ 22,154

CONTACT:  Paul B. Toms Jr.
          Chairman and Chief Executive Officer
          Phone: (276) 632-2133, or
          Paul Huckfeldt, Vice President, Chief Financial Officer
          Phone: (276) 632-2133, or
          Kim D. Shaver
          Vice President, Marketing Communications
          Phone: (336) 880-1230

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