Hooker Furniture Doubles Net Income on Higher Sales in Fiscal 2014 First Quarter

Hooker Furniture Doubles Net Income on Higher Sales in Fiscal 2014 First

MARTINSVILLE, Va., June 4, 2013 (GLOBE NEWSWIRE) -- Hooker Furniture
(Nasdaq:HOFT) today reported net sales of $56.3 million and net income of $2.1
million, or $0.20 per share, for its fiscal 2014 first quarter, which began on
February 4, 2013 and ended May 5, 2013, compared to $1.0 million, or $0.09 per
share, during last year's first quarter. The 108% increase in net income was
driven by higher sales across all operating units, decreased product
discounting for casegoods, and lower product costs and higher operating
profitability for the domestic upholstery operations of Bradington-Young and
Sam Moore.

Net sales for the first quarter increased $4.6 million, or 8.8%, compared to
$51.7 million for the same period a year ago. Average selling prices increased
in both the Company's segments, casegoods and upholstery, and were partially
offset by lower unit volume in the Company's casegoods segment. The casegoods
unit volume decline was primarily due to lower promotional discounting
compared to the prior-year quarter.

"The improvements we saw in the second half of last year continued into this
quarter with year-over-year increases in orders, shipments and profits for
both the casegoods and upholstery segments," said Paul B. Toms Jr., chairman
and chief executive officer. "We're trending in the right direction on
multiple levels. Our upholstery segment had the best performance in the last
several years this quarter and our casegoods segment is beginning to grow
again. We believe our inventory levels are in the optimum range and retail
conditions are stronger than in recent years," he added.

"We were able to more than double consolidated net profit while absorbing
start-up costs associated with two new business ventures we are launching to
expand our business beyond our core customer demographic and reach additional
consumers on each end of the age spectrum," Toms said. "Our new Homeware
product line, which is set to launch on two eCommerce websites in late summer,
targets young Millenials in the early stages of their careers. The Homeware
line features fresh, fashionable furnishings that are parcel delivery
shippable and easily assembled in the home with an innovative, patented
connector system requiring no tools. On the other end of the age spectrum, our
new H Contract brand, launched in April, caters to retirees moving into senior
living facilities, whose ranks are projected to triple in the next 20 years."

"Start-up costs associated with both new product lines were approximately
$440,000 before tax and $294,000 after tax, or $0.03 per share, in the first
quarter," Toms said. The Company projects start-up costs will account for
$0.12 to $0.15 per share for the full 2014 fiscal year.

"We're pleased with our overall direction in profitability, especially in the
improving performance of our domestic upholstery operations," Toms said.
Michael Delgatti, president of Hooker Upholstery, added, "We believe our
upholstery companies are making progress in numerous areas, including market
share growth and in our journey towards sustainable profitability."

Additional fiscal 2014 first quarter highlights (compared to the fiscal 2013
first quarter)

  *Gross profit increased 27.4% to $13.9 million, or 24.7% of net sales, as
    compared to $10.9 million, or 21.1% of net sales, in the prior-year
    period, primarily due to:

    *higher sales volume in both segments;
    *decreased discounting in our casegoods segment; and
    *lower domestic upholstery costs as a percentage of net sales.

  *Selling and administrative expenses increased 13.7% to $10.7 million, or
    19% of net sales, due to start-up costs for the Company's H Contract and
    Homeware product lines and increased:

    *bonus expense, due to improved earnings performance;
    *furniture disposals eligible to be deducted as contributions for income
      tax purposes; and
    *bad debt expense, due to the reduction of our allowance for doubtful
      accounts in the prior year quarter because of favorable collections

  *Operating income increased 111.6% to $3.2 million, or 5.7% of net sales,
    from $1.5 million, or 3% of net sales, in the prior year period, due to
    the factors discussed previously.
  *Income tax expense increased to $1.1 million, or 1.9% of net sales, from
    $552,000, or 1.1% of net sales, in the prior year period, primarily due to
    higher taxable income. The Company's effective tax rate decreased to 33.6%
    from 35.1%, primarily due to larger anticipated rate benefits from
    earnings on company owned life insurance policies and distributions from
    our former captive insurance arrangement.
  *Net income increased 108.4% to $2.1 million (3.8% of net sales), or $0.20
    per share, from $1.0 million (2% of net sales), or $0.09 per share, in the
    prior year period.

Cash, Inventory and Debt Levels

Cash and cash equivalents increased $2.4 million to $28.7 million as of May 5,
2013, from $26.3 million on February 3, 2013, due principally to:

  *a $3.4 million decrease in inventories, due to increased sales and lower
    inventory purchases; and
  *a $1.8 million decrease in accounts receivable, due to cash collections in
    excess of net sales during the quarter.

These decreases were partially offset by $2.1 million in income tax payments
and $1.1 million in dividend payments during the quarter.

The Company had no long-term debt at May 5, 2013 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

"With all the positive news surrounding housing and rising consumer
confidence, it would be hard not to be optimistic about our prospects," said
Toms. "We're bullish about our future, both with our core business and our new
ventures. Internally, we believe we are well positioned to capitalize on the
improving economy as we ramp up our manufacturing facilities, maintain a good
inventory position and enjoy our strongest product line in several years.
During the month of May, we have seen much stronger demand for our product
than a year ago, which we attribute to the vitality of our freshened line up
and better retail conditions. Although we are entering what is traditionally
the slowest season of the year for furniture, we have considerable momentum."


At its June 3, 2013 meeting, the Company's board of directors declared a
quarterly cash dividend of $0.10 per share, payable on June 28, 2013 to
shareholders of record at June 14, 2013.

Conference Call Details

Hooker Furniture will present its fiscal 2014 first quarter results via
teleconference and live internet web cast on Wednesday morning, June
5^th,2013 at 9:00 AM Eastern Time.The dial-in number for domestic callers is
877-665-2466, and 678-894-3031 is the number for international callers.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
89-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.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 occasional
chairs, settees, sofas and sectional seating with an emphasis on
cover-to-frame customization.Please visit our websites at
www.hookerfurniture.com, www.bradington-young.com, and www.sammoore.com.

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 or (ii) customers and suppliers and their ability to
obtain financing or generate the cash necessary to conduct their respective
businesses; (2) 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; (3) disruptions affecting our Henry
County, Virginia warehouses and corporate headquarters facilities; (4) price
competition in the furniture industry; (5) changes in domestic and
international monetary policies and fluctuations in foreign currency exchange
rates affecting the price of our imported products and raw materials; (6) the
cyclical nature of the furniture industry, which is particularly sensitive to
changes in consumer confidence, the amount of consumers' income available for
discretionary purchases, and the availability and terms of consumer credit;
(7) risks associated with the cost of imported goods, including fluctuation in
the prices of purchased finished goods and transportation and warehousing
costs; (8) adverse political acts or developments in, or affecting, the
international markets from which we import products, including duties or
tariffs imposed on those products; (9) risks associated with domestic
manufacturing operations, including fluctuations in capacity utilization and
the prices and availability of key raw materials, as well as changes in
transportation, warehousing and domestic labor costs and environmental
compliance and remediation costs; (10) our ability to successfully implement
our business plan to increase sales and improve financial performance; (11)
the direct and indirect costs associated with the implementation of our
Enterprise Resource Planning system, including costs resulting from
unanticipated disruptions to our business; (12) achieving and managing growth
and change, and the risks associated with new business lines, acquisitions,
restructurings, strategic alliances and international operations; (13) risks
associated with distribution through third-party retailers, such as
non-binding dealership arrangements; (14) capital requirements and costs; (15)
competition from non-traditional outlets, such as catalog and internet
retailers and home improvement centers; (16) 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; and (17) higher
than expected costs associated with product quality and safety, including
regulatory compliance costs related to the sale of consumer products and costs
related to defective or non-compliant products. 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
(In thousands, except per share data)
                                   Thirteen Weeks Ended
                                   May 5,     April 29,
                                    2013       2012
Net sales                           $ 56,295  $ 51,730
Cost of sales                       42,379    40,808
Gross profit                        13,916    10,922
Selling and administrative expenses 10,682    9,394
Operating income                    3,234     1,528
Other (expense) income, net         (32)      44
Income before income taxes          3,202     1,572
Income tax expense                  1,076     552
Net income                          $2,126   $1,020
Earnings per share:                           
Basic                               $0.20    $0.09
Diluted                             $0.20    $0.09
Weighted average shares outstanding:           
Basic                               10,717     10,772
Diluted                             10,747     10,794
Cash dividends declared per share   $0.10    $0.10

Table II
(In thousands)
                                                     Thirteen Weeks Ended
                                                     May 5,    April 29,
                                                      2013      2012
Net Income                                            $2,126  $1,020
Other comprehensive income:                                   
Amortization of actuarial gain net of tax of $10 and (17)     (9)
$6, respectively
Adjustments to net periodic benefit cost             (17)     (9)
Comprehensive Income                                  $2,109  $1,011

Table III
(In thousands, including share data)
                                                      May 5,      February 3,
                                                       2013        2013
Current Assets                                                    
Cash and cash equivalents                              $28,728   $26,342
Accounts receivable, less allowance for doubtful       26,435     28,272
accounts of $1,085 and $1,249, respectively
Inventories                                            46,506     49,872
Prepaid expenses and other current assets              2,652      3,569
Deferred taxes                                         1,572      1,612
Total current assets                                   105,893    109,667
Property, plant and equipment, net                     23,125     22,829
Intangible assets                                      1,257      1,257
Cash surrender value of life insurance policies        17,720     17,360
Deferred taxes                                         4,423      4,494
Other assets                                           342        216
Total assets                                           $152,760  $155,823
Liabilities and Shareholders' Equity                              
Current Liabilities                                               
Trade accounts payable                                 $9,224    $11,620
Accrued salaries, wages and benefits                   2,604      3,316
Other accrued expenses                                 1,241      2,531
Total current liabilities                              13,069     17,467
Deferred compensation                                  7,557      7,311
Total liabilities                                      20,626     24,778
Shareholders' equity                                              
Common stock, no par value, 20,000 shares authorized,
10,746 shares issued and outstanding on each date,     17,407     17,360
Retained earnings                                      114,542    113,483
Accumulated other comprehensive income                 185        202
Total shareholders' equity                             132,134    131,045
Total liabilities and shareholders' equity             $152,760  $155,823

Table IV
(In thousands)
                                                         Thirteen Weeks Ended
                                                         May 5,     April 29,
                                                          2013       2012
Cash flows from operating activities                                
Cash received from customers                              $58,134  $53,631
Cash paid to suppliers and employees                      (51,992)  (42,548)
Income taxes paid, net                                    (2,115)   (14)
Interest paid, net                                        (34)      (8)
Net cash provided by operating activities                 3,993     11,061
Cash flows from investing activities                                
Purchase of property, plant and equipment                 (880)     (2,211)
Proceeds received on notes issued for the sale of         14        9
property, plant and equipment
Proceeds from the sale of property and equipment          8         30
Premiums paid on company-owned life insurance             (190)     (187)
Proceeds received on company-owned life insurance         516       --
Net cash used in investing activities                     (532)     (2,359)
Cash flows from financing activities                                
Cash dividends paid                                       (1,075)   (1,079)
Net cash used in financing activities                     (1,075)   (1,079)
Net increase in cash and cash equivalents                 $2,386   $7,623
Cash and cash equivalents at the beginning of the period  26,342    40,355
Cash and cash equivalents at the end of the period        $28,728  $47,978
Reconciliation of net income to net cash provided by                
operating activities:
Net income                                                $2,126   $1,020
Depreciation and amortization                             584       595
Non-cash restricted stock awards and performance grants   229       58
Provision for doubtful accounts                           75        160
Deferred income taxes                                     (5)       5
Gain on disposal ofproperty                              (8)       (13)
Gain on insurance policies                                (135)     (126)
Changes in assets and liabilities:                                  
Trade accounts receivable                                 1,762     1,690
Inventories                                               3,366     3,612
Prepaid expenses and other current assets                 832       450
Trade accounts payable                                    (2,876)   4,182
Accrued salaries, wages, and benefits                     (712)     (1,199)
Accrued income taxes                                      (1,034)   533
Other accrued expenses                                    (256)     100
Deferred compensation                                     45        (6)
Net cash provided by operating activities                 $3,993   $11,061

CONTACT:  For more information, 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) 454-7088

company logo
Press spacebar to pause and continue. Press esc to stop.