Hooker Furniture Reports Fifth Consecutive Quarter of Increased Sales

Hooker Furniture Reports Fifth Consecutive Quarter of Increased Sales

Martinsville, Va., Dec. 11, 2013 (GLOBE NEWSWIRE) -- Hooker Furniture
(Nasdaq:HOFT) today reported net sales of $59.1 million and net income of $2.1
million, or $0.20 per share, for its fiscal 2014 third quarter ended November
3, 2013. Sales increased $2.3 million, or 4.1%, while net income decreased
$317,000, or 13.0%, compared to last year's third quarter. Earnings per share
decreased to $0.20 from $0.23 in the comparable period a year ago.

For the fiscal 2014 first nine months, net sales increased 7.6%, or $12
million, to $170.7 million, and net income increased 20.3%, or $1 million, to
$5.9 million, or $0.55 per share, compared to $0.46 in the prior-year period.

"We're pleased with our year-to-date sales performance and the strength of
incoming orders and backlogs as we enter a historically strong retail
furniture-selling season," said Paul B. Toms Jr., chairman and chief executive
officer. "This was one of our strongest shipping quarters in the last five
years, and demand is up for both casegoods and upholstery compared to a year
ago," he said. "We had our second largest shipping quarter in five years,
exceeded only slightly by last year's fourth quarter, which had an extra week.
Our written business at the October High Point Market was the best in the last
three years," he added.

The net sales gain for the third quarter was driven by higher average selling
prices in both casegoods and upholstery due to changes in product mix. For the
nine months, sales increases were also driven by higher average selling prices
in both operating segments, along with increased unit volume in the upholstery
segment.

Toms attributed the decline in net income for the fiscal 2014 third quarter to
previously announced increased discounting in casegoods to dispose of
slow-moving casegoods inventory, start-up costs for the new H Contract and
Homeware brands and production ramp-up costs at Sam Moore. "Our casegoods
inventories are still above targeted levels, and we've had higher discounts,
primarily related to groups and product lines we are discontinuing. With
Homeware and H Contract, we anticipated start-up costs and spending would come
before revenues on both these long-term strategic initiatives. Our
profitability challenges at Sam Moore revolve around the ramp-up of production
and higher labor costs to meet demand that's increased 15% to 20% per year
during the last two-and-a-half years," he said.

Fiscal 2014 third quarter highlights (compared to fiscal 2013 third quarter):

  *Gross profit remained essentially flat in absolute terms at $13.6 million
    in both quarters, but decreased slightly as a percentage of net sales to
    23.0%, compared to 23.9% in the prior-year quarter. The improvements in
    net sales were offset by increased discounting in the casegoods segment
    and higher cost of sales in the upholstery segment.
  *Selling and administrative expenses increased $662,000 to $10.4 million,
    or 17.7% of net sales, from $9.8 million, or 17.2% of net sales, in last
    year's quarter primarily due to start-up costs for the H Contract and
    Homeware brands.
  *Operating income decreased $624,000, or 16.5%, to $3.2 million, or 5.3% of
    net sales, from $3.8 million, or 6.7% of net sales.
  *Net income decreased $317,000, or 13.0%, to $2.1 million, or 3.6% of net
    sales, from $2.4 million, or 4.3% of net sales.

Fiscal 2014 first nine months highlights (compared to fiscal 2013 first nine
months):

  *Gross profit increased $5 million, or 14.1%, to $40.8 million, or 23.9% of
    net sales, from $35.7 million, or 22.5% of net sales. These changes were
    primarily due to:
    - higher sales volume in both segments;
    - slightly reduced cost of sales as a percentage of net sales and lower
    distribution costs in our casegoods segment, the latter being due to the
    closure of several Asian warehouses; and
    - to a lesser extent, reduced upholstery segment cost of salesas a
    percentage of net sales.
  *Selling and administrative expenses increased $3.6 million, or 12.9%, to
    $31.7 million, or 18.6% of net sales, from $28.1 million, or 17.7% of net
    sales, due to start-up costs from H Contract and Homeware and additional
    factors including increases in professional services expense, benefits
    expense and bad debts expense.
  *Operating income increased as a percentage of net sales to 5.3%, from
    4.8%, and in absolute terms by $1.4 million, or 18.4%, from $7.6 million
    to $9.0 million.
  *Net income increased as a percentage of net sales to 3.5%, from 3.1%, and
    in absolute terms by 20.3%, or $1 million, to $5.9 million, or $0.55 per
    share, compared to $4.9 million, or $0.46 per share, in the prior year.

Cash, Inventory and Debt

Cash and cash equivalents increased $3.6 million to $30 million as of November
3, 2013, from $26.3 million on February 3, 2013, due principally to:

  *a $1.7 million decrease in accounts receivable; and
  *an $878,000 decrease in inventories, as a result of our efforts to reduce
    levels of slow moving and discontinued inventory.

"Our inventories are currently about 10% above targeted levels," Toms said.
"We have adjusted our ordering, but expect that it will be the first quarter
of our next fiscal year before we experience the impact of those adjustments.
The inventory composition is improving, with a higher percentage of active,
in-line and best-selling items and less pre-discontinued and discontinued
product," Toms said, adding that he expects the current level of discounting
to continue through the fourth quarter.

The Company had no long-term debt at November 3, 2013 and had $12.9 million
available on its $15.0 million revolving credit facility, net of $2.1 million
reserved for standby letters of credit.

Business Outlook

"Business has been reasonably steady all year, with sales up each quarter on a
year-over-year basis," Toms said. "We have solid economic fundamentals on our
side, including conditions for an improved housing market, and a stock market
pushing all-time highs. There are some negatives, including political gridlock
in Washington, D.C. and recent slight declines in consumer confidence, but we
are generally still bullish on both a short and long-term basis. We realize we
are going up against an outstanding fourth quarter last year that included an
extra week. However, based on current revenue and earnings momentum, a very
successful October High Point Market and the strength of our product line, we
believe we can continue to grow and gain market share in our segments of the
home furnishings industry."

Dividends

On November 26, 2013, the Company's board of directors declared a quarterly
cash dividend of $0.10 per share, payable on December 27, 2013, to
shareholders of record at December 12, 2013.

Conference Call Details

Hooker Furniture will present its fiscal 2014 third quarter results via
teleconference and live internet web cast on Wednesday afternoon, December 11,
2013 at 2:00 PM 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 2012 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 product lines
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 and Seven Seas, imported leather upholstered
furniture targeted at the upper-medium price-range. The Homeware product line
offers direct-to-consumer, customer-assembled, modular upholstered and
casegoods products designed for younger and more mobile furniture customers.
The H Contract product line supplies upholstered seating and casegoods to
upscale senior living facilities. Please visit our websites at
www.hookerfurniture.com, www.bradington-young.com,www.sammoore.com,
www.homeware.com, and www.hcontractfurniture.com.

Certain statements made in this release, 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
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
                                                                
                               Thirteen Weeks Ended   Thirty-Nine Weeks Ended
                               November 3, October 28 November 3,  October 28
                               2013        2012       2013         2012
                                                                
Net sales                       $59,125   $56,803  $170,721   $158,718
                                                                
Cost of sales                   45,527     43,243    129,950     122,971
                                                                
Gross profit                   13,598     13,560    40,771      35,747
                                                                
Selling and administrative      10,443     9,781     31,742      28,118
expenses
                                                                
Operating income               3,155      3,779     9,029       7,629
                                                                
Other income (expense), net     9          34        (45)        98
                                                                
Income before income taxes     3,164      3,813     8,984       7,727
                                                                
Income tax expense              1,048      1,379     3,054       2,799
                                                                
Net income                     $2,116    $2,434   $5,930     $4,928
                                                                
Earnings per share:                                              
Basic                          $0.20     $0.23    $0.55      $0.46
Diluted                        $0.20     $0.23    $0.55      $0.46
                                                                
Weighted average shares                                          
outstanding:
Basic                           10,724      10,723     10,721       10,755
Diluted                         10,753      10,742     10,748       10,787
                                                                


Table II
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

                              Thirteen Weeks Ended    Thirty-Nine Weeks Ended
                              November 3, October 28, November 3, October 28,
                              2013        2012        2013        2012
                                                               
Net Income                     $2,116    $2,434    $5,930    $4,928
Other comprehensive income:                                    
Amortization of actuarial     (27)       (14)       (81)       (43)
gain
Income tax effect on
amortization of actuarial      10         5          30         16
gains
Adjustments to net periodic   (17)       (9)        (51)       (27)
benefit cost
                                                               
Comprehensive Income           $2,099    $2,425    $5,879    $4,901
                                                               


Table III
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, including share data)
                                                      November 3, February 3,
                                                      2013        2013
Assets                                                            
Current assets                                                    
Cash and cash equivalents                             $29,946    $26,342
Accounts receivable, less allowance for               26,545      28,272
doubtfulaccounts of $1,082 and $1,249, respectively
Inventories                                           48,995      49,872
Prepaid expenses and other current assets             5,146       5,181
Total current assets                                  110,632    109,667
Property, plant and equipment, net                     23,594      22,829
Intangible assets                                      1,382       1,257
Cash surrender value of life insurance policies        18,501      17,360
Other assets                                           4,653      4,710
Total assets                                          $158,762    $155,823
                                                                 
Liabilities and Shareholders' Equity                              
Current liabilities                                               
Trade accounts payable                                $12,271    $11,620
Accrued salaries, wages and benefits                  3,068       3,316
Other accrued expenses                                1,695       2,531
Total current liabilities                             17,034     17,467
Deferred compensation                                  7,851       7,311
Total liabilities                                     24,885     24,778
                                                                 
Shareholders' equity                                              
Common stock, no par value, 20,000 shares
authorized,10,753 and 10,746 shares issued and        17,528      17,360
outstanding on each date
Retained earnings                                    116,197     113,483
Accumulated other comprehensive income                152        202
Total shareholders' equity                            133,877    131,045
Total liabilities and shareholders' equity            $158,762   $155,823
                                                                 


Table IV
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                                                               
                                                  Thirty-Nine Weeks Ended
                                                  November 3, October 28,
                                                  2013          2012
Cash flows from operating activities                          
Cash received from customers                     $172,409    $155,192
Cash paid to suppliers and employees             (158,704)     (153,368)
Income taxes paid, net                           (3,904)       (900)
Interest paid, net                               (14)          (28)
Net cash provided by operating activities        9,787         896
                                                               
Cash flows from investing activities                          
Purchase of property, plant and equipment        (2,608)       (3,850)
Proceeds received on notes issued for the sale of 30            24
property
Proceeds from the sale of property and equipment 31            403
Purchase of Homeware.com URL                     (125)         --
Premiums paid on life insurance policies         (802)         (870)
Proceeds received on life insurance policies     516          --
Net cash used in investing activities            (2,958)       (4,293)
                                                               
Cash flows from financing activities                          
Cash dividends paid                              (3,225)       (3,235)
Purchase and retirement of common stock          --          (671)
Net cash used in financing activities            (3,225)       (3,906)
                                                               
Net increase in cash and cash equivalents        3,604         (7,303)
Cash and cash equivalents at beginning of period 26,342        40,355
Cash and cash equivalents at end of period       $29,946     $33,052
                                                               
Reconciliation of net income to net cash                       
provided
by operating activities:                                      
Net income                                       $5,930      $4,928
Depreciation and amortization                    1,818         2,248
Non-cash restricted stock awards and performance  500           300
grants
Provision for doubtful accounts                  (191)         (87)
Deferred income taxes                            (331)         260
(Gain) on disposal of property                   (6)          (45)
(Gain) on insurance policies                     (480)        (545)
Changes in assets and liabilities:                            
Accounts receivable                              1,918         (3,562)
Inventories                                      877           (4,718)
Prepaid expenses and other current assets        46            160
Trade accounts payable                           651           171
Accrued salaries, wages and benefits             (248)         (270)
Accrued income taxes                             (519)         1,636
Other accrued expenses                           (317)         303
Deferred compensation                            139           117
Net cash provided by operating activities        $9,787      $896
                                                               

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
         Director, Marketing Communications
         Phone: (336) 880-1230

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