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Hooker Furniture Reports Higher 2013 First Half Income On Lower Sales

MARTINSVILLE, Va., Sept. 5, 2012 (GLOBE NEWSWIRE) -- Hooker Furniture (Nasdaq:HOFT) today reported net sales of $50.2 million and net income of $1.5 million, or $0.14 per share, for its fiscal 2013 second quarter, which ended July 29, 2012. For the fiscal 2013 first half, net sales were $101.9 million and net income was $2.5 million, or $0.23 per share.

For the fiscal 2013 second quarter, net sales decreased 9.7%, or $5.4 million, and net income decreased 10.4%, or $172,000, to $0.14 per share compared to $0.15 per share in the comparable period a year ago.

For the fiscal 2013 first half, sales decreased 10.6%, or $12.1 million, and net income increased 15.0%, or $325,000, compared to the prior-year period. Earnings per share for the fiscal 2013 first half increased to $0.23 per share compared to $0.20 per share in the prior year.

Performance in both fiscal 2013 periods was primarily driven by lower net sales, reduced sales discounting, lower freight costs on imported products and lower domestic manufacturing costs.

"We're disappointed in our sales performance so far this year, but pleased that we have been able to achieve comparable to higher profitability on lower sales for both casegoods and upholstery," said Paul B. Toms Jr., chairman and chief executive officer. "We've maintained profitability by improving our domestic upholstery manufacturing operations and by managing costs. In addition, we believe we are now positioned to stabilize and grow sales again. We are almost re-stocked on best-selling products, and we believe we have both the heavy discounting and higher freight rates behind us. We're also preparing to ship several new, well-received collections that will be debuting on retail floors during the historically strong fall selling season," he added.

Fiscal 2013 second quarter highlights (compared to fiscal 2012 second quarter):

  • Gross profit increased as a percentage of net sales to 22.5%, from 21.9%, but decreased in absolute terms by 7.4%, or $897,000, to $11.3 million. These changes were primarily due to lower sales volume, decreased casegoods segment discounting, reduced upholstery segment manufacturing costs and lower freight costs on imported products.
  • Selling and administrative expenses:
  • decreased in absolute terms by 7.5%, or $726,000, to $8.9 million, primarily due to decreases in sales-related expenses; and
  • increased as a percentage of net sales from 17.4% to 17.8%, due to lower net sales.
  • Operating income increased to 4.6% of net sales, from 4.5%, but decreased in absolute terms by 6.9%, or $171,000, to $2.3 million.
  • Net income decreased as a percentage of net sales to 2.9%, from 3.0%, and in absolute terms by 10.4%, or $172,000, to $1.5 million, or $0.14 per share, compared to $1.6 million, or $0.15 per share in the prior year.

Fiscal 2013 first half highlights (compared to fiscal 2013 first half):

  • Gross profit increased as a percentage of net sales to 21.8%, from 20.4%, but decreased in absolute terms by 4.4%, or $1.0 million, to $22.2 million, primarily due to lower sales volume, decreased casegoods and upholstery segment discounting, reduced upholstery segment manufacturing costs and lower freight costs on imported products.
  • Selling and administrative expenses:
  • decreased in absolute terms by 8.1%, or $1.6 million, to $18.3 million, primarily due to decreases in sales-related expenses; and
  • increased as a percentage of net sales to 18.0%, from 17.5%, due to lower net sales.
  • Operating income increased as a percentage of net sales to 3.8%, from 2.8%, and in absolute terms by $609,000 or 18.8%, from $3.2 million to $3.9 million.
  • Net income increased as a percentage of net sales to 2.5%, from 1.9%, and in absolute terms by 15.0%, or $325,000, to $2.5 million, or $0.23 per share, compared to $2.2 million, or $0.20 per share in the prior year.  

Cash, Inventory and Debt

Cash and cash equivalents increased $3.0 million to $43.3 million as of July 29, 2012, from $40.4 million on January 29, 2012, due principally to:

  • a $3.4 million increase in accounts payable, due to increased inventory purchases;
  • a $2.1 million decrease in accounts receivable, due to lower sales; and
  • a $1.7 million increase in inventories due to restocking efforts.  

"Our cash position remains strong, although we expect a modest decrease in cash during the second half of fiscal 2013 as we continue to replenish inventories and repurchase shares under last quarter's board authorization," said Toms. "We are in an improving inventory position, and the composition of our inventories with best-selling and newer products is much better compared to the prior year period."

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