Stanley Furniture Company, Inc. (Nasdaq-NGS: STLY) today reported sales and operating results for the first quarter of 2010. Net sales of $36.5 million decreased 8.1% from the first quarter of 2009. Net loss for the quarter was $19.1 million, or $1.85 per share, compared to a net loss of $2.4 million, or $.23 per share, in the 2009 first quarter. The 2010 first quarter loss includes a goodwill impairment charge of $9.1 million. The current year quarter also includes a $1.3 million charge to establish a valuation allowance against gross deferred tax assets. Operating loss amounted to $17.6 million, compared to operating loss of $3.1 million in the first quarter of 2009. The higher operating loss is primarily due to the goodwill impairment charge, manufacturing inefficiencies and the increased cost of transitioning approximately one-third of the Young America product line revenues from overseas into domestic facilities, and lower overall sales across the Company’s various product lines. These factors were partially offset by lower expenses resulting from previous restructurings and on-going cost reduction efforts. The Company also announced today a restructuring plan setting a path toward profitability. This plan includes the following major components:
The Company will transition the majority of the manufacturing of its Stanley Furniture adult product line from its Stanleytown, VA facility to several strategic offshore vendors with whom it has existing working relationships. A substantial portion of the Stanleytown facility will become a warehousing and distribution center. In addition, the Company will retain a domestic assembly and finish process in its Martinsville, VA facility to continue offering multiple finish options on certain items across various product lines. These actions will take place over the balance of 2010. The Company’s Martinsville, VA facility is currently used for warehousing.
The Company’s Young America nursery and youth product line will continue to be exclusively manufactured in its Robbinsville, NC facility, except for certain component SKUs of nominal revenue phased over to the Company’s offshore vendors to lower cost.
“We believe any sound business must have a strategy which satisfies customer needs and differentiates itself from its competition,” said Glenn Prillaman, President and Chief Executive Officer. “Domestic manufacturing seamlessly blended with overseas sourcing has been the hallmark of our Company’s operations model for over ten years. Over that time period, the driving factors of demand for each of our two major product lines have become increasingly unique and we must adjust to address these changes in the marketplace.”