Furniture Brands International (FBN) announced financial results for the third quarter ended September 29, 2012.
- Net sales of $255.6 million, down 0.9% as compared to the third quarter of 2011
- Gross margin of 21.2% as compared to 22.3% reported in the third quarter of 2011
- SG&A of $70.1 million as compared to $75.0 million in the third quarter of 2011
Mr. Ralph Scozzafava, Chairman and CEO stated, "Sales for the quarter were slightly below the year ago period and we saw an improving shipment trend through the quarter.
Encouragingly, our order activity for the third quarter showed improvement on both a sequential and year over year basis enabling us to carry an increased order backlog into the fourth quarter. Our new product introductions are resonating with customers and helping us gain incremental distribution as well as replace older products at retail. In addition, the new financing package that we recently secured greatly improves our borrowing capacity and financial flexibility, enabling us to continue to pursue our strategy to drive sales, improve efficiencies and make opportunistic investments in our business."
Net sales for the three months ended September 29, 2012 were $255.6 million compared to $258.0 million in the three months ended September 30, 2011, a decrease of $2.4 million, or 0.9%. Third quarter 2012 retail sales at the 48 Thomasville company-owned stores totaled $24.9 million compared with sales of $26.7 million at 49 Thomasville company-owned stores in the prior year period. Third quarter same-store sales at the 45 Thomasville stores that the company has owned for more than 15 months were down 4% compared to the third quarter of 2011 when same-store sales increased by 5%.
Gross profit for the third quarter of 2012 was $54.2 million and included $1.9 million in charges from inventory write-downs related to product rationalization, resulting in a gross margin of 21.2%. Gross profit for the third quarter of 2011 was $57.5 million and included $2.8 million in charges associated with cost reduction initiatives, resulting in a gross margin of 22.3%. Excluding the charges above, the decrease in third quarter 2012 gross margin when compared to the year ago period was primarily due to discounts, including the additional clearance of older inventory and product that is being replaced.
Selling, general and administrative expenses (SG&A) for the third quarter of 2012 totaled $70.1 million and included $3.1 million in charges associated with increased environmental reserves. SG&A expenses for the third quarter of 2011 totaled $75.0 million and included $4.7 million in charges related to cost reduction activities. Excluding the charges above, the decrease in SG&A was primarily due to lower expenses resulting from prior cost reduction activities.
The Company had an operating loss of $15.8 million in the third quarter of 2012 as compared to an operating loss of $26.5 million in the prior year period. In addition to the charges described above, the third quarter 2011 operating loss also included a $9.0 million intangible asset impairment charge.
Interest expense for the third quarter of 2012 was $1.8 million as compared to $0.9 million in the prior year period. The increase in interest expense was primarily due to the previously announced debt refinancing which resulted in a write-off of capitalized fees of $0.9 million related to the company's old credit agreement.
For the third quarter of 2012, Furniture Brands reported a net loss of $18.0 million which includes a $5.9 million after-tax impact from the aforementioned items. This compares to a net loss of $24.5 million in the third quarter of 2011, which includes a $13.4 million after-tax impact from the aforementioned items.
Net loss on a per share basis for the third quarter of 2012 was $0.33 as compared to a net loss per share of $0.45 in the third quarter of 2011.
The Company ended the quarter with a cash balance of $15.5 million and a debt balance of $83.3 million.
About Furniture Brands:
Furniture Brands International, Inc. (FBN) is a world leader in designing, manufacturing, sourcing and retailing home furnishings. Furniture Brands markets products through a wide range of channels, including its own Thomasville retail stores and through interior designers, multi-line, independent retailers and mass merchant stores. Furniture Brands' portfolio includes some of the best known and most respected brands in the furniture industry, including Thomasville, Broyhill, Lane, Drexel Heritage, Henredon, Pearson, Hickory Chair, Lane Venture, Maitland-Smith, La Barge, and Creative Interiors. To learn more about the company, visit: furniturebrands.com
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