Stanley Furniture Company, Inc. recently reported sales and operating results for the 2012 fourth quarter and total year.
Fourth quarter 2012 highlights:
Total year 2012 highlights:
- Net sales were $23.4 million compared to $24.6 million in 2011.
- Operating loss was $2.4 million compared to a loss of $1.1 million in 2011, due primarily to the decline in Young America sales and spending in preparation for the Winter Market in Las Vegas.
- Ended the year with $37.7 million in cash, restricted cash and short-term investments.
- Completed the Young America product design and operational transition as well as planned capital improvements.
- Purchased 146,015 shares of its common stock at an average price of $4.53 per share.
- Net sales were $98.6 million compared to $104.6 million in 2011.
- Gross margin improved to 12.9% of net sales compared to 12.3% in 2011, excluding restructuring charges in both years.
- Selling, general and administrative expenses were reduced to $18.3 million, or 18.6% of net sales, from $19.3 million, or 18.4% of net sales, in 2011.
- Net of restructuring charges in both years, operating loss narrowed to $5.6 million in 2012 from a $6.4 million loss in 2011.
- Invested $6.5 million in new information systems as well as the modernization of the Robbinsville, North Carolina facility that manufacturers Young America product.
“As expected, the combination of two factors hurt sales in the fourth quarter: soft retail demand in most areas of the country for residential wood furniture in our segment, and the disruption at retail caused by floor sample changes associated with the final chapter of the launch of our new Young America product line,” commented Glenn Prillaman, President and Chief Executive Officer. “While total revenue declined for the quarter and year, our Stanley brand grew revenues in both periods contributing to the year’s bottom line improvements,” said Prillaman.
“In addition, after three years of constant change, our Young America brand is no longer in operational transition. Representing the last stage of our journey to position this domestically made product line for growth, we completed initial production of all items, including two new designs that were introduced in October 2012 at the High Point Market,” said Prillaman. “Understandably, customers have been challenged with changing floor samples after the re-engineering of the entire Young America product line during a time when retail traffic was slow. Our customers are delighted with the quality enhancements to our product and with our return to a more predictable production schedule. They have responded with orders in January.”
“We will complete the total transformation of our company with the consolidation of our corporate offices and new showroom in downtown High Point, North Carolina, and the implementation of our customer-driven information systems upgrade. These projects are on plan and expected to occur during the second quarter of 2013,” Prillaman concluded.
Cash, restricted cash and short-term investments at the end of the year were $37.7 million, up from $17.3 million at December 31, 2011. CDSOA proceeds of $39.5 million, net of taxes paid, were received in the second quarter of 2012 for funds that were previously withheld under the antidumping duty order for wooden bedroom furniture imported from China. Capital expenditures totaled $3.8 million as we invested in machinery and equipment to modernize and automate our Robbinsville manufacturing facility. Additionally, the company spent $2.7 million on new information systems in 2012 as it prepared for the consolidation of its new corporate office and new showroom in High Point. Other significant uses of cash during the year were a $4.0 million increase in inventory and $661,000 to repurchase company stock.
“In the coming year, our focus moves towards executing the business models we have developed to grow each brand,” said Prillaman. “The investments we have made will allow us to leverage our current fixed cost structure against revenue growth. Both brands enter 2013 with healthy backlogs and excitement from new product introductions. The retail environment in our segment remains tough for most areas of the country although we are encouraged with housing trends and we see certain home furnishing segments starting to rebound.”
“While we believe we have used our cash wisely to operate the business while making strategic investments that have us positioned to execute our plan for growth and profitability, we recognize the need to stop consuming cash in 2013. We expect to use cash in the first half of the year, but anticipate being cash neutral by the end of 2013, with the exception of share repurchases. We intend to do so by regaining the market share we have lost, managing inventory levels to meet demand and reducing capital spending,” continued Prillaman.
“Last week, we attended our first Winter Market in Las Vegas where we introduced both brands to hundreds of new customers in the western half of the country. We expect this exposure to result in growth for these markets and we look forward to similar results with existing customers after they experience new and existing designs in an entirely new setting at High Point’s Spring Market in April,” said Prillaman.
“We believe we will continue a slow but steady growth for our Stanley brand in 2013, barring any unforeseen economic factors changing our momentum. As for Young America, we believe demand is driven not only by macro factors, but also by more predictable demographic trends that drive demand for children’s furniture. We expect higher growth on this side of the business in 2013 as we begin to regain market share lost over the last several years,” concluded Prillaman.
About the Company:
Established in 1924, Stanley Furniture Company, Inc. is a leading designer and manufacturer of wood furniture targeted at the premium segment of the residential market. The company offers two major product lines. Its Stanley Furniture brand represents its fashion-oriented adult furniture and competes through an overseas sourcing model in the upscale market through superior finish, styling and piece assortment. Its Young America brand is positioned as the leader in the infant and youth segment and differentiates through a domestic manufacturing model catering to parent preferences such as child safety, color, choice and quick delivery of customized special orders. The company’s common stock is traded on the NASDAQ stock market under the symbol STLY.
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