Furniture Brands International announced financial results for the second quarter ended June 30, 2011.
- Sales were $296.2 million, an increase of 2.3% versus the second quarter of 2010 and almost flat versus the prior quarter
- Gross margin was 24.8% compared to 25.7% in the second quarter of 2010 and 26.0% in the prior quarter
- SG&A expense was $79.3 million compared to $75.2 million in the second quarter of 2010 and $79.6 million in the prior quarter
- Quarter ending cash balance was $35 million and bank facility additional borrowing availability was approximately $54 million
"We are pleased to report a sales increase in the second quarter," said Mr. Ralph Scozzafava, Chairman and CEO. "The initiatives we have implemented to drive our sales are gaining traction, including increasing consumer tested product, new product introductions that are resonating with customers, as well as our brand building initiatives that are serving to drive traffic to our websites and ultimately our stores and those of our dealers."
Net sales of $296.2 million for the second quarter of 2011 increased 2.3% versus net sales of $289.5 million in the second quarter of 2010. On a sequential basis net sales were roughly flat versus the first quarter of 2011. Second-quarter 2011 retail sales at the 66 company-owned stores and showrooms totaled $36.4 million, flat compared with second-quarter 2010 sales at 71 company-owned stores and showrooms. Second-quarter 2011 same-store sales at the 45 Thomasville stores that the company has owned for more than 15 months showed an increase of 8% compared to the second quarter of 2010. This was the sixth consecutive quarter of same-store sales growth.
Furniture Brands' gross margin for the second quarter of 2011 was 24.8% down from 25.7% in the second quarter of 2010 largely due to increased raw material costs and higher inventory charges. Selling, general and administrative expenses (SG&A) for the second quarter of 2011 totaled $79.3 million up from $75.2 million in the second quarter of 2010 primarily due to increased advertising investments and favorable settlements in 2010 related to certain international tax and trade compliance matters.
The Company had a pretax loss of $6.4 million in the second quarter of 2011 as compared to a pretax loss of $1.0 million in the second quarter of 2010. For the second quarter of 2011, Furniture Brands had a net loss of $6.6 million, or $0.12 per diluted share. This compared to net income of $4.2 million, or $0.09 per diluted share, in the second quarter of 2010 which included a net tax benefit of approximately $5.3 million driven by the utilization of tax loss carrybacks.
Cash of $35 million decreased from the first quarter of 2011 balance of $41 million due primarily to fees related to the refinancing of our bank loan agreement as well as investments in new, offshore manufacturing capacity.
"We are making investment decisions that we believe are critical to the longer-term health of our Company," Mr. Scozzafava added. "These include investing to complete our manufacturing facilities in Indonesia and Mexico, both of which will deliver components and finished product at a lower cost than would otherwise be possible. They also include expenditures related to our 2012 SAP first-phase implementation that will ultimately create centralized information systems, timely access to business information, more rapid read and response time, as well as reduced costs to operate the business. It is our relentless focus on tightly controlling non-revenue generating expenses that is helping fund these investments."
"The elements that are critical to driving our revenues remain a priority. We will continue to make the necessary investments to drive profitable sales and the tough decisions to ensure our cost structure is appropriate, all while keeping our sights firmly set on returning our Company to profitability," Mr. Scozzafava concluded.
About Furniture Brands: Furniture Brands International (NYSE:FBN) is one of the world's leading designers, manufacturers, sourcers, wholesalers, and retailers of home furnishings. We market through a wide range of retail channels, from mass merchant stores to single-branded and independent dealers to specialized interior designers. We serve our customers through some of the best known and most respected brands in the furniture industry, including Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Hickory Chair, Pearson, Laneventure, Maitland-Smith, and Creative Interiors.