The Rowe Companies Announces First Quarter Operating Results
Furniture World Magazine
The Rowe Companies (Amex: ROW), a leading furniture manufacturer and home furnishings retailer, reported operating results for the first quarter ended February 29, 2004.
Led by a 24% sales increase in its Storehouse retail unit, net earnings from continuing operations for the first quarter totaled $149,000 or $0.01 per diluted share, compared to a loss in the prior year first quarter of $(813,000), or $(0.06) per diluted share. Net shipments increased 11% to $70.7 million, compared with $63.7 million for the same period last year. Gross profit increased to 35.5% of net shipments compared with 35.1% of net shipments for the same period last year as retail margins improved. As previously announced, included in cost of shipments was an after-tax non-cashcharge of $(451,000) or $(0.03) per share to depreciate certain legacy systems that will be removed from service this year as the Company's new ERP system is implemented. Sales and administrative costs for the quarter were $24.2 million compared to $22.7 million in the prior year quarter, principally due to higher retail selling expense associated with higher volume and increased store occupancy expense.
During the quarter the Company recorded an increase in workers' compensation expense for a prior year of $(218,000) after tax, a portion of which was attributable to business units that have subsequently been sold, but for which the Company retained the workers' compensation liability.
Accordingly, $(105,000) after tax, or $(0.01) per share was attributed to discontinued operations. Net earnings for first quarter of 2003 including discontinued operations were $44,000 or $0.00 per share, compared to $2,000 or $0.00 per share in 2003. Net earnings for the prior year included the results of the Mitchell Gold Co., which was sold in April 2003.
"We are pleased with the continuing improvement in our operating results," said Gerald M. Birnbach, Chairman and President. "Our Storehouse retail business continues to show strong sales growth, with an 18.8% same store sales increase for the third consecutive quarter of double digit same store sales gains. Total sales gained 23.9% for the quarter. Our Rowe Furniture shipments increased 1% in this quarter, despite two less production days in its operating calendar compared to last year."
In addition to the non-cash charge in the first quarter resulting from the accelerated depreciation of certain legacy systems, there will be an additional non-cash charge of $(148,000) after tax or $(0.01) per share for the second quarter of fiscal 2004.
The Rowe Companies operates two subsidiaries in the home furnishings industry: Rowe Furniture, Inc., a major manufacturer of quality upholstered furniture serving the middle and upper middle market throughout the U.S.; and
Storehouse, Inc., a multi-channel, lifestyle home furnishings business including 61 retail home furnishings stores. Storehouse makes good design accessible by selling an edited assortment of casual, contemporary home furnishings through its stores located in the Southeast, Southwest, and Mid- Atlantic markets and its catalog.