Over 150 Years of Service to the Furniture Industry

 Furniture World Logo

Furniture Brands International Reports Revenue Decline; EPS Increase.

Furniture World News on

-Earnings per share from continuing operations of $0.07 to $0.08, more than double the $0.03 in 2007 -Sales from continuing operations totaled $477 million, down 14% from prior year - Quarter-end cash of $188 million, long-term debt of $235 million Furniture Brands International announced its preliminary financial results for the first quarter ended March 31, 2008. These results are from continuing operations and exclude the impact of the first quarter sale and operations of Hickory Business Furniture ("HBF''). The sale of this business was announced in the fourth quarter of 2007 and has been treated as a discontinued operation in both the 2007 and 2008 periods. Net sales for the 2008 first quarter were $477 million, compared with $557 million in the first quarter of 2007. Diluted earnings per common share from continuing operations are between $0.07 to $0.08 for the first quarter of 2008 compared to $0.03 in the first quarter of 2007. Ralph P. Scozzafava, the company's Vice-Chairman of the Board and Chief Executive Officer, commented: "The strategic plan the company unveiled last fall continues to drive improved performance despite a challenging retail environment. Our plan called for 2007 activities to focus on balance sheet improvement, 2008 activities to drive improved profitability, and 2009 activities to increase profitable sales. With our first-quarter preliminary results complete, and our belief that earnings per share will increase in later quarters, we remain on track toward our 2008 earnings target of $0.40 to $0.60 per share. "Our 2007 activities were very successful, as we restructured our lending facility, turned inventories into cash, and paid down debt. At the end of 2007, we had the most cash and least debt since our recapitalization in 1993.'' "Our current balance sheet is equally positive,'' Mr. Scozzafava continued. "At the end of the quarter, cash totaled approximately $188 million and our long-term debt has been paid down to $235 million, with the ability to make additional repayments in the future. We have generated this cash through continued working capital improvements, the sale of HBF, and lower interest expense.'' "Our progress against our strategic plan is continuing in 2008. Despite the economic environment, earnings from ongoing operations showed solid improvement over both year-ago and prior quarter comparisons despite a reduction in sales. This improved financial performance is directly related to the changes we have executed over the past three quarters. These changes include closing 18 unprofitable stores and 10 manufacturing and storage facilities with accompanying reductions in headcount, and launching a shared services model to eliminate costs for administration of payroll, human resources, IT and travel. We expect these and other actions will ultimately deliver $40 million to $50 million in annual savings with all workstreams completed by early 2009,'' Mr. Scozzafava said. "Along with our focus on financial performance, we are equally focused at the consumer and customer levels and we are seeing signs of success. We have reduced unproductive discounts as a means of moving inventory because we are starting to sell the right products at the right price in the right categories, where consumers see and respond to the real value of our brands,'' Mr. Scozzafava said. "In addition, at the beginning of the second quarter, we announced price increases across our brands that will take effect in mid-April and May.'' "We have also increased our company-owned retail presence through the recent acquisition of 11 Thomasville stores. Succeeding as a Thomasville retailer is a key element of our strategic plan, and our performance to date is promising. During the first quarter, those Thomasville stores we have owned for more than a year showed a same-store sales increase of more than 2% over the prior year,'' Mr. Scozzafava said. "We expect improvements in profitability to continue as we complete our transition to a branded consumer products company. Broyhill is leading our initiative to incorporate consumer insight testing and market research prior to launching new products. Beginning in 2009, all major new product introductions will reflect our consumer research and testing processes. By providing our retail partners with products that we know consumers want, we can further improve product flow, reduce discounts, control inventories and improve gross margins. We also expect to realize the full benefits of FBN Asia, which will let us complement our domestic manufacturing assets with the most appropriate Asian supply chain partners,'' Mr. Scozzafava said. "Furniture Brands has the right strategy in place, and we now have the right team to execute it,'' Mr. Scozzafava said. ``Steve Rolls joined the company this month as chief financial officer, rounding out our Executive Leadership Team. Together with the recent addition of Jon Botsford as general counsel, the newly assembled team has the skill and the will to address our challenges and opportunities. The transformation of Furniture Brands to a successful branded consumer products company is well underway,'' Mr. Scozzafava said. Earnings Guidance: The company affirmed its 2008 financial performance guidance of sales revenue between $1.9 billion and $2.0 billion with earnings per share on a continuing operations basis of between $0.40 and $0.60. About Furniture Brands: Furniture Brands International (NYSE:FBN - News) is a vertically integrated operating company that is one of the nation's leading designers, manufacturers, and retailers of home furnishings. With annual sales of approximately $2 billion, it markets through a wide range of retail channels, from mass merchant stores to single-brand and independent dealers to company-owned stores to specialized interior designers. Furniture Brands serves its customers through some of the best known and most respected brands in the furniture industry, including Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Pearson, Hickory Chair, Laneventure, and Maitland-Smith.

Furniture World Magazine-Business solutions for furniture retailers