Furniture Brands International announced its financial results for the second quarter and six months ended June 30, 2010.
Net sales for the 2010 second quarter were $289.5 million compared to net sales of $288.3 million in the second quarter of 2009. Net sales for the second quarter of 2010 reflect a net decrease of $12 million from the 2009 quarter in the company's ready-to-assemble business as a result of the company exiting two unprofitable lines of business. For the 2010 second quarter, Furniture Brands reported net income of $4.2 million, or $0.09 per diluted share, compared to a loss of $16 million, or $0.33 per diluted share, in the second quarter of 2009. Gross margin for the second quarter of 2010 was 25.7% compared to 21.4% in the second quarter of 2009.
For the six months ended June 30, 2010, the company reported net sales of $611.9 million and net income of $7.7 million, or $0.16 per diluted share, compared to net sales of $645.1 million and a net loss of $20.2 million, or $0.42 per diluted share, for the six months ended June 30, 2009. Results for all periods include selected items that are detailed in a table attached to this press release.
At June 30, 2010, the company had a net cash* position of $26 million compared to net debt* of $52 million at June 30, 2009. The company also anticipates receiving an approximately $7 million federal tax refund during the fourth quarter of 2010. The refund is primarily the result of contributions of common stock to the company's pension plan during the second quarter of 2010 which allowed the company to utilize remaining tax loss carry back capacity from previous tax years and record a related net tax benefit of approximately $4.8 million in the quarter.
"Furniture Brands' ongoing efforts to reposition the company delivered solid year-over-year gross margin improvement for the second straight quarter. We have ongoing initiatives in place to drive profitable sales as we eliminate costs from our operations and reduce our break-even point. These are essential elements of our business strategy and will help us become a stronger company in the future," said Chairman and Chief Executive Officer Ralph P. Scozzafava. "The underpinnings of the solid financial performance of the first quarter of 2010 -- historically the company's highest quarter for net sales -- remain in place. Gross margin of 25.7% for the second quarter is the highest level for that quarter since 2002," Mr. Scozzafava said.
"The strong performance in gross margin is being driven by several factors -- 45 of our 55 production lines have been converted to a cellular manufacturing design, domestic distribution and transportation costs are being reduced while we're improving customer service to our dealers, and our lean implementation is yielding a more competitive cost structure as well as delivering stronger quality performance in our factories. We have also vastly improved safety in all of our facilities, which is lowering our workers compensation costs while the benefits to our people are tremendous," Mr. Scozzafava said.
Second-quarter 2010 retail sales at the 71 company-owned stores and showrooms totaled $36.4 million with a gross margin of 41.7% compared to sales of $29.8 million and gross margin of 39.3% at the 69 stores and showrooms the company owned during the second quarter of 2009. Second-quarter 2010 same-store sales at the 40 Thomasville stores that the company has owned for more than 15 months showed an increase of 21% from the second quarter of 2009.
"The steady improvement in our Thomasville same-store sales performance illustrates the power of the Thomasville brand with consumers and the benefits of a well-managed retail operation. We continue to leverage and share our retail selling insights with our independent Thomasville dealers and also with our Lane and Broyhill retail partners. Sharing knowledge and best practices is a key step in gaining additional floor placements and improving product sell-through," Mr. Scozzafava said.
Selling, general, and administrative costs for the 2010 second quarter totaled $75.2 million compared to $76 million in the second quarter of 2009. SG&A for both quarters includes selected items that are detailed in a table attached to this press release.
"The entire Furniture Brands organization has made remarkable strides in strengthening our balance sheet and creating a platform that can be leveraged to deliver profitable growth. We are also getting better and better at uncovering and eliminating unnecessary administrative costs. Any expense that does not help drive top-line sales growth is subject to rigorous review, and every Furniture Brands associate has an incentive to improve our profit performance. Lowering back-office costs frees up capital that will be invested in our brands through new product innovation, advertising, national promotions, and events that drive traffic to our dealers. Over time, this investment will fuel the consumer demand that drives incremental sales and profitability into our highly scalable operating model," Mr. Scozzafava said.
Mr. Scozzafava continued, "We know that driving our top-line sales performance is the critical next step in moving our company forward. We are excited about our new product introductions and innovative marketing programs that our brands are using to grow their business. Broyhill has developed a partnership with the Make-a-Wish Foundation that helps our dealers raise their visibility in their communities and drive more traffic into their stores. Lane is expanding its successful mobile showroom tour this fall to include more college football and NASCAR destinations along with an expanded schedule of dealer visits. Thomasville will host in-store promotional events every month for the rest of 2010 while increasing its national TV campaign. Everything we do is designed to leverage the power of our brands and drive traffic to our dealers."
About Furniture Brands
Furniture Brands International (FBN 5.84, -0.01, -0.17%) is one of the world's leading designers, manufacturers, sourcers, and retailers of home furnishings. It markets through a wide range of retail channels, from mass merchant stores to single-brand and independent dealers 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.