Rowe Announces Net Shipment and Gross Profit Margins Increase

Furniture World Magazine

The Rowe Companies (NYSE: ROW), a leading furniture manufacturer and retailer, reported operating results for the first quarter ended February 27, 2000. Net shipments for the first quarter of fiscal year 2000 amounted to $87.5 million, compared to $60.0 million for the same period last year. Included in the 2000 first quarter were shipments of $24.5 million from Storehouse, acquired August 1, 1999. Gross profit margins in the first quarter increased to 34.0%, up from 27.7% last year. This increase is primarily the result of higher margins on retail sales at Storehouse. First quarter earnings before the cumulative effect of a change in accounting principle were $2.5 million, or $0.18 per diluted share, compared to $3.1 million, or $0.21 per diluted share, for the same period last year. Earnings after the cumulative effect were $2.4 million, or $0.17 per diluted share. The cumulative effect on earnings results from new accounting guidance regarding the treatment of pre-opening costs for retail locations resulting from stores opened in the prior year. Operating results for the first quarter were impacted by several major items. Planned moving and start-up costs were incurred in relocating the Salem, Virginia upholstery plant to a new 435,000 square foot facility in Elliston, Virginia. The accounting change referenced above required new store pre-opening costs, which previously would have been expensed over the first twelve months of store operation, to be expensed in the first quarter as new locations were opened. In addition, severe weather in the eastern part of the country in January adversely affected both our manufacturing and retail operations. "While our Company's overall financial results for the quarter were on plan, the adverse winter weather prevented us from exceeding internal expectations," said Gerald M. Birnbach, Chairman and Chief Executive Officer. The Rowe Companies is a synergistic collection of home furnishings specialty manufacturing and retail businesses -- Rowe Furniture, Inc., The Mitchell Gold Company, The Wexford Collection, Inc., Home Elements, Inc. and Storehouse, Inc. For more information log on to http://www.therowecompanies.com.