The Rowe Companies Announces Second Quarter Operating Results

Furniture World Magazine

The Rowe Companies (Amex: ROW), a leading furniture manufacturer and retailer, reported operating results for the second quarter ended June 1, 2003. Net earnings totaled $89 thousand, or $0.01 per diluted share, compared to a loss in the prior year period of $(1.4) million, or $(.10) per diluted share. Net shipments increased to $68.1 million, compared with $67.6 million for the same period last year. Gross profit margins decreased to 35.2% for the second quarter, down from 35.9% for the same period last year. The change in gross profit reflects lower wholesale volume and retail clearance sale activity. Included in earnings for the current quarter was $731 thousand, net of taxes, or $.06 per share, of earnings and benefit from the sale of the Mitchell Gold division, which was announced April 4, 2003. All prior periods have been restated to reflect Mitchell Gold's results as discontinued operations. Included in earnings for the second quarter of the prior year was a charge of $1.4 million, net of taxes, or $(.11) per share, for the combination of the former Home Elements division into Storehouse. For the six-month period, net earnings were $92 thousand, compared to a loss of $(667) thousand in the prior year. Shipments were $131.8 million, down 1% from prior year shipments of $133.3 million. Gross profit margins decreased to 35.1% from 35.7% in the prior year. Selling and administrative expenses at $47.1 million were $2.6 million lower than last year's $49.7 million, reflecting improved operating controls in the manufacturing segment partially offset by higher retail warehousing and delivery expense, and the restructuring charge in the prior year. "We were particularly pleased by the sales growth at our Storehouse retail business, which achieved increases of 13% same store sales and 15% all stores sales over the prior year second quarter. However, weakness continues in the incoming order rate for our Rowe Furniture manufacturing unit, reflecting trends in our industry and the economy in general," said Gerald M. Birnbach, Chairman and President, "and we continue to maintain strict cost control in all areas of the business". During the quarter, the Company completed its analysis of intangible assets as required under FAS 142, and concluded that no impairment of the asset value has occurred. The Rowe Companies is comprised of Rowe Furniture, Inc. a major manufacturer of quality upholstered furniture; and Storehouse, Inc., a 60-store retail furniture chain.