FBI sales fall 17.6%
By Jay McIntosh -- Furniture Today, 11/10/2008 12:00:00 AM
ST. LOUIS — Furniture Brands International reported a 17.6% sales decline and wider loss of $41.7 million in the third quarter as it took restructuring charges it said were aimed at positioning the company to weather the weak sales climate.
Furniture Brands also slashed its sales and earnings estimates for the full year, saying it now expects a loss of $2.25 to $2.45 per share. In July, it was forecasting a loss of 49 to 55 cents per share.
To conserve cash, FBI’s board also suspended the company’s quarterly dividend of 4 cents per share, which should save $8 million a year.
Sales of $412.8 million in the third quarter were down from $500.8 million in the same period last year. Both quarters exclude the results of Hickory Business Furniture, the contract furniture unit the company sold earlier this year.
Results for the quarter just ended included $48.4 million in pretax charges and temporary costs, most of which were non-cash, for moves including closing stores and factories, taking factory downtime and writing down the value of inventory — actions that mainly stemmed from the weakened economy, the company said. In the third quarter of 2007, such charges came to $24 million.
“The management team is continuing to focus on Furniture Brands’ financial structure. We are working to ensure that the company will emerge from this period of economic instability as a stronger competitor,” said Ralph Scozzafava, chairman and CEO.
During a conference call with securities analysts, Scozzafava said the company’s short-term focus will continue to be on conserving cash. He said corporate expenses will be reduced throughout the supply chain and will include additional job cuts.
He declined to be specific about the number of jobs that will be eliminated, but said some will be achieved through the consolidation of duplicate functions within various FBI brands.
He also told analysts that the five company-owned Lane and Broyhill dedicated stores will be closed by the end of the year. Those closings (four Lane and one Broyhill) will leave FBI with 53 company-operated stores — 42 Thomasville, 10 Drexel Heritage and one Henredon, Scozzafava told analysts.
“We believe that Lane and Broyhill are far better off … (as) strong brands on the retail floors of our multibrand furniture retailers,” he said.
FBI said it expects to take another $56 million to $72 million in restructuring charges in the fourth quarter.
The company said it had cash and equivalents of $110 million as of Sept. 30 and expects to end the year with cash of $80 million to $95 million.
For the first nine months of 2008, Furniture Brands reported a loss of $32.1 million or $1.27 per share from continuing operations on sales of $1.3 billion.
Business Editor Larry Thomas contributed to this story.
| Furniture Brands International | |||
|---|---|---|---|
| Owns Broyhill, Drexel Heritage, Henredon, Lane, Maitland-Smith and Thomasville | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/30 | 2008 | 2007 | Change |
| (a) Includes earnings from discontinued operations of $1.5 million in the 2007 quarter, $29.9 million in the 2008 nine months and $4.4 million in the 2007 nine months. Also includes income tax benefit of $21.9 million in the 2008 quarter, $8 million in the 2007 quarter, $27.9 million in the 2008 nine months and $4 million in the 2007 nine months. |
|||
| Sales | $412,753,000 | $500,840,000 | (17.6%) |
| Operating income | (62,087,000) | (4,161,000) | — |
| Net income (a) | (41,721,000) | (13,656,000) | — |
| Earnings per share | (0.86) | (0.28) | — |
| 9 months ended 9/30 | 2008 | 2007 | Change |
| Sales | $1,339,823,000 | $1,577,270,000 | (15.1%) |
| Operating income | (84,678,000) | 10,385,000 | — |
| Net income (a) | (32,049,000) | (4,971,000) | — |
| Earnings per share | (0.66) | (0.10) | — |
