Furniture Brands International (FBN) announced financial results for the fourth quarter and full year ended December 29, 2012.
- Net sales of $264.0 million, an increase of 3.3% as compared to the fourth quarter of 2011
- Gross margin of 20.7% as compared to 23.0% in the fourth quarter of 2011
- SG&A of $70.9 million as compared to $71.8 million in the fourth quarter of 2011
Mr. Ralph Scozzafava, Chairman and CEO stated, "Fourth quarter sales increased 3%, however much work remains to be done in order to make progress driving profitable sales growth. In 2012 we ramped up production in our Mexico and Indonesia facilities and started our Broyhill casegoods mixing program, all of which will enable us to reduce our costs and participate more in the high-volume, lower-price point segments of the market. We also increased our mix of transitional and updated product to broaden our style appeal, and we improved service to our dealers with our Broyhill casegoods mixing program and Lane and Broyhill quickship programs."
Mr. Scozzafava added, "Looking forward, our focus in 2013 continues to be on generating free cash flow, and to that end we will intensify our efforts to drive profitable sales growth through product, pricing and dealer service initiatives. We will also remain focused on manufacturing efficiencies as well as on reducing costs and improving working capital."
For the fourth quarter ended December 29, 2012:
Net sales were $264.0 million compared to $255.5 million for the three months ended December 31, 2011, an increase of $8.5 million, or 3.3%. Fourth quarter 2012 retail sales at the 48 Thomasville company-owned stores totaled $27.5 million compared with sales of $26.0 million at 48 Thomasville company-owned stores in the prior year period. Fourth quarter same-store sales at the 45 Thomasville stores that the company has owned for more than 15 months were up 4.8% compared to the fourth quarter of 2011 when same-store sales decreased by 4.0%.
Gross profit was $54.6 million and included $1.0 million in charges related to cost reduction activities, resulting in a gross margin of 20.7%. Gross profit for the fourth quarter of 2011 was $58.8 million and gross margin was 23.0%. Excluding these charges, the decrease in fourth quarter 2012 gross margin when compared to the year ago period was primarily due to increased discounts, including the additional clearance of older inventory and product that is being replaced.
Selling, general and administrative expenses (SG&A) for the fourth quarter of 2012 totaled $70.9 million and included $2.8 million in charges related to cost reduction activities. SG&A expenses for the fourth quarter of 2011 totaled $71.8 million. Excluding these charges, the decrease in SG&A was primarily due to lower expenses resulting from prior cost reduction activities and favorable legal settlements.
The Company had an operating loss of $23.9 million as compared to an operating loss of $10.2 million in the prior year quarter. The current quarter operating loss includes $11.3 million of charges, which consist of the aforementioned $3.8 million of cost reduction charges as well as $7.5 of impairment charges, comprised of $6.1 million related to assets held for sale and $1.4 million related to trade names. The prior year operating loss includes a $3.0 million gain on idle facility sales partially offset by $0.2 million in impairment related to assets held for sale, both of which are recorded in Impairments of assets, net of recoveries.
Interest expense was $2.3 million as compared to $1.0 million in the prior year period. The increase in interest expense was primarily due to the increased interest rate on higher debt and closing cost amortization related to the previously announced debt refinancing in September 2012.
Net loss for the fourth quarter of 2012 was $22.9 million, or $0.41 per diluted share, which includes a $10.8 million after-tax charge from the aforementioned items, partially offset by the reversal of a $2.4 million valuation allowance on our tax assets, which was recorded in Income tax benefit. This compares to a net loss of $9.5 million, or $0.17 per diluted share, in the fourth quarter of 2011, which includes a $2.8 million after-tax gain from the aforementioned items.
For the year ended December 29, 2012:
Total revenue for the year decreased 3.2% to $1.07 billion from $1.11 billion in 2011. Thomasville sales at the 48 company-owned Thomasville stores were $105.5 million compared to $108.5 million in 2011 and comparable store sales for the 45 stores the company has owned for more than 15 months decreased 2.1% compared to 2011 when same-store sales increased by 6.3%.
Gross profit for the year was $244.3 million, or 22.8% of sales, compared to $267.3 million, or 24.1% of sales, in 2011. Gross profit for 2012 includes $1.9 million in charges from inventory write-downs related to product rationalization and $1.0 million in cost reduction charges. Gross profit for 2011 includes $2.8 million in charges associated with cost reduction initiatives.
SG&A for the year was $279.7 million compared to $305.5 million in 2011. SG&A for 2012 includes $3.8 million of cost reduction charges and $3.4 million of environmental charges, while 2011 includes $4.7 million in charges related to cost reduction activities and $0.5 million of environmental charges.
Operating loss for 2012 was $44.1 million and includes the aforementioned $10.1 million of charges as well as $8.7 million of impairment charges. Operating loss for 2011 was $44.5 million and includes the aforementioned $8.0 million of charges as well as $6.4 million of impairment charges.
Net loss was $47.3 million, or $0.86 per diluted share, which includes an $18.3 million after-tax charge from the aforementioned items, partially offset by the reversal of a $2.4 million valuation allowance on our tax assets, compared to a net loss of $43.8 million, or $0.80 per diluted share, in 2011, which includes an $10.9 million after-tax charge from the aforementioned items.
The Company ended the year with a cash balance of $11.9 million and a debt balance of $105.0 million.
About Furniture Brands:
Furniture Brands International, Inc. (FBN) is a world leader in designing, manufacturing, sourcing and retailing home furnishings. Furniture Brands markets products through a wide range of channels, including its own Thomasville retail stores and through interior designers, multi-line, independent retailers and mass merchant stores. Furniture Brands' portfolio includes some of the best known and most respected brands in the furniture industry, including Thomasville, Broyhill, Lane, Drexel Heritage, Henredon, Pearson, Hickory Chair, Lane Venture, Maitland-Smith, La Barge, and Creative Interiors. To learn more about the company, visit: furniturebrands.com
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