LADD's net earnings for the second quarter of fiscal 1998 jumped 74 percent compared to the year-earlier quarter, on an 8 percent sales increase. For the fiscal second quarter, which ended July 4, 1998, LADD earned $2.9 million, or $0.35 per share (diluted), as compared to $1.7 million, or $0.21 per share (diluted) in last year's second quarter. Second quarter net sales totaled $135.5 million this year, compared to $125.6 million in fiscal 1997.
For the first six months, net sales rose 14 percent, to $282.9 million this year, from $248.9 million in 1997. Profits for this year's first six months were substantially ahead of the comparable 1997 level, as net earnings totaled $5.2 million, or $0.65 per share (diluted), for the six months ended July 4, 1998 - compared with $2.2 million, or $0.28 per share (diluted).
During this year's second quarter, LADD's gross profit margin reached the 20% level for the first time in six years, and it was this meaningful margin progress which enabled second quarter net earnings to increase substantially faster than our sales growth during the period.
Total residential casegoods (wood furniture) sales increased 9 percent during the second quarter, compared to the year-earlier period, while residential upholstery sales edged up 2 percent, and contract furniture volume gained 11 percent. Through the first six months of fiscal 1998, residential casegoods sales were up 13 percent, while residential upholstery volume grew 5 percent and contract sales rose 24 percent. While our contract furniture business remains strong, we expect the quarterly sales growth rate to decelerate on a year-over-year comparative basis during the last two quarters of 1998, because of the extremely strong growth rates that business has experienced over the last several years.
According to LADD, flows in the residential furniture business have been somewhat erratic so far in 1998. A very strong order pattern early in the year was followed by a pronounced slowdown during the second quarter, when their overall orders were roughly flat compared to the year-earlier period. Following this second quarter softness, another strong surge in incoming orders developed during the month of July.
Their mid-year 1998 backlogs were above year-earlier levels in all three business groups - residential casegoods, residential upholstery and contract sales - and they are looking for third quarter shipments of their new residential casegoods and upholstery products introduced earlier this year at the April International Home Furnishings Market. They expect the industry to continue growing over the remainder of 1998 and into 1999, and feel strongly that LADD is well positioned to participate fully in this trend.
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