The Rowe Companies Announces Second Quarter Operating Results
MCLEAN, Va., June 21 /PRNewswire-FirstCall/ -- The Rowe Companies (AMEX:ROW),
a leading furniture manufacturer and home furnishings retailer, today reported
operating results for the second quarter ended May 29, 2005.
Net shipments for the quarter increased 5.8% to $79.9 million, compared to
$75.6 million for the comparable prior year period. Gross profit declined to
30.3% of net shipments, compared to 35.8% of net shipments for the second
quarter of 2004, as manufacturing productivity continued to be below historical
levels as well as increased accruals for returns, allowances and service costs
due to order entry errors, shipping and invoicing errors, late deliveries and
other associated issues. Selling and administrative expenses for the quarter
were $27.6 million, compared to $25.4 million in the prior year quarter,
principally due to higher retail selling expenses associated with increased
revenue and higher store occupancy expense from new store growth. Interest
expense and other income, net, increased from net expense of $537,000 in 2004
to $628,000 in 2005, principally due to lower rental income in 2005. Net loss
from continuing operations were $(2.6) million or $(0.19) per share, compared
to net earnings in the prior year period of $.7 million or $0.05 per share.
The prior year quarter included an after-tax, non-cash charge of $(148,000) or
$(0.01) per share to complete the depreciation of certain legacy systems being
replaced by the Company's new ERP system.
For the six months ended May 29, 2005, net shipments were $145.4 million, a
decrease of $(.6) million or (.4)% from the prior year amount of $146.0
million. Gross profit declined to 30.6% of net shipments, from 35.5% for the
2004 comparable period, also as a result of reduced manufacturing productivity
and increased accruals for returns and service-related costs. Selling and
administrative expenses increased from $49.3 million in the first half of 2004
to $52.7 million in 2005, principally due to higher retail selling expenses and
store occupancy costs associated with higher volume and five new stores. Interest expense and other income, net, decreased from net expense of
$1,073,000 in 2004 to $361,000 in 2005, principally due to a $680,000 gain in
2005 from the settlement of litigation. Net loss from continuing operations
declined to $(5.5) million, or $(0.41) per diluted share, in 2005 compared to
net earnings of $.9 million, or $0.07 per diluted share in 2004. Net loss,
including a gain on the sale of investment property recorded in the first
fiscal quarter, was $(2.7) million or $(0.20) per diluted share in 2005
compared to net earnings of $800,000, or $0.06 per diluted share in 2004.
"Both Rowe Furniture and Storehouse recorded positive revenue results this
quarter, with manufacturing shipments net of intercompany sales increasing 4%,
and Storehouse sales up 7.8% for all stores and 1.9% for same store sales,"
reported Gerald M. Birnbach, Chairman and President. "While we made about
thirty percent more pieces of furniture this quarter than the first quarter,
our manufacturing productivity continues to be below our goals, and is the
number one focus for our Rowe Furniture manufacturing operations. The higher
production levels allowed us to begin reducing our manufacturing backlog, which
peaked during the quarter, and ended at about the same level as the first
quarter. The backlog has been reduced further since the end of the second
quarter, and our plan is to reduce it further during the rest of the third
quarter," Mr. Birnbach concluded. "There were seven or 12% more production
days in the second quarter than the first." The Rowe Companies operates two subsidiaries in the home furnishings industry:
Rowe Furniture, Inc., a major manufacturer of quality upholstered furniture
serving the middle and upper middle market throughout the U.S.; and Storehouse,
Inc., a multi-channel, lifestyle home furnishings business including 65 retail
home furnishings stores. Storehouse makes good design accessible by selling an
edited assortment of casual, contemporary home furnishings through its stores
located in the Southeast, Southwest and Mid- Atlantic markets, its catalog and
over the Internet.
Statements in this press release concerning Rowe's business outlook or future
economic performance, anticipated profitability, revenues, expenses or other
financial items; together with other statements that are not historical facts,
are "forward-looking statements" as that term is defined under Federal
Securities Laws. "Forward-looking statements" are subject to risks,
uncertainties and other factors which could cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties and
factors include, but are not limited to, industry cyclicality, fluctuations in
customer demand and order patterns, the seasonal nature of the business,
changes in pricing, and general economic conditions, as well as other risks
detailed in Rowe's filings with the Securities and Exchange Commission.
THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MAY 29, 2005 AND MAY 30, 2004
UNAUDITED Three Months Ended Six Months Ended
May 29, May 30, May 29, May 30,
2005 2004 2005 2004 (in thousands, except per share amounts)
Net shipments $79,915 $75,561 $145,426 $145,983
Cost of shipments 55,732 48,507 100,972 94,151
Gross profit 24,183 27,054 44,454 51,832
Selling and administrative expenses 27,600 25,447 52,728 49,305
Operating income (loss) (3,417) 1,607 (8,274) 2,527
Interest expense (707) (752) (1,229) (1,463)
Other income, net 79 215 868 390
Earnings (loss) from continuing
operations before taxes (4,045) 1,070 (8,635) 1,454
Tax expense (benefit) (1,493) 347 (3,181) 548 Net earnings (loss) from continuing
operations (2,552) 723 (5,454) 906 Discontinued operations:
Loss on contingencies associated
with operations discontinued in
prior years, net of tax benefit
of $65 - - - (105)
Gain (loss) from discontinued real
estate operations, net of tax
expense (benefit) of $7, $4, $51
and $0, respectively 11 6 81 (1)
Gain on disposal of Sylmar
investment property,
net of tax expense of $1,680 - - 2,683 - Net earnings (loss) $(2,541) $729 $(2,690) $800
Net earnings (loss) from continuing
operations per common share $(0.19) $0.05 $(0.41) $0.07 Net earnings (loss) per common share $(0.19) $0.06 $(0.20) $0.06 Weighted average common shares 13,293 13,188 13,283 13,182 Net earnings (loss) from continuing
operations per common
share assuming dilution $(0.19) $0.05 $(0.41) $0.07 Net earnings (loss) per common
share assuming dilution $(0.19) $0.05 $(0.20) $0.06 Weighted average common shares
and equivalents 13,293 13,527 13,283 13,501
DATASOURCE: The Rowe Companies CONTACT: Gene S. Morphis, Chief Financial Officer of The Rowe Companies, +1-703-847-8670 Web site: http://www.therowecompanies.com/
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