The Rowe Companies Announces Second Quarter Operating Results
MCLEAN, Va., June 23 /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 30, 2004.
Led by strong sales and gross margin in its Storehouse retail unit, net
earnings from continuing operations for the second quarter totaled $715,000, or
$0.05 per diluted share, compared to a loss of $(642,000) or $(0.05) per
diluted share, for the comparable 2003 period. Net shipments increased 11.6%
to $75.9 million, compared to $68.1 million for the comparable prior year
period. Gross profit increased to 36.1% of net shipments, compared to 35.2% of
net shipments for the second quarter of 2003. The 2004 second 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. Sales and administrative expenses for the quarter were $25.8 million,
compared to $24.4 million in the prior year quarter, principally due to higher
retail selling expenses associated with higher volume and increased store
occupancy expense from new store growth.
During the second quarter of last year, the Company completed the sale of a
subsidiary, the Mitchell Gold Co. Gain on the sale, as well as operating
results for such subsidiary during the period through the closing, added to net
earnings for the 2003 second quarter.
For the six months ended May 30, 2004, sales increased 11.3% overall to $146.7
million from $131.8 million in the prior year, led by an 18.6% increase in
retail sales. Gross profit improved to 35.8% of net shipments, from 35.1% for
the 2003 comparable period, driven by growth in retail sales as a percentage of
total sales, as well as improvements in retail sales margins. Selling and
administrative expenses increased from $47.1 million in the first half of 2003
to $50.1 million in 2004, principally due to higher retail selling expenses and
store occupancy costs associated with higher volume. Net earnings from
continuing operations improved to $864,000, or $0.06 per diluted share, in 2004
compared to a loss of $(1,454,000), or $(0.11) per diluted share in 2003. Net
earnings improved to $759,000, or $0.06 per diluted share, in 2004 from
$92,000, or $0.01 per diluted share. The 2003 results included discontinued
operations and gain on the Mitchell Gold sale.
"We are encouraged by the continuing strength in our retail sales and the
positive response to Rowe's new products at the April furniture market where we
had some important new customer wins," said Gerald M. Birnbach, Chairman and
President. "Same store sales growth at our Storehouse unit for the quarter was
8%. Total sales increased 13.8% in our retail unit, and 9.7% in our
manufacturing unit." 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 61 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 30, 2004 AND JUNE 1, 2003
UNAUDITED Three Months Ended Six Months Ended
May 30, June 1, May 30, June 1,
2004 2003 2004 2003
(in thousands - except per share amounts) Net shipments $75,922 $68,059 $146,668 $131,778 Cost of shipments 48,507 44,096 94,151 85,472 Gross profit 27,415 23,963 52,517 46,306 Selling and administrative
expenses 25,828 24,270 50,052 46,954
Retail restructuring and
other charges - 125 - 125 Operating income (loss) 1,587 (432) 2,465 (773) Interest expense (935) (1,036) (1,829) (2,372)
Other income 408 411 755 806 Earnings (loss) from continuing
operations before taxes 1,060 (1,057) 1,391 (2,339) Tax expense (benefit) 345 (415) 527 (885) Net earnings (loss) from
continuing operations 715 (642) 864 (1,454) Earnings (loss) from discontinued
operations, net of tax expense
(benefit) of $0, $165, $(65)
and $664, respectively - 269 (105) 1,084
Gain on sale of Mitchell Gold,
net of tax benefit of $1,473 - 462 - 462 Net earnings $ 715 $ 89 $ 759 $ 92 Net earnings (loss) from
continuing operations
per common share $ 0.05 $ (0.05) $ 0.07 $ (0.11) Net earnings per common share $ 0.05 $ 0.01 $ 0.06 $ 0.01 Weighted average common shares 13,188 13,167 13,182 13,166 Net earnings (loss) from
continuing operations per
common share assuming dilution $ 0.05 $ (0.05) $ 0.06 $ (0.11) Net earnings per common share
assuming dilution $ 0.05 $0.01 $ 0.06 $ 0.01 Weighted average common
shares and equivalents 13,527 13,188 13,501 13,200 THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS May 30, November 30,
2004 2003
(Unaudited) (Audited)
($ in thousands) ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,088 $ 3,708
Restricted cash 4,214 4,034
Accounts receivable, net 19,978 19,529
Notes receivable 25 100
Inventories 34,081 32,387
Deferred income tax asset 653 880
Prepaid expenses and other 2,263 2,711
Total current assets 65,302 63,349 PROPERTY AND EQUIPMENT, net 39,889 41,624
GOODWILL, net 14,224 14,224
OTHER NONCURRENT ASSETS 11,147 10,871 $ 130,562 $ 130,068 LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,014 $ 3,314
Accounts payable and accrued
liabilities 21,297 21,683
Income taxes payable 927 1,061
Customer deposits 13,812 13,512
Total current liabilities 38,050 39,570 LONG-TERM DEBT 35,175 34,312
DEFERRED LIABILITIES 4,242 4,269 Total liabilities 77,467 78,151 Total stockholders' equity 53,095 51,917
$ 130,562 $ 130,068
DATASOURCE: The Rowe Companies CONTACT: Gene Morphis, Chief Financial Officer of The Rowe Companies, +1-703-847-8670 Web site: http://www.therowecompanies.com/
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