PRESS RELEASE
For more information, contact:
Paul B. Toms Jr.,
Chairman & Chief Executive Officer
Phone: (276) 632-2133,
E. Larry Ryder,
Executive Vice President & Chief Financial Officer
Phone: (276) 632-2133, or
Kim D. Shaver,
Director of Communications
Phone: (336) 454-7088
For immediate release: October 1, 2001
Hooker Furniture Announces Third Quarter Results, Stock Repurchase Program
Martinsville, Va.: Hooker Furniture today reported net sales of $50.6 million
for its third quarter ended August 31, 2001, a decrease of 17.8% from the same
period a year ago. Year to date, 2001 net sales are off 12.2% to $162.1 million
compared to the same nine-month period a year ago, a reflection of the industry-
wide economic downturn since late 2000.
Gross profit margin for the 2001 third-quarter period decreased to 21.3%
compared to 26.7% in the 2000 period. For the 2001 nine-month period, gross
profit margin decreased to 22.8% compared to 26.0% in the 2000 period. Selling
and administrative expenses decreased $1.1 million to $9.2 million for the most
recent quarter, and decreased $611,000 to $28.9 million for the most recent
nine-month period of 2001. However, as a percentage of net sales, selling and
administrative expenses increased to 18.3% and 17.9% in the three and nine-month
2001 periods from 16.8% and 16.0% in the 2000 periods, respectively. While
production costs and selling and administrative expenses both decreased, these
reductions in costs were not enough to offset the negative impact of lower
volume on operating margins. Additionally, inventories were reduced by $2.4
million during the 2001 third quarter.
A one-time restructuring charge and a special common stock repurchase by the
Company's Employee Stock Ownership Plan (ESOP) contributed to a decline in net
income for the third quarter to $167,000, compared with $4.1 million in the 2000
third quarter. The one-time charge and stock repurchase were related to the
previously announced workforce reduction of about 100 Martinsville employees on
August 30. The one-time restructuring charge consisted of $881,000 in severance
and early retirement benefits paid to terminated employees. In addition, the
ESOP repurchased $321,000 in common stock from these terminated employees. These
combined, non-recurring charges totaled $1.2 million pretax.
Net income for the nine-month period of 2001 declined to $4 million from $11.7
million in the year-ago period.
Also as previously announced, all of Hooker's manufacturing employees in
Virginia and North Carolina returned to 40-hours-per-week work schedules on
September 10 after working 35-hour weeks since January 2001. As the Company's
six manufacturing facilities return to full schedules, the Company expects
increased operating efficiencies.
Earnings per share were $0.03 and $0.68 for the three and nine-month periods
of 2001, compared with $0.54 and $1.54 in the prior year periods, respectively.
The restructuring charge and the repurchase by the ESOP reduced earnings per
share by $0.13 in each of the three and nine-month periods of 2001.
Looking toward the fourth quarter, Chairman and Chief Executive Officer Paul B.
Toms Jr. observed, "It's very tough to predict where business is headed short-
term. We are in uncharted waters due to the tragic terrorist attacks on our
nation and the resulting decline in consumer confidence, unstable financial
markets and the prospect of war looming. However, we believe we are well-
positioned to ride out all of these events."
Toms added, "We saw business strengthen during August, culminating in a very
strong Labor Day weekend sales period, with sales remaining strong until the
attacks September 11. For 10 days after the attacks, business was down sharply
as peoples' minds were rightly focused elsewhere. However, beginning the weekend
of September 21, we've seen incoming orders begin to increase again."
Hooker's long-term strategy remains intact. "We will stay the course we've set,
positioning ourselves as a vital domestic case goods producer by offering
impeccable quality and quick delivery and by tying ourselves more closely with
our customers through sales training and other programs," he said.
At its September 2001 meeting, the Board of Directors authorized the repurchase
by the Company of an additional $2.2 million of the Company's common stock. The
Company is now authorized to repurchase up to $3.0 million of its common stock.
These repurchases may be made from time to time in the open market, or in
privately negotiated transactions, at prevailing market prices that the Company
deems appropriate. Toms stated, "We've purchased 253,000 shares since June at a
total cost of $2.2 million, or $8.52 per share. Our Board continues to feel
that repurchasing our common stock at these prices enhances stockholder value
going forward. Our cash position remains strong enabling us to expand the stock
repurchase program. In addition we have been able to reduce long-term debt by
$1.4 million since the end of last year."
Also at the September meeting, the Board declared a quarterly dividend of $.09
per share, payable on November 30, 2001 to shareholders of record November 15,
2001.
Ranked among the nation's top 20 furniture manufacturers in sales, Hooker
Furniture is a 77-year-old producer and importer of wall and entertainment
systems, home office, occasional and bedroom furniture with approximately 1,800
employee-owners and year 2000 sales of $250 million. The Company has six
manufacturing facilities and a distribution center in Virginia and North
Carolina.
Plant locations include Pleasant Garden, Kernersville and Maiden, NC and
Martinsville and Roanoke, VA.
Certain statements made in this report are not based on historical facts, but
are forward-looking statements. These statements can be identified by the use
of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy. These statements
reflect the Company's reasonable judgment with respect to future events and are
subject to risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Such risks and
uncertainties include the cyclical nature of the furniture industry,
fluctuations in the price of lumber which is the most significant raw material
used by the Company, competition in the furniture industry, capital costs and
general economic or business conditions, either nationally or internationally.
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