MCLEAN, Va., Sept. 21 /PRNewswire-FirstCall/ -- The Rowe Companies
(AMEX:ROW), a leading furniture manufacturer and home furnishings
retailer, today reported operating results for its third fiscal
quarter ended August 28, 2005. Net shipments for the quarter
increased 4.4% to $79.5 million, compared to $76.1 million for the
comparable prior year period. Gross profit declined to 32.6% of net
shipments, compared to 34.9% of net shipments for the third quarter
of 2004, as manufacturing productivity continued below historical
levels while the Company experienced price increases in a number of
raw materials. Selling and administrative expenses for the quarter
were $27.9 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 and other income, net,
increased from net expense of $526,000 in 2004 to $608,000 in 2005,
principally due to lower rental income in 2005. Net loss from
continuing operations was $(1.6) million or $(0.12) per share,
compared to net earnings in the prior year period of $.4 million or
$0.03 per share. During the quarter, the Company completed the
sales of its Christiansburg, VA and Jessup, MD, investment real
estate properties, which were unassociated with the operations of
the Company, for an after-tax gain of $1.7 million, or $0.13 per
share, thereby completing the Company's planned divestiture of
unrelated investment property. Net earnings for the third quarter
were $123,000 or $0.01 per share, compared to earnings of $490,000
or $0.04 per share in the same period of the prior year. The New
Orleans store operated by the Company's Storehouse division was
seriously damaged by Hurricane Katrina. For fiscal year 2004, net
shipments for this store were approximately $1.9 million, and
projected shipments for this fiscal year were approximately $2.2
million. The Company believes that insurance will cover the loss of
inventory and store fixtures, and has estimated the insurance
proceeds from its write-off of assets. This resulted in a gain of
$101,000 or $0.01 per share. For the nine months ended August 28,
2005, net shipments were $224.9 million, an increase of $2.8
million or 1.2% from the prior year amount of $222.1 million. Gross
profit declined to 31.3% of net shipments, from 35.3% for the 2004
comparable period, as result of reduced manufacturing productivity,
higher raw material costs and unfavorable transportation costs.
Selling and administrative expenses increased from $74.7 million in
the third quarter of 2004 to $80.6 million in 2005, principally due
to higher retail selling expenses and store occupancy costs
associated with higher volume and six new stores. Interest and
other income, net, decreased from net expense of $1,599,000 in 2004
to $969,000 in 2005, principally due to a $680,000 gain in 2005
from the settlement of litigation. Net loss from continuing
operations declined to $(7.1) million, or $(0.53) per diluted
share, in 2005 compared to net earnings of $1.3 million, or $0.10
per diluted share in 2004. Net loss, including gains on the sale of
investment property recorded in the first and third quarters, was
$(2.6) million or $(0.19) per diluted share in 2005 compared to net
earnings of $1.3 million, or $0.10 per diluted share. "We were
pleased that Storehouse achieved a 3.6% same store sales increase,
and a 14.4% overall increase during the quarter in an environment
complicated by aggressive automobile discounting and rising
gasoline prices", stated Gerald M. Birnbach, Chairman and
President; "and our Rowe Furniture division did achieve some
improvement during the quarter but we remain below our targeted
levels. We continue to focus intensely on delivering a higher level
of productivity and improving our gross profit." 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 66 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. The Rowe Companies will
hold a conference call which will be webcast at
http://www.therowecompanies.com/ to discuss third quarter results
at 4:30 p.m. today. 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. (table
follows) THE ROWE COMPANIES AND WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS
ENDED AUGUST 28, 2005 AND AUGUST 29, 2004 UNAUDITED Three Months
Ended Nine Months Ended August 28, August 29, August 28, August 29,
2005 2004 2005 2004 (in thousands, except per share amounts) Net
shipments $79,466 $76,149 $224,892 $222,132 Cost of shipments
53,564 49,593 154,536 143,745 Gross profit 25,902 26,556 70,356
78,387 Selling and administrative expenses 27,870 25,380 80,598
74,684 Operating income (loss) (1,968) 1,176 (10,242) 3,703
Interest expense (862) (721) (2,091) (2,184) Other income, net 254
195 1,122 585 Earnings (loss) from continuing operations before
taxes (2,576) 650 (11,211) 2,104 Tax expense (benefit) (972) 219
(4,153) 767 Net earnings (loss) from continuing operations (1,604)
431 (7,058) 1,337 Discontinued operations: Loss on contingencies
associated with operations discontinued in prior years, net of tax
benefit of $65 - - - (105) Earnings (loss) from discontinued real
estate operations, net of tax expense (benefit) of $(8), $37, $43
and $37, respectively (13) 59 69 58 Gains on disposal of real
estate investment property, net of tax expense of $1,089 and
$2,769, respectively 1,740 - 4,423 - Net earnings (loss) $123 $490
$(2,566) $1,290 Net earnings (loss) from continuing operations per
common share $(0.12) $0.03 $(0.53) $0.10 Net earnings (loss) per
common share $0.01 $0.04 $(0.19) $0.10 Weighted average common
shares 13,292 13,201 13,286 13,188 Net earnings (loss) from
continuing operations per common share assuming dilution $(0.12)
$0.03 $(0.53) $0.10 Net earnings (loss) per common share assuming
dilution $0.01 $0.04 $(0.19) $0.10 Weighted average common shares
and equivalents 13,292 13,591 13,286 13,531 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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