MARTINSVILLE, VA - Hooker Furniture reported a 73% net income gain this month, totaling $3.9 million, as sales in its second quarter rose to $60 million - up over 9 percent.  
 
Hooker detailed its manufacturing sources in its 2015 annual report issued in April. The Martinsville, VA residential furniture maker says that if there were a disruption in its China furniture supply, it could  manufacture at least some furniture at its own factories. Here's an excerpt:
 
We have sourced products from foreign manufacturers since 1988.  Imported casegoods and upholstered furniture together accounted for approximately 71% of net sales in fiscal 2015, 72% of net sales in fiscal 2014 and 73% of net sales in fiscal 2013.  We import finished furniture in a variety of styles, materials and product lines.  We believe the best way to leverage our financial strength and differentiate our import business from the industry is through innovative and collaborative design, extensive product lines, compelling  products, value, consistent quality, excellent customer service, easy ordering and quick delivery through significant finished goods inventories, world-class global logistics and robust distribution systems.    
 
We import products primarily from China, Vietnam, Indonesia and Mexico.  Because of the large number and diverse nature of the foreign factories from which we source our imported products, we have significant flexibility in the placement of products in any particular factory or country.  Factories located in China and Vietnam are our primary resources for imported furniture.  In fiscal 2015, imported products sourced from China and Vietnam accounted for approximately 73% and 20%, respectively, of import purchases. The factory in China from which we directly source the most product, accounted for approximately 59% of our worldwide purchases of imported product.  
 
A disruption in our supply chain from this factory, or from China or Vietnam in general, could significantly compromise our ability to fill customer orders for products manufactured at that factory or in that country.  If such a disruption were to occur, we believe that we would have sufficient inventory currently on hand and in transit to our U.S. warehouses in Martinsville, Virginia to adequately meet demand for approximately four months, with up to an additional one and one quarter months available for immediate shipment from our primary Asian warehouse. Also, with the broad spectrum of product we offer, we believe that, in some cases, buyers could be offered similar products available from alternative sources.  
 
We believe we could, most likely at higher cost, source most of the products currently sourced in China or Vietnam from factories in other countries and could produce certain upholstered products domestically at our own factories. 
 
During the second quarter, Hooker said upholstery segment sales were up year-over-year mid-single digits at Bradington-Young and low double digits at the imported Hooker Upholstery line, but sale fell at Sam Moore. Shipments there were adversely affected by exiting some lower-margin sales programs and the conversion of Sam Moore's Enterprise Resource Planning System to a new platform.

 

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