HIGH POINT, N.C. - Stanley Furniture Company, Inc. has reported sales and operating results for the second quarter which ended July 1, 2017.
Compared to 2017's first quarter, the second quarter saw an increase of 3.8 percent in net sales with $11.6 million. The gross profit margins increased to 23.5 percent from 20 percent and the company ended the quarter with $5.2 million in cash, including $631,000 in restricted cash.
Gross margins improved both sequentially and over prior year due to high discounting in both 2017's first quarter and 2016's second quarter. Improved margins in the second quarter also resulted from higher sales allowing for the absorption of fixed overhead.
Compared to 2016's second quarter, 2017's second quarter decreased 3.6 percent in net sales with the prior year reporting $12.1 million. Selling, general, and administrative expenses in 2017's second quarter were $2.7 million, or 23.6 percent of net sales, compared to the prior year's $3.5 million, or 29.1 percent of net sales.
Selling, general, and administrative costs for the period decreased to historical lows despite $65,000 in the second quarter and $93,000 year-to-date in legal and professional fees associated mostly with the strategic review process with Stephens Inc. While the Board and management are focused on implementing the company’s business plan, the Board remains committed to maximizing long-term value for the company’s stockholders and will continue to evaluate strategic alternatives.
Compared to 2016's year-to-date second quarter, 2017's year-to-date second quarter saw a decrease of 3.9 percent in net sales with $22.8 million. The second quarter was the second consecutive quarter of growth for the company, but revenues continue to remain below target due to sourcing issues.
However, indicating that past sourcing issues are being alleviated, inventories increased sequentially by $770,000 due to production that is in transit, but not yet received in the company’s domestic warehouse where it can then service order backlog.
The company's net income for the second quarter was $14,000 versus a sequential loss of $416,000 and a prior year second quarter loss of $1.4 million. The company says lower discounting and cost reductions were the major factors toward improved results.
“The business is now essentially break-even despite missing desired sales growth,” said Glenn Prillaman, president and CEO. “We remain debt free and we have sufficient cash to serve customers through inventory investments, which should result in continued sequential revenue growth.”
The company has remained debt free with $5.2 million in cash at the end of the period, up $288,000 from year-end. Working capital decreased $794,000 as inventories decreased $2.0 million since year-end, partially offset by an increase in accounts receivables of $1.1 million. Payables were flat with previous year-end, yet increased $1.8 million sequentially due to a high amount of production shipping late in the quarter from overseas vendors.
“Newer, more marketable product introductions developed throughout the past two years, but not previously seen by the retail consumer, began to sell late in the quarter,” said Prillaman. “We and our wholesale customers are pleased with initial results, and we expect to slowly grow revenues and demonstrate slight profitability over the remainder of 2017 as inventory availability improves.”
Established in 1924, Stanley Furniture is a design, marketing, and overseas sourcing resource in the wood residential market. The company offers a diversified product line supported by an overseas sourcing model and markets its brands through the wholesale trade’s network of brick-and-mortar furniture retailers, online retailers, and interior designers worldwide, as well as through direct sales to the consumer online.
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