ECRU, MS - American Furniture Manufacturing lost $35.2 million in 2011 on net sales of $105.3 million, reports Compass Diversified Holdings, the investment firm that acquired the mass market residential furniture maker in August 2007. Sales fell 23 percent from 2010.
American Furniture Manufacturing, which sells to low-priced retailers like Value City, has been writing down assets, and took an obsolescence charge on $1.7 million in furniture inventory during 2011. Write downs to good will, other intangible assets and property and equipment totaled $27.8 million in 2011, and $38.8 million in 2010.
The company-owned trucking division, with 38 cabs, will be sold this year, says Compass, which expects to stem the losses at the American Furniture. AFM subsidiary, American Furniture Trucking Div., Inc. operates a fleet of trucks to provide product delivery principally to the customers of AFM.
"Write downs were triggered by a significant deterioration in American Furniture’s operations and profitability caused by the unprecedented drop in the promotional furniture market and demand for its product," said Compass in its SEC filing, citing unemployment, decreased home purchases and consumer credit, and rising fuel costs as responsible for "the worst market for promotional furniture sales over the last two years than has been experienced over the last two decades."
The Compass Diversified Holdings 2011 annual report provides insight into the American Furniture Manufacturing's business strategy, upholstered furniture market straucture and share, and wood products manufacturing direct. At its height, the company exceeded $100 million in sales, according to Clearview Capital, which sold its 80 percent share of the business in 2004.
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