MARTINSVILLE, Va., June 5, 2014 (GLOBE NEWSWIRE) -- Hooker Furniture (Nasdaq:HOFT) today reported net sales of $61.4 million and net income of $2.8 million, or $0.26 per share, for its fiscal 2015 first quarter which began on February 3, 2014 and ended May 4, 2014.

Net income increased 31.9% compared to $2.1 million, or $0.20 per share, during last year's first quarter, driven primarily by higher sales in the casegoods segment.

Net sales for the first quarter increased $5.1 million, or 9.1%, compared to $56.3 million for the same period a year ago, primarily due to increased casegoods unit volume against essentially flat consolidated average selling prices. Casegoods and upholstery segment net sales increased 10.1% and 7.3%, respectively, compared to the fiscal 2014 first quarter.

"We're gratified to see casegoods growing again," said Paul B. Toms Jr., chairman and chief executive officer. Noting that the 31.2% or $1.0 million gain in consolidated operating profitability was driven by increased casegoods volume, he added, "While upholstery sales have grown faster than casegoods sales over the last few years, we're seeing indications of a recovery in casegoods sales and improved retailer ability to sell large-ticket bedroom, dining and home office furniture."

"Significant increases in container-direct shipments to retailers from Hooker's Asia warehouse program helped lead the way in the quarter's solid sales performance," Toms said. "We have strengthened our container-direct offering with a strong service position on a broader selection of best sellers. Retailers are also more comfortable committing to the larger container purchases when they don't have to buy as deep on any particular item," he said.

Gross profit increased in the quarter due to increased sales in both operating segments and lower casegoods segment warehouse and distribution expenses, both in absolute terms and as a percentage of net sales.

Selling and administrative expenses decreased as a percentage of net sales but increased in absolute terms, due partially to additional operating costs for the Company's new start-up businesses, H Contract and Homeware.

Hooker's new business ventures, H Contract and Homeware, reported operating losses for the quarter of $357,000. These new initiatives decreased net income by $233,000 after tax or $0.02 per share. H Contract, which offers upholstered seating and casegoods to upscale senior living facilities, is now operating near break-even versus operating losses a year ago. Homeware, an online-only, direct-to-consumer brand of furnishings and home décor, "continues to have operating losses, but is operating close to expectations as we continue to invest in marketing to build brand awareness," Toms said.

Cash, Inventory and Debt Levels

"Our inventory and cash positions were highlights of the quarter," Toms said. "Inventories are in target range, with a good composition of best sellers, and service levels remain high. We were able to increase cash by almost $8 million." The Company finished the fiscal 2015 first quarter with $31.7 million in cash and cash equivalents and no long-term debt. Additionally, $13.3 million was available on its $15.0 million revolving credit facility, net of $1.7 million reserved for standby letters of credit. Consolidated inventories stood at $43.6 million, down $5.4 million from the fiscal 2014 year-end.

Business Outlook

"Orders for the quarter were up over the prior-year period, but not quite as strong as we would have hoped this spring during the post-furniture market period," Toms said. "While we are positioned very well internally, we're concerned about the retail demand environment," he said, "and a little less bullish than earlier in the year due to a slower housing market, inconsistency at retail and an economy not as robust as expected. However, as we head into the summer months, we expect to capitalize on any improvements in external conditions with our good inventory position on best sellers, strong product line, progress in our upholstery segment and success with our new business initiatives."

Dividends

At its June 5, 2014 meeting, the Company's board of directors declared a quarterly cash dividend of $0.10 per share, payable on June 30, 2014 to shareholders of record at June 16, 2014.

 Ranked among the nation's top 10 largest publicly traded furniture sources based on 2013 shipments to U.S. retailers, Hooker Furniture Corporation is a residential wood, metal and upholstered furniture resource in its 90th year of business. Major casegoods product categories include home entertainment, home office, accent, dining, and bedroom furniture primarily in the upper-medium price points sold under the Hooker Furniture brand. Hooker's residential upholstered seating product lines include: Bradington-Young, a specialist in upscale motion and stationary leather furniture; Sam Moore Furniture, a specialist in upscale occasional chairs, settees, sofas and sectional seating with an emphasis on cover-to-frame customization; and Hooker Upholstery which focuses on imported leather upholstered furniture targeted at the upper-medium price-range. The Homeware product line offers direct-to-consumer, customer-assembled, modular upholstered and casegoods products designed for younger and more mobile furniture customers. The H Contract product line supplies upholstered seating and casegoods to upscale senior living facilities. Please visit our websites at hookerfurniture.com, bradington-young.com, sammoore.com, homeware.com, and hcontractfurniture.com.

Table I
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
 (Unaudited)
   
     
  Thirteen Weeks Ended
  May 4, May 5,
  2014 2013
     
Net sales $ 61,396 $ 56,295
     
Cost of sales  45,786  42,379
     
Gross profit  15,610  13,916
     
Selling and administrative expenses  11,367  10,682
     
Operating income  4,243  3,234
     
Other income (expense), net  46  (32)
     
Income before income taxes  4,289  3,202
     
Income tax expense  1,485  1,076
     
Net income $ 2,804 $ 2,126
     
Earnings per share:    
Basic $ 0.26 $ 0.20
Diluted $ 0.26 $ 0.20
     
Weighted average shares outstanding:  
Basic 10,724 10,717
Diluted 10,762 10,747
     
Cash dividends declared per share $ 0.10 $ 0.10
 
 
Table II
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
 (Unaudited)
 
  For the 
  Thirteen Weeks Ended
  May 4, May 5,
  2014 2013
     
Net Income  $ 2,804  $ 2,126
Other comprehensive income:    
Amortization of actuarial gain     
net of tax of $5 and $10, respectively  (8)  (17)
Adjustments to net periodic benefit cost  (8)  (17)
     
Comprehensive Income  $ 2,796  $ 2,109
 
 
Table III
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
As of May 4, February 2,
  2014 2014
  (unaudited)  
Assets
Current assets    
Cash and cash equivalents  $ 31,686  $ 23,882
Trade accounts receivable, less allowance for doubtful  accounts of $1,276 and $1,243 on each respective date   30,396  29,393
Inventories  43,587  49,016
Prepaid expenses and other current assets  2,397  2,413
Deferred taxes  1,246  1,664
Income tax recoverable  -  682
Total current assets  109,312  107,050
Property, plant and equipment, net  22,840  23,752
Cash surrender value of life insurance policies  19,202  18,891
Deferred taxes  4,121  4,051
Intangible assets  1,382  1,382
Other assets  1,703  355
Total non-current assets  49,248  48,431
Total assets  $ 158,560  $ 155,481
 
Liabilities and Shareholders' Equity
Current liabilities    
Trade accounts payable  $ 8,694  $ 7,077
Accrued salaries, wages and benefits  2,805  3,478
Income tax accrual  156  -
Accrued commissions  856  934
Customer deposits  433  659
Other accrued expenses  832  759
Total current liabilities  13,776  12,907
Deferred compensation  7,793  7,668
Income tax accrual  103  103
Other long-term liabilities  308  -
Total long-term liabilities  8,204  7,771
Total liabilities  21,980  20,678
     
Shareholders' equity    
Common stock, no par value, 20,000 shares authorized, 10,753 shares issued and outstanding on each date   17,641  17,585
Retained earnings   118,849  117,120
Accumulated other comprehensive income  90  98
Total shareholders' equity  136,580  134,803
Total liabilities and shareholders' equity  $ 158,560  $ 155,481
 
 
Table IV
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
     
  Thirteen Weeks Ended
  May 4, May 5,
  2014 2013
Operating Activities:    
Net income  $ 2,804  $ 2,126
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  613  584
Gain on disposal of assets  (34)  (8)
Deferred income tax expense (benefit)   404  (5)
Noncash restricted stock and performance awards  55  229
Provision for doubtful accounts  125 75
Changes in assets and liabilities:    
Trade accounts receivable  (1,129)  1,762
Inventories  5,429  3,366
Income tax recoverable  682  - 
Gain on life insurance policies  (126)  (135)
Prepaid expenses and other current assets  237  832
Trade accounts payable  1,616  (2,876)
Accrued salaries, wages, and benefits  (673)  (712)
Accrued income taxes  156  (1,034)
Accrued commissions   (78)  (267)
Customer deposits  (226)  - 
Other accrued expenses   77  11
Deferred compensation  63  45
Other long-term liabilities  6  - 
Net cash provided by operating activities   $ 10,001  $ 3,993
     
Investing Activities:    
Purchases of property and equipment  (1,008)  (880)
Proceeds received on notes receivable  11  14
Proceeds from sale of property and equipment  65  8
Premiums paid on life insurance policies  (190)  (190)
Proceeds received on life insurance policies  -   516
Net cash used in investing activities   (1,122)  (532)
     
Financing Activities:    
Cash dividends paid  (1,075)  (1,075)
Net cash used in financing activities   (1,075)  (1,075)
     
Net increase in cash and cash equivalents  7,804  2,386
Cash and cash equivalents - beginning of year  23,882  26,342
Cash and cash equivalents - end of quarter  $ 31,686  $ 28,728
     
Supplemental schedule of cash flows information:    
Income taxes paid, net  $ (294)  $ (2,115)

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