MARTINSVILLE, VA - Hooker Furniture (Nasdaq:HOFT) said the start-up costs of two new divisions were primarily responsible for an 8.1% decline in net income for its fiscal year ended Feb. 2.
The furniture company reported net income of $7.9 million compared for FY 2014 compared to $8.6 million for FY 2013. The fall in profits occurred as the company grew consolidated net sales by 4.5% to $228.3 million for FY 2014.
Hooker Furniture said its bottom line was negatively impacted by about $1.5 million in pre-tax costs associated with starting up H Contract, which furnishes upscale senior living facilities, and Homeware, a direct-to-consumer e-commerce operation. The company sees these new division adding sales and profits to its portfolio in the future.
Hooker's core businesses, upholstery and casegoods, registered sales gain in FY 2014. The upholstery segment nearly doubled profitability after reporting operating losses dating back to the second quarter of FY 2009. Hooker's casegoods recorded a $1.3 million or 3.4% increase in gross profit to $39.3 million for FY 2014.
"We accomplished a great deal this year, growing sales across both segments while launching two new businesses," said Paul B. Toms Jr., chairman and chief executive officer. "We improved upholstery profitability and properly sized and aligned our inventories. We ended the year with a broad spectrum of collections and product lines performing well."
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With the overall economy looking more "resilient," Toms said, "We are fairly bullish (for the near and long-term). We are planning for growth by expanding our domestic upholstery capacity, warehousing and distribution in both the U.S. and Asia, and capital spending on information systems. With our strongest product line in years and the bright potential of our two new ventures targeting Millennials and Baby Boomers seeking senior living options, we are planning for a larger business going forward."
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