HIGH POINT, NC - Stanley Furniture (Nasdaq-NGS:STLY) enterprise software roll out took a bite out of earnings, impeding the sales process for the past two quarters. With the implementation issues behind it, Stanley is preparing to bring new lines at the Fall High Point furniture show this week.
Net sales for third quarter were $24 million, essentially flat, and Stanley Furniture posted a loss of $2.47 million, up from $1.9 million loss a year ago.
Technology Helps Stanley Furniture's Young America Line Grow - See more at: http://www.woodworkingnetwork.com/production-woodworking/industrial-wood...
Celebrated for its aggressive investment in retooling and inshoring production from China to the U.S., Stanley Furniture has been reinventing its manufacturing process. In the first nine months of this new operating systems and capital spending in the Robbinsville, NC plant have consumed $5.1 million.
"Sales have stabilized, and we should begin growing in the near term," said CEO Glenn Charles Prillaman during a call-in. "The difficulties we experienced in Q2, after the launch of our new operating system in May continued in Q3, and that did negatively affect sales, but it greatly dissipated as the quarter progressed.
"With refinements to our operating system not yet made at the beginning of the quarter, hold times, e-mail responses and our ability to speak with credibility regarding the information surrounding the sale of our products were issues, yet as we exited the period, customer satisfaction has greatly improved," Prillaman said.
Lumber prices also hurt margins, as did a government required salary increase in Indonesia, where Stanley brand furniture is produced.
"We took pricing action to offset that inflation," said CFO Micah Goldstein during the earnings call. But the timing of that price increase was pushed back, "because we delayed the launch of our operating system. And that's why we really took a little bit more of a margin hit on the Stanley side than we had originally anticipated."
Lumber prices hurt the Young America children and infant furniture business.
"The inflation that we're seeing right now is mostly related to lumber," Golstein said. "Lumber prices fluctuate throughout the year. This year has been a lot wetter than normal, we had a really wet summer, and so we've had to go further from our factory to procure lumber. And so that increases transportation costs."
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