St. Louis - Furniture Brands International (NYSE: FBN) today announced financial results for the fourth quarter and full year ended December 31, 2011.

  • Net sales of $1.11 billion for 2011, a decline of 4.5% compared to net sales of $1.16 billion in 2010
  • Gross profit of $267 million and gross margin of 24.1% in 2011 as compared to $276 million in gross profit and 23.8% gross margin in 2010
  • Inventory at year end of $228 million, down 8.6% from 2010 and down 8.3% from the third quarter of 2011
  • Year-end cash balance of $25.4 million, up $4.2 million from the third quarter of 2011

 

Mr. Ralph Scozzafava, Chairman and CEO stated, “2011 has been a year defined by continued progress on the cost and efficiency fronts but importantly, it also was a year where we made key investments to strengthen our infrastructure and improve our competitiveness for the long term.”

“Looking to 2012, our priority as an organization is to drive profitable sales. The progress we have made to reduce our operating losses the last few years has been driven by actions taken to align our cost structure with our revenue base, improve the efficiency of our manufacturing operations and drive profitable sales. This year we will focus on delivering the right product at the right price to the right retailers. We expect to improve our operational performance and generate positive free cash flow as we continue to make progress on the path to profitability," Mr. Scozzafava concluded.

Net sales for the fourth quarter of 2011 were $255.5 million, a decline of 7.4% compared to net sales of $276.1 million in the fourth quarter of 2010. Fourth quarter 2011 retail sales at the 64 company-owned stores and showrooms totaled $34.6 million compared with retail sales of $38.8 million at 67 company owned stores and showrooms in the fourth quarter of 2010. Same-store sales at the 44 Thomasville stores that the company has owned for more than 15 months decreased 4% in the fourth quarter of 2011 following a 15% increase in the fourth quarter of 2010. For the full year of 2011, net sales were $1.11 billion, a decrease of 4.5% compared to $1.16 billion in 2010 net sales. Full year 2011 retail sales totaled $145.9 million as compared to $147.7 million in 2010. Same-store sales at the 48 Thomasville stores that the company has owned for more than 15 months increased 6.3% in 2011 following a 19% increase in 2010.

Gross profit for the fourth quarter of 2011 was $58.8 million and gross margin was 23% compared to $50.1 million in gross profit and 18.1% gross margin in the fourth quarter of 2010. The increase in fourth quarter 2011 gross margin was primarily due to lower expenses related to restructuring activities, compensation, benefits, and inventory charges partially offset by higher raw material costs. For the full year, gross profit was $267.3 million and gross margin was 24.1% as compared to $276.3 million in gross profit and 23.8% in gross margin for 2010. The increase in full year 2011 gross margin was primarily due to lower expenses related to restructuring activities, compensation, and benefits partially offset by higher raw material costs.

Selling, general and administrative expenses (SG&A) for the fourth quarter of 2011 totaled $69.0 million as compared to $94.5 million in the fourth quarter of 2010. This decrease was primarily due to lower expenses related to restructuring activities, compensation, benefits, non—working marketing and sales spend, and bad debt expense as well as higher gains on facility and asset sales. For the full year, SG&A totaled $302.9 million as compared to $320.2 million in 2010. The decrease in full year 2011 SG&A was primarily due to lower expenses related to restructuring activities, compensation, benefits, non-working marketing and sales spend, and vacant facility costs as well as higher gains on facility and asset sales partially offset by favorable settlements related to certain international tax and trade compliance matters that took place in 2010.

The Company had a pretax loss of $10.5 million in the fourth quarter of 2011 as compared to a pretax loss of $46.4 million in the fourth quarter of 2010. For the full year the company reported a pretax loss of $46.6 million as compared to a pretax loss of $47.9 million in 2010. The 2011 pre-tax loss includes $9 million in intangible asset impairment as compared to $1.1 million in intangible asset impairment in 2010.

For the fourth quarter of 201 1, Furniture Brands reported a net loss of $9.5 million, or $0.17 per share compared to a net loss of $44.7 million, or $0.82 per share in the fourth quarter of 2010. For the full year net loss was $43.7 million, or $0.80 per diluted share compared to a net loss of $39.0 million, or $0.76 per diluted share in 2010. The $6.1 million decrease in income tax benefit from 2010 to 2011 is primarily due to the benefit created from contributions to our pension plan in 2010.

The Company ended the year with $25.4 million in cash, up $4.2 million from the third quarter of 2011, and $77 million in debt, consistent with the third quarter of 2011.

Outlook

ltem                                                   2011 Actual                       2012 Estimate

Capital Expenditures                    $27.5 million                     $16 to $18 million

Depreciation and Amortization   $21.9 million                     $22 to $24 million

Pension Contribution                    $3.1 million                       $14 million

As previously mentioned, cost improvement actions were implemented in the third quarter of 2011 that will generate annualized cost savings of at least $30 million. lnclusive of these cost savings and the above guidance, quarterly base SG&A in 2012 is expected to be between $73 and $77 million. This base SG&A run rate will increase or decrease depending on changes such as brand support activities and incentive compensation accruals. The Company expects to generate positive free cash flow in 2012.

Source: Furniture Brands International Inc.

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