The Rowe Companies, a leading furniture manufacturer and home furnishings retailer, reported operating results for its second fiscal quarter ended May 28, 2006.
Net shipments for the quarter decreased 15.2 percent to $67.7 million, compared to $79.9 million for the comparable prior year period. Gross profit as a percentage of net shipments improved to 33.6 percent, compared to 30.3 percent for the second quarter of 2005. Price increases announced in the late fall took effect during the quarter, manufacturing efficiencies were implemented as part of the Company's turnaround plan, and higher margin retail shipments increased as a percentage of total shipments due to 12 new Storehouse stores opening since the beginning of 2005.
The 2006 second quarter included two charges--a pre-tax charge of $1.0 million to write-down the value of excess, discontinued and slow-moving fabric inventory (created from a combination of duplicate fabric orders, quantities ordered in excess of customer needs and a lack of system visibility as to quantities on hand and on order from fabric vendors) in the manufacturing segment and a $350,000 pre-tax charge to increase the Company's bad debt reserve due to the uncertain retail environment. The inventory charge was included in cost of goods sold, while the bad debt charge was included in selling and administrative expenses.
Net loss for the quarter was $4.9 million or $0.37 per share, compared to a net loss in the prior yearquarter of $2.5 million or $0.19 per share.
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