Hooker Furniture built on its core strengths but was not satisfied with a 7.7 percent growth in profits in fiscal 2011, its president and chief executive officer said Tuesday.
Paul B. Toms Jr. addressed about 50 people at the company’s annual shareholder meeting Tuesday at Piedmont Arts Association. Most of those present were company directors, officers, employees or associates, he said.
Hooker posted net sales of $255,429,000 in fiscal 2011, up 5.9 percent from 2010. Considering the business environment, Toms said he was “pretty pleased” with that.
The company’s casegoods sales were up 2 percent for the year, 10 percent for the fourth quarter and 21.8 percent in the first quarter of fiscal 2012, Toms said. Sales of imported upholstery rose 40 percent, and Hooker took steps to improve its domestic upholstery results, including consolidating leather production in its Hickory, N.C., operation, he said.
Toms said Hooker is not satisfied that its 2011 profit rose 7.7 percent. “We will try to do better,” he added.
The company was challenged in the past year by production issues in the Asian factories that supply its products, Toms said. Also, there were shortages in container boxes and vessels, as well as high freight rates, he said. As a result, controlling inventories was difficult, Toms said.
Now, however, he said, 91 percent of the items that are driving Hooker’s business are in stock.
At the end of fiscal 2011, Hooker was debt-free and continued its 40-cent dividend.
The company’s core strengths that it built upon during the year include its expansive product line, which has made it a leader in function and style; broad distribution, including more than 3,900 customers in 26 distribution channels; its strong brand with retailers; expanded international distribution, including customers in Russia and China; expanding consumer demographics, especially into younger customers through its Envision and Opus Designs by Hooker youth line; and its employees, including those who will lead the company in the future, Toms said.
The casegoods (wood) segment expanded its offerings with new styles and prices in Envision, Mélange and Sanctuary lines; added new merchandising staff; added top 100 furniture retailers, many of which have done better during the economic downturn; increased its international presence; and increased its social media marketing, Toms said.
In casegoods operations, Hooker has reorganized and strengthened its operations management; improved product quality and packaging, which saved the company more than $1 million; opened China Cross Dock, in which customers can mix products in shipping containers; and began the ERP (enterprise resource planning) software system to integrate the Hooker Furniture, Bradington-Young and Sam Moore divisions.
In the upholstery segment, Hooker has new merchandising staff; expanded styles and categories, including sectional sofas and fabric recliners from Sam Moore, to target a broader consumer demographic; and opened new channels of distribution and top 100 accounts, including Crate & Barrel, Macy’s, Direct Buy and others, Toms said.
In upholstery operations, it has lowered break-even points; consolidated leather operations; consolidated upholstery management; and combined some back office functions.
Toms said he wished he could have presented the company’s outlook a few weeks ago before the economic recovery began losing steam.
Housing prices still are falling, and there is an eight- to nine-month inventory of homes on the market nationwide, he said. However, home remodeling is up 14 percent year over year, which helps the furniture industry, he said.
Furniture sales often are tied to home sales, Toms said, but they also are driven by events, such as when someone buys a first home, has children or retires.
A company still can be successful in a slow housing market, but it is harder, Toms added.
Consumer spending has improved, as evidenced by a 5.5 percent increase in Christmas sales and a 6.7 percent increase in sales of luxury goods to affluent consumers, who are Hooker’s main customers, he said.
But consumer confidence is declining after a two-year improvement, he said. While unemployment is 9.1 percent, it is about 5 percent for the people in Hooker’s customer demographic, and the stock market has made solid gains over the last year two years, though it is showing signs of stalling, he said.
The company cannot control things such as those, Toms said.
“We focus on what we can control, and I think we’ve done a pretty good job” of doing that, he added.
Tuesday’s meeting began with a moment of silence in honor of the late J. Clyde Hooker Jr., Hooker Furniture’s long-time president and chief executive officer who died in July 2010.
Hooker’s stock closed Tuesday at $10.30 a share, down 36 cents.
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