Quarterly revenues up for 8 companies

By Janice Chamberlain -- Kids Today, 1/1/2005 12:00:00 AM

It was yet again another tough quarter for the 12 companies on this edition of the Kids Today vendor scorecard, as just four of them managed net income gains from the comparable period in 2003.

Double that many companies — eight — posted revenue gains for the third quarter of 2004, compared with the year-earlier period.

Leading the way in percentage revenue gain was Canadian Dorel, which reports in U.S. dollars. Excluding licensing and commission income, revenues skyrocketed 42.4% to $422.7 million from $296.8 million a year ago. Stanley Furniture took second-place honors, as revenues jumped 18.3% to $77.2 million from $65.2 million.

The largest revenue increase in dollars also belonged to Dorel, with revenues up $129.7 million. Next in line was La-Z-Boy, which added $22.7 million in revenues to finish the quarter at $533.7 million, compared with $511 million a year ago.

Dorel again led the way in adding profit dollars in the quarter. The company added $9.5 million in earnings to end the quarter with profits of $28.2 million, compared with $18.8 million a year ago. Graco added $6.1 million to quarterly net income to finish with earnings of $28.8 million, compared with $22.7 million last year.

Graco benefited from two acquisitions: Playing Mantis (acquired June 2004) and The First Years (acquired Sept. 15, 2004).

Overall, revenues for all 12 companies were up $155.4 million, or 6%, to nearly $2.7 billion from $2.5 billion a year ago. Collective profits fell 42%, or $43.3 million, compared with year-ago results. Aggregate profits were $59.9 million, measured against $103.2 million last year.

Hardest hit among the vendors in terms of percentage revenue declines was Martha Stewart Living Omnimedia, which saw revenues fall 24.4% to $38.7 million from $51.2 million last year. The largest dollar decrease was posted by textiles giant WestPoint Stevens, which recorded revenues of $416.1 million in the quarter, off $29.1 million from the year-ago period.

WestPoint Stevens also saw its quarterly net loss grow from $12.8 million a year ago to $52.6 million in the latest quarter. Both periods included pretax restructuring and impairment charges and income tax benefits.

Half the companies on the scorecard recorded gross margin improvements. Coming in first with a 2.8 percentage point gain was furniture company Chromcraft Revington. Next in line was Graco's 1.7-point increase.

The largest quarterly gross point margin registered was Graco's 55.1%, which edged out RC2's 50.8% and Ethan Allen's 47.9%.

Collective gross margin was off 1 percentage point.

Return-on-revenues bounced from company to company, but overall the companies saw their ROR score decline from 4.1% a year ago to 2.2% in the latest quarter.

Graco posted both the highest ROR — 19.3% — and the largest improvement — 2.3 percentage points. Just two other companies, Stanley Furniture and Dorel, managed to increase their ROR in the latest quarter compared with the 2003 period.

Kids Today's third-quarter vendor scorecard is based on the financial results of 12 publicly traded companies with fiscal quarters ending from Aug. 28 to Oct. 23, 2004.

Gross margin percentage

	2004 GM%	2003 GM%	Pct. Pt. change
1. Cost of goods sold represents production, distribution and editorial costs. Source: Company reports and Kids Today market research
Chromcraft Revington	22.3%	19.5%	2.8
Graco	55.1	53.4	1.7
Stanley Furniture	25.2	24.0	1.2
Furniture Brands Intl.	27.7	26.9	0.9
Bassett Furniture	25.6	25.0	0.6
La-Z-Boy	23.1	22.8	0.2
Ethan Allen	47.9	48.7	-0.8
Dorel	23.9	25.1	-1.2
Crown Crafts	20.1	22.1	-2.0
RC2	50.8	54.6	-3.8
WestPoint Stevens	11.7	17.9	-6.1
Martha Stewart Omnimedia1	29.2	38.6	-9.4
Composite	27.7%	28.6%	-0.9

Kids vendor scorecard

			revenue in millions			net income in millions		return on revenues
Retailer	Qtr. ended	2004	2003	change	2004	2003	Change	2004	2003
Note: Figures in parentheses are losses or declines. 1. Includes pretax restructuring charges of $749,000 in the 2004 quarter and $2 million in the 2003 quarter. The 2004 quarter also includes a $702,000 extraordinary gain. 2. Includes licensing and commission income of $5.4 million in the 2004 quarter and $1.6 million in the 2003 quarter. 3. Includes pretax restructuring and impairment charges of $10.4 million in the 2004 quarter and $967,000 in the 2003 quarter, pretax Chapter 11 expenses of $7.2 million in the 2004 quarter and $12.7 million in the 2003 quarter and income tax benefits of $1.3 million in the 2004 quarter and $3.2 million in the 2003 quarter. The 2004 quarter also includes a $7.9 million pretax fixed asset impairment charge. 4. Includes pretax restructuring and impairment charges of $167,000 in the 2004 quarter and $264,000 in the 2003 quarter. 5. Includes the results of Playing Mantis (acquired June 2004) and The First Years (acquired Sept. 15, 2004) from their dates of acquisition. 6. Includes a $1.2 million pretax restructuring and impaired asset charge. 7. Includes income tax benefits of $806,000 in the 2004 quarter and $2.2 million in the 2003 quarter and net losses from discontinued operations of $129,000 in the 2004 quarter and $122,000 in the 2003 quarter. Source: Company reports and Kids Today market research.
Furniture Brands Intl.	9/30	$557.8	$557.4	0.1%	$19.4	$19.3	0.4%	3.5%	3.5%
La-Z-Boy	10/23	533.7	511.0	4.4	8.91	15.21	-41.6	1.7	3.0
Dorel	9/30	428.22	298.52	43.5	28.2	18.8	50.5	6.6	6.3
WestPoint Stevens	9/30	416.1	445.2	-6.5	(52.6)3	(12.8)3	—	-12.7	-2.9
Ethan Allen	9/30	230.3	222.8	3.4	18.94	18.94	-0.1	8.2	8.5
Graco	9/24	149.1	133.8	11.4	28.8	22.7	26.9	19.3	17.0
RC25	9/30	110.3	97.7	12.9	14.0	16.2	-13.5	12.7	16.5
Bassett Furniture	8/28	78.6	79.4	-1.1	1.16	1.6	-27.6	1.4	2.0
Stanley Furniture	9/25	77.2	65.2	18.3	5.3	3.7	42.2	6.8	5.7
Chromcraft Revington	10/2	41.7	45.0	-7.3	2.0	2.6	-24.4	4.8	5.8
Martha Stewart Omnimedia	9/30	38.7	51.2	-24.4	(15.0)7	(3.9)7	—	-38.7	-7.7
Crown Crafts	9/26	23.0	22.0	4.7	0.8	0.9	-8.7	3.7	4.2%
TOTAL		$2,684.6	$2,529.1	6.1%	$59.9	$103.2	-42.0%	2.2%	4.1%