Manufacturers finish quarter in black

By Janice Chamberlain -- Kids Today, 3/1/2006 12:00:00 AM

High Point —

You can't complain about a difficult quarter when all nine of the juvenile home furnishings suppliers on the Kids Today fourth-quarter 2005 Vendor Scorecard were in the black for the period. And just over half — five companies — earned more than they did a year ago.

However, just four of these publicly-traded firms managed to increase their revenues compared with the final quarter of 2004.

Leading the way in percentage earnings growth once again was RC2, which posted a 58.7% jump in net income to finish the quarter at $17.3 million in earnings — up $6.4 million over the final quarter of 2004. Net profits at Crown Crafts increased 15.8% to $1.1 million from $918,000 a year ago, putting it solidly in second place for percentage growth in net income.

Top turn-around honors go to Martha Stewart Living Omnimedia, which posted fourth-quarter 2005 net profits of $2.9 million, compared with a net loss of $7.3 million in the comparable 2004 period. That $10.3 million earnings improvement was the largest on the scorecard.

Furniture Brands International's quarterly net profits of $17.1 million were off 23.2% from earnings of $22.3 million a year earlier, giving it the largest percentage decline in profits of any supplier on the scorecard. 2005 fourth-quarter profits included $1.6 million in pretax charges for restructuring, asset impairment and severance and 2004 net income included $2.4 million in pretax charges for restructuring and asset impairment.

Bassett Furniture posted a 21% drop in net income in the latest quarter, which included a $2 million pretax charge for restructuring and asset impairment, tying Chromcraft Revington for the second-largest percentage decrease in net earnings.

On the revenue side, Martha Stewart Living was first in percentage gain — revenues were up 40.3% to $84.5 million in the latest quarter. The company's $24.2 million increase was also the second largest dollar gain in revenues among the companies on the scorecard.

The leader in revenue dollar increase was Ethan Allen, which added $30.8 million to finish the latest quarter with revenues of $276 million, up 12.5% from fourth quarter 2004 revenues.

Collectively, the nine companies on the scorecard reported revenues of $1.8 billion for the fourth quarter of 2005, up 3.4% from the comparable 2004 period.

Aggregate profits for the suppliers on the vendor scorecard jumped 18.3% to $84.9 million from $71.7 million in the final quarter of 2004.

As a group, gross margin inched up two percentage points to 32.6%. Once again Martha Stewart took top honors in improving gross margin, gaining 7.8 percentage points to narrowly edge out Bassett Furniture's gain of 7.7 percentage points.

Four other companies — Crown Crafts, Ethan Allen, RC2 and La-Z-Boy — also improved their gross margins.

Return-on-revenues varied from company to company, but as a group, companies saw their ROR score increase to 4.6% from 4% a year ago.

RC2's 11% ROR once again led the way in the latest quarter, making it the only company to post a double-digit score. Ethan Allen came in second, with a score of 9.5%, followed by Stanley Furniture's 7.2%.

Across the board, leaders of the nine companies on the scorecard said they were optimistic about the future, believing their companies are positioned well for the future.

Kids Today's fourth-quarter vendor scorecard is based on the financial results of nine publicly traded companies with fiscal quarters ending from Nov. 26, 2005, to Jan. 28, 2006. For the purpose of comparison, these quarters are referred to as the fourth quarter of 2005 and their comparable periods a year earlier as the fourth quarter of 2004.

Gross margin percentage

	2005 GM%	2004 GM%	Pct.Pt chnge
1.Cost of goods sold represents production, distribution and editorial costs. Source: Company reports
Martha Stewart Omnimedia1	58.9%	51.1%	7.8
Bassett Furniture	33.7	26.0	7.7
Crown Crafts	24.2	21.3	2.9
Ethan Allen	50.7	48.7	2.0
RC2	47.2	45.7	1.5
La-Z-Boy	24.8	24.0	0.8
Stanley Furniture	24.7	24.9	-0.2
Furniture Brands Intl.	25.2	25.4	-0.3
Chromcraft Revington	19.4	22.9	-3.5
TOTAL	32.6%	30.6%	2.0%

Kids vendor scorecard

		revenue in millions			net income in millions			return on revenues
Retailer	Qtr. ended	2005	2004	change	2005	2004	Change	2005	2004
Note: For comparative purposes, quarters ending between Nov. 26, 2005, and Jan. 28, 2006, are referred to as the 2005 quarter, and their comparable year-earlier quarters as the 2004 quarter. Note: Figures in parentheses are losses or declines. 1. Includes pretax restructuring charges of $594,000 in the 2005 quarter and $2.3 million in the 2004 quarter. The 2004 quarter also includes $352,000 in net income from discontinued operations. 2. Includes a $52,000 pretax restructuring credit. 3. Includes a $2 million pretax charge for restructuring and asset impairment. 4. Includes net losses from discontinued operations of $120,000 in the 2005 quarter and $109,000 in the 2004 quarter. 5. Includes a $127,000 income tax benefit. Source: Company reports and Kids Today market research
Furniture Brands Intl.	12/31/05	$593.5	$602.0	-1.4%	$17.1	$22.3	-23.2%	2.9%	3.7%
La-Z-Boy	1/28/06	502.3	507.0	-0.9	10.51	11.11	-5.6	2.1	2.2
Ethan Allen	12/31/05	276.0	245.3	12.5	26.2	23.12	13.1	9.5	9.4
RC2	12/31/05	156.6	140.4	11.5	17.3	10.9	58.7	11.0	7.8
Bassett Furniture	11/26/05	88.6	80.1	10.6	2.33	2.9	-21.0	2.6	3.6
Martha Stewart Omnimedia	12/31/05	84.5	60.2	40.3	2.94	(7.3)4	—	3.5	-12.2
Stanley Furniture	12/31/05	81.4	83.3	-2.2	5.8	5.7	2.7	7.2	6.8
Chromcraft Revington	12/31/05	40.7	41.6	-2.3	1.75	2.2	-21.0	4.2	5.2
Crown Crafts	1/1/06	17.9	20.7	-13.5	1.1	0.9	15.8	5.9	4.4
TOTAL		$1,841.5	$1,780.6	3.4%	$84.9	$71.7	18.3%	4.6%	4.0%