Stanley sees improved performance in first quarter
April 19, 2017,
HIGH POINT – Case goods resource Stanley Furniture saw a slight drop in sales during the first quarter, but cut its net loss by more than $1 million as it lowered finished goods inventory costs as well as overall liabilities ranging from accounts payable to the cost of salaries wages and benefits.
Net sales during the first quarter ended April 2, fell 4.2%, to $11.2 million from $11.7 million during the first quarter of 2016, while its net loss fell to $416,000 from$1.5 million in the year ago period. Its operating loss fell to $421,000 from $770,000, which as a percentage of net sales was 3.7% for the first three months compared to 6.6% for the same period last year and 14.1% for the fourth quarter of 2016.
It said lower unit volume resulted from shipping delays of floor samples. A majority of the new product, the company said, “should have already been on customers’ floors and generating resale activity.”
During the quarter Stanley’s selling general and administrative expenses also fell to $2.7 million, or 23.7% of sales, down from $3.3 million, or 28.3% a year ago and from $3.4 million, or 34.2% during the three month period ended Dec. 31, 2016. The company said the decrease in spending was due to cost reduction actions taken at the beginning of the year as well as lower stock compensation-related expenses, lower legal and professional expenditures and lower bad debt expenses.
Partially offsetting these lower expenses, it said, were higher commission costs, and not benefiting from the cash surrender value growth of corporate owned life insurance policies liquidated during the first quarter of 2016.
According to its quarterly filing, the company in January 2016 liquidated two of 27 corporate-owned life insurance policies with a cash surrender value of $2.6 million and used $2.5 million to pay down outstanding loans and accrued interest on corporate owned life insurance policies, which lowered its outstanding loan levels to $3.1 million.
In March 2016, it decided to liquidate the remaining 25 life insurance policies with a cash surrender value of $25.6 million. It said the decision to liquidate was made after continued review of the financial stability of Genworth Life Insurance Company at that time, which was the issuer of the policies.
Overall cash used by operations was $613,000 in the current quarter, down from $2.2 million during the prior year. The company said this was due to improved operating results in the current quarter compared to the same period last year and having no interest payments in the current quarter, due to the company’s decision to liquidate corporate owned life insurance policies during the first quarter last year. This resulted in an additional $24 million in taxable income at that time.
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