Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
276-638-8801
Toll Free: 800-234-6575
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Thursday, April 19, 2007
By GINNY WRAY - Bulletin Editor
A day after announcing a 10 percent drop in sales for the first quarter of 2007, Stanley Furniture Co. Inc.’s chief executive officer said he believes the company’s strategy of largely domestic manufacturing will survive the current downturn in the industry.
“History shows business will eventually come back,” said Jeffrey R. Scheffer, CEO, chairman and president of Stanley. And when it does, Stanley will be well-positioned with its “short supply chain” of primarily domestic manufacturing, he added.
Scheffer spoke at Stanley’s annual shareholders’ meeting Wednesday at the company headquarters in Stanleytown.
After the meeting, he said the company’s plants are operating at nearly full production, and production levels are being increased in some areas. He added that some production is being moved among Stanley’s plants, but there are no plans to close any facilities.
On Tuesday, the company reported that net sales of $75.1 million in the first quarter of 2007 fell 10.1 percent from the first quarter of 2006. For all of 2006, sales were $308 million, down 7.8 percent from $334 million in 2005, according to Douglas I. Payne, executive vice president-finance and administration and secretary.
Also in 2006, operating income declined 39.3 percent, net income was down 27.8 percent, and earnings per share fell 20.3 percent, according to Stanley’s annual report.
That came after five years in which sales grew by nearly $100 million, Scheffer said.
“Some people might say that in 2006 the bloom came off Stanley’s rose. We don’t think so. We think it’s a reflection of the cyclical business,” he said, noting that downturns also occurred in the mid-1990s and in 2000-01.
Payne noted that $10,000 invested in Stanley at its initial public offering in 1993 is worth $100,000 today. That resulted from a 19 percent increase in the compound annual growth rate in its stock and a fourfold increase in its cash dividend, he said.
The company also has had $250 million in cash flow for the last 10 years, which gives it the ability to invest in its people, processes and facilities, Payne said. For instance, Stanley has invested $60 million in machines and equipment during the past 10 years, he said.
Currently, about 80 percent of the wood residential furniture sold in this country is made offshore, Scheffer said. Different local companies have taken different approaches to coping with that change, he said, adding that they are a “microcosm to what is occurring in the industry as a whole.”
Bassett Furniture Industries is becoming a retailer, with its Bassett Furniture Direct stores; Hooker Furniture Co. is becoming a marketing/logistics company for its wood furniture; and Stanley has remained a manufacturer, Scheffer said.
About two-thirds of Stanley’s sales are products it makes in its four domestic factories, and the rest come from suppliers primarily in Asia, according to Stanley’s annual report.
As a result, the company ships orders within 14 days on average, Scheffer said, calling it “a model that is difficult if not impossible to duplicate” for offshore shipping.
That speed of delivery; style, with more interesting woods such as cherry that are not grown in Asia; selection, with more than 4,000 items; and quality are keys to Stanley’s attempts to help simplify retailers’ business, Scheffer said.
“Simplify” was the topic of a brief video shown at Wednesday’s meeting. Its point was that Stanley, by offering products in every major category, is a retailer’s one-stop shopping source.
It also condenses Stanley’s mission of providing the best product possible in its segment and supporting it with quality and service, Scheffer said.
“It’s the same story I’ve been telling for the past six years and Albert Prillaman (retired CEO) told for 25 years before that,” Scheffer added.
Stanley has a total of 2,000 employees, including 1,050 in Stanleytown, 300 in Martinsville, and the rest at plants in Lexington and Robbinsville in North Carolina.
Also Wednesday, Stanley’s board declared a regular quarterly cash dividend of 10 cents per share, payable June 4 to shareholders of record May 11.
Stanley’s stock closed Wednesday at $21.60, up 96 cents. |
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