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Hooker Furniture Corp. Message Board

  • healthreward healthreward Sep 11, 2008 11:58 AM Flag

    Margins are really getting squeezed

    Gross profit margin for the quarter decreased to 28.3% of net sales compared to 31.3% in the fiscal 2008 second quarter. The reduction in gross margin was driven by an increase in the delivered cost of imported wood furniture as a percentage of net sales along with higher sales discounting to stimulate sales and substantial discounts on discontinued domestically produced wood furniture. Another factor was higher raw material and overhead costs as a percentage of net sales for our domestically produced upholstered furniture lines.

    Since this spring we’ve received cost increases from our offshore suppliers on imported furniture as well as increases in transportation costs, raw materials for upholstered furniture and for other operating expenses. These inflationary pressures along with an increase in selling and administrative expenses to $15.4 million or 23.9% of net sales compares to $15.1 million or 20.5% of net sales for the prior year period resulting in operating income for the fiscal 2009 second quarter of $3.1 million or 4.8% of net sales. That compares to $7.5 million or 10.2% of net sales in the same period a year ago.

    (from conference call)

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