The Company designs, manufactures, sources & markets home rfurnishings through its four operating subsidiaries: Broyhill Furniture Industries, Inc.; Lane Furniture Industries, Inc.; Thomasville Furniture Industries, Inc. & HDM Furniture Industries, Inc.
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Furniture Brands International, Inc. is a furniture-making empire, which markets its products through four operating subsidiaries: Broyhill Furniture, Lane Furniture, Thomasville Furniture, and HDM Furniture. These four subsidiaries offer a line-up of nationally recognized furniture brands. They design, manufacture, source, market, and distribute a full line of branded products consisting of both wood and upholstered furniture.
The industry, in which the company operates, is witnessing a down turn. New home sales and existing home sales have been declining from the past four quarters. Moreover, home equity is expected to further fall by 40% in 2007. To cope with this softness in the industry, the company has started offering aggressive discounts on slower-moving products. and had scheduled downtime in several upholstery plants. However, such moves imply that the company is using its assets less efficiently and will probably have weaker gross margin and operating margins in future.
The company’s margins have been declining from the past seven consecutive quarters. This is largely because of the increase in raw material prices, which are expected to increase further. The company is currently trading at the price of $17.39, which is nearer to its 52-weeks low.
Considering the softness in the industry owning to factors like higher interest rates and cooling home sales, which are leading some consumers to pull back big purchases and move-on to the repair-and-remodel activities, it is believed that the company would under perform in the near future.
Furniture Brands International is a furniture-making empire, which markets its products through four operating subsidiaries: Broyhill Furniture, Lane Furniture, Thomasville Furniture, and HDM Furniture. Soft retail conditions are still up affecting the furniture industry, with people not buying property, are not looking to furnish new condos and homes.Endorsing the same, the company is suffering from its decreased revenues and profits. This was due to aggressive promotional activities like discounts given on selected slower moving products, which also affected company’s margins. Furniture Brands and others like it in the furniture industry are all blaming the challenging retail conditions. Considering the environment, if one looks at the company’s strategy, it seems to take no constructive action to combat the existing situation. It can just hope for some betterment in the environment and in its financials.Management estimates a 10-15% decline in its sales and a further drop in its profits for the coming first quarter of 2007. It also expects the same trend for the second quarter and hopes to do better in the second half of the coming year. One can figure out industry’s distress by looking at the large number of jobs lost, factories being closed, and imports increasing as many manufacturers have wrapped up. Furniture Brands has closed and has announced closing of 34 domestic case goods manufacturing units since the start of 2001. With no strong planning and existing weak environment, it is believed that the company would under perform in the near future.