Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 15, 1992 TAG: 9202150131
SECTION: BUSINESS PAGE: A-8 EDITION: METRO
SOURCE: SANDRA BROWN KELLY
DATELINE: LENGTH: Medium
FURNITURE MAKER ENDS '91 WITH SIGH
Pulaski Furniture Corp.'s president, Bernard C. Wampler, said his sentiments were reflected by a Christmas card he got from a stockholder. It said: "Thank God, 1991 is over.""It was not one of the better years for the home furnishings industry, certainly not for our company," Wampler said at the company's annual meeting Friday. "Profits remain in the black, and that's about all I can say about it."
Pulaski on Friday reported net income down 75 percent in its first quarter, ended Jan. 26, despite a 6.5 percent increase in sales over the corresponding period a year ago.
The "dramatic drop," Wampler said, is mainly the result of higher production costs.
Quarterly figures, released at the meeting in Roanoke, showed net sales of $28.3 million and net income of $214,714, or 8 cents per share. That compares with year-earlier sales of $26.5 million and net income of $844,618, or 30 cents a share.
Despite larger sales, Wampler said, profits were lower because most sales now are of lower-priced, promotional furniture that generally has a lower profit margin. Also, to control inventory, fewer items of any one product are made at a time, he said.
A typical production run now might be for only 250 to 300 pieces, but it "really needs to be 500" to be cost-efficient, he said. Expenses also are up because plants are running only four days a week, he said.
Pulaski produces nearly 1,000 different items in its lines, which range from accent pieces and curio cabinets to bedroom and dining room suites and 18th century reproductions.
Wampler said the company has maintained its share of the furniture market over the past 18 months of recession, but he sees "another tough year coming at us."
"The people out of work, the bankers, high-tech people . . . those are the folks with the incomes who bought things like cars and furniture," he said.
Wampler said the credit problems of retailers that are the furniture makers' customers began to emerge in 1990 and continue to hurt manufacturers.
Last year was the company's "worst year for credit losses," he said. It had to write off some $1.2 million in bad debt.
He said the credit problems aren't over, either. Last week, a major Canadian company that sells Pulaski's furniture filed for reorganization under bankruptcy protection.
"The bankruptcy laws are almost criminal," said Wampler. "Accounts buy our merchandise, file bankruptcy and take our merchandise and open a new business."
He said a stockholder's suggestion that the company collect its payment before shipping merchandise won't work in the current economy.
"We wouldn't ship anything," said Wampler. He said manufacturers are so hungry to sell furniture that some are even extending the terms for payment despite retailers' credit problems.
"We have one competitor who is even offering 120-day terms," he said.
While Wampler warned that the bad times aren't over, he also said the company has a healthy backlog of orders, up by about $6 million from the same time last year.
But, he said, the number of "credit holds," - orders that can't be shipped until payment is received because of previous problems - is growing.
"We used to say [sales] don't count until they're shipped. Now we say it doesn't count until we collect," said Wampler.