Case goods vendor Stanley Furniture Co. reported second-quarter 2016 sales of $12.1 million, a 20.4% drop from the prior-year period.

The net loss from continuing operations for the second quarter was $1.4 million, compared with net income of $1.3 million in the same period last year, which included $1.1 million in antidumping duties on Chinese wood bedroom furniture.

According to the company, sales continued to be negatively impacted by production delays from the newly constructed factory in Vietnam in conjunction with the company’s strategic manufacturing alliance with Starwood Manufacturing Corp. More marketable product introductions manufactured at the new factory and introduced throughout 2015 are six months delayed from normal deliveries to Stanley’s retailers.

The new factory’s production in the quarter increased two-fold sequentially. Further significant improvement is expected each quarter ahead as supply comes in sync with growing demand for new product, which will be sold at 25%-40% lower retail prices.

“Our wholesale customers clearly see the enhanced value of our company’s newer product, and they have been patient as we bring this new factory, exclusively dedicated to our brands, in line with increasing order rates,” said Glenn Prillaman, president and CEO. “New product was well received at last year’s markets and is now beginning to ship from overseas. We expect new product to have a favorable impact on sales in the second half of this year.”

Prillaman noted that Stanley made progress in the second quarter with production supply supporting the company’s new brand of nursery and youth furniture, Stone & Leigh.

“Expansion into each of the company’s multiple channels of distribution is planned for the second half now that supply can better support increasing demand,” Prillaman said of Stone & Leigh, which was introduced in 2015 and began shipping to multiple customers earlier this year.

Stanley said S&L order rates have increased throughout the first half of the current year and that raffic on the brand’s website over the past thirty days has doubled from the prior sequential month.

With offshore production delays, “In an effort to assist retailers with their own promotions during the normal mid-year seasonal sluggishness for residential case goods, we aggressively promoted older products immediately available to ship in the quarter,” Prillaman said. “As we await sufficient supply levels of newer, more marketable products from the new factory, these promotions allowed us to turn inventory into cash and increase related retail floor placements by approximately 10%. We did so at the expense of margins in the quarter, but we believe we have extended the life cycles of these older products, which will support further sales at normal margins in the second half as we await the shipment of backlog of newer product.”

Looking ahead, Prillaman said Stanley’s focus remains on the execution of its operational strategy overseas, efforts to launch new product lines and its desire to increasingly market directly to the consumer to drive retail traffic to its wholesale distribution network.

“As I indicated last quarter, second quarter was going to be another tough quarter, and it was,” Prillaman said. “We expect the second half of this year to show improved sales and margin results.”

(Source: Furniture Today  Author: Powell Slaughter)