From FurnitureToday.com (full story):
ECRU, Miss. — Promotional upholstery maker American Furniture reported an operating loss of a $35.2 million in 2011, due largely to a 23.1% sales decline and a big non-cash impairment charge.
Sales of $105.3 million for the year were down from the previous year's $136.9 million, and 2009's $141.9 million, American's publicly held parent, Compass Diversified Holdings, reported Wednesday.
American incurred a non-cash impairment charge of $27.8 million for the year, reflecting a decline in the estimated fair market value of the business due to the soft retail environment in the promotional furniture market, Compass said. In 2010, the company had recorded a $38.8 million impairment.
Including the charges, American had an operating loss of $35.2 million in 2011, compared with an operating loss of $37.1 million in 2010 and a profit of $6.5 million in 2009.
The company also said sales to retailer Value City, the company's largest customer, dropped about $20 million in 2011 as Value City "restructured their core its core retail product offerings and began sourcing product from a small, low-cost manufacturer."
During 2011, American's sales of stationary upholstery decreased $19 million, motion and recliner sales dropped $11 million, and occasional chairs, accent tables and rugs sales were down $1.2 million, Compass said.
"The decrease in product sales is the result of the softer retail furniture environment, especially in the more expensive product categories such as our motion products, and the increasing presence of Asian import product which offers a better overall value proposition to customers," the company said in its SEC filings.
"The decrease in net sales of recliners, chairs, tables and rugs in 2011 is due to an overall weaker retail market for promotional furniture offerings in 2011 than in 2010. The promotional retail furniture market continues to be impacted by downward pressure from lower consumer spending for new furniture due principally to the limited access to credit available to home buyers," the company said.