By Dennis Seid
TUPELO – As usual, buyers and retailers have conducted business at the Tupelo Furniture Market this week, with special deals, new introductions and new programs launched by exhibitors to attract customers.
At the Lane Furniture showroom, it’s been business as usual – almost.
Whispers and concerns about the future of Furniture Brands International – Lane’s parent company – have swirled for more than a week, and the talk hasn’t abated at the fall market.
Last week, Furniture Brands posted a $41 million quarterly loss, and an industry analyst said the company’s bankruptcy filing was “imminent.” That has ramped up speculation about the company’s – and by extension, Lane’s – future.
Lane employs some 1,300 people in Northeast Mississippi, with manufacturing plants in Belden and Saltillo, offices and distribution center in Verona and a distribution center in Wren.
There has been no official comment from Furniture Brands or Lane officials, and other furniture industry players, including buyers, aren’t saying much publicly either.
“While we appreciate your interest, we don’t comment on rumors,” said Furniture Brands spokeswoman Lisa Hanly.
Lane’s showroom has been open all week at the fall market, but its manufacturing facilities were open for production only on Thursday and Friday.
It is clear Furniture Brands – whose portfolio includes Broyhill, Thomasville, Drexel-Heritage, Maitland-Smith and others – faces a bleak financial situation.
At the end of the second quarter, the company had available cash of $8.8 million and a debt balance of $117.7 million. Its pension plan is under-funded by more than $200 million.
Furniture Brands’ shares have plummeted since a 1-for-7 reverse stock split three months ago. On May 29, the day after the company announced the move in an effort to stay listed on the New York Stock Exchange, shares traded at $6.43.
Since then, it has fallen 85 percent. On Friday, it closed at 79 cents, down 33 percent for the week. More than 575,000 shares were traded on Friday alone, an unusually high volume; an average of 206,000 shares were traded daily in the past three months.
In order to stay listed on the exchange, Furniture Brands’ shares must trade at $1 or more for 30 consecutive trading days. It was warned in December it faced delisting, but was able to stay. But another requirement is that its market capitalization be at least $50 million. As of Friday, Furniture Brands’ market cap was $6.26 million.
Its biggest shareholder a month ago, Shan Huei Kuo of Samson Holdings, Asia’s largest furniture exporter, has reduced his 12.8 percent stake in the company. Kuo has sold 26 percent of his more than 1 million shares of Furniture Brands stock since mid-July.
Furniture Brands, once the largest furniture company in the U.S., has seen its fortunes fall precipitously. In 2006, sales were $2.42 billion and it pulled in a profit of $55 million. That’s also the last year it posted an annual profit.
Sales have continued to fall every year since, reaching less than $1.1 billion last year. Analysts expect sales to drop below $1 billion this year.
The company, in its quarterly earnings filing with the SEC last week, said it was exploring options to improve its liquidity, including cutting expenses and capital spending and delaying payments to vendors.