RIVER OAKS CONSOLIDATES OPERATIONS
By Stephen Singer
BELDEN – A brief ribbon-cutting ceremony for new corporate offices of River Oaks Furniture Inc. Wednesday afternoon opened a new chapter in what Chief Executive Officer Stephen L. Simons called the company’s “aggressive growth story.”
Simons, who also is chairman of the company, was joined by the firm’s Board of Directors, Tupelo Mayor Jack Marshall and Harry Martin, president of the Community Development Foundation, to mark the consolidation of several River Oaks operations in the 275,000-square-foot building on McCullough Boulevard.
“You’ve got to remember. This company started in a muffler shop in Fulton” in 1988, Simons said a few hours before the ceremony. “Since we started this thing, it’s been an aggressive growth story.”
Sales increased from $107.8 million in 1994 to $143 million last year, but net income dropped from 89 cents to 21 cents a share during the same period.
The drop was due to the firm’s investment of more than $4 million in the new building, bad debt and higher health-care costs, Simons said.
Boosting efficiency, capacity
The building project began in 1994. River Oaks purchased the 80-acre site for a building to consolidate cutting operations, delivery, product development, repairs and returns, customer service, purchasing, accounting and other functions.
River Oaks operates a manufacturing plant in New Albany, which it opened in September, and another in Baldwyn. The company recently closed its Fulton plant, though Simons said that closing is temporary.
The move of the corporate office from Fulton to the new building in Belden is “just a small part of what this is about,” Simons said. River Oaks officials are looking to the new building to boost efficiency and provide more capacity.
For example, shipping originated at Baldwyn and deliveries were scheduled at Fulton, Simons said. Both operations now take place at Belden in a move that promises to cut costs.
River Oaks also invested $1 million in sewing operations to improve efficiency and purchased heat tunnels up to 60 feet long that tighten furniture wrapping before leaving the plant for delivery, Simons said. “You’d never get it that tight by hand,” he said.
In addition, the Belden site includes central fabric-cutting operations and “just-in-time” delivery, a practice that allows firms to keep down inventories while providing fast deliveries to customers.
Looking for gains
“Manufacturers are constantly looking for ways to drive costs down,” said Pamela Singleton, an analyst of textiles, apparel and the furniture industry at Merrill Lynch in New York. “The furniture industry is looking for gains.”
Slack consumer demand because of competition to furniture purchases by the computer industry and other home products, excessive consumer debt, and low consumer confidence are hurting the industry, Singleton said.
To boost investor confidence, seven of nine members of the River Oaks Board of Directors recently bought 300,000 shares of company stock. Simons hinted that more such purchases may take place. “It doesn’t mean we’re done buying,” he said.
One director saw the move as a wise business investment.
Stock prices slid from a high of $14.25 in the past 12 months to $3.75 when directors purchased the stock Feb. 22. The low price “played in our decision to buy,” said Thomas D. Keenum Sr.
But he said 1996 will be a “good year.”
“We’re coming back up out of the cycle,” he said.