Martinsville, VA, August 19--Major furniture manufacturer and importer Hooker Furniture, with 2003 net sales of $309 million, announced today that it will close its Maiden, N.C. plant by late October 2004.
The 200,000-square-foot plant, one of four wood furniture manufacturing facilities operated by Hooker in Virginia and North Carolina, employs approximately 240 people, representing about 13% of the company's total workforce, and produces modular home office furniture, wall units and entertainment centers.
With the closure of the Maiden facility, Hooker will maintain three wood furniture production plants, three upholstered furniture plants, two supply plants, a distribution center and several other warehouses, all located in Virginia and North Carolina.
"Even though Hooker is performing well with 10 consecutive quarters of increased sales (compared to the same prior year quarters), there has been a major shift in where wood furniture is produced in this industry," said Paul B. Toms Jr., chairman and chief executive officer.
"Because of ever-increasing customer demand for lower-priced wood furniture imported from Asia, we have been unable to generate enough orders to run all four of our domestic wood furniture manufacturing facilities at full capacity. We believe we can improve the profitability of our domestic operations by better aligning our production capacity to demand," he said. "The plant closure in Maiden should enable us to operate our remaining three wood furniture plants at normal work schedules," Toms said.
In addition to its domestically produced wood furniture operations, Hooker also operates its Bradington-Young leather upholstery division and imports wood and upholstered furniture. Increasing sales and profitability on the imported and upholstered furniture side of Hooker's business have more than offset the Company's decline in orders for domestically produced wood furniture, resulting in overall sales and profit growth for the company.
The company expects to realize the benefits of greater efficiencies and cost savings with increased production volume at its other wood furniture manufacturing facilities. Those savings are estimated to range from $2.0 to $2.5 million annually once the Maiden facility is closed.
In connection with the closing of the Maiden, N.C. facility, the company expects to record restructuring and related asset impairment charges of $2.5 to $3.2 million pretax ($1.6 million or $0.13 per share to $2.0 million or $0.17 per share after tax), principally for severance and related employee benefit costs, and the write-down of certain assets at the Maiden facility. The company expects to recognize 80-90% of these costs in the fiscal third quarter of 2004 and the balance in the 2004 fourth quarter.
Hooker remains committed to domestic manufacturing as a vital part of its strategy of offering a blend of imported and domestic wood and upholstered furniture. "We're still working aggressively to hold on to our domestic business. We're entering new categories that are domestically produced and working harder than ever to promote and add value to the domestic products we offer," Toms said.
