Hooker Furniture Corporation today reported net sales of $91.5 million for the quarter ended May 31, 2004, increasing $11.4 million, or 14.2%, from $80.1 million in the same period last year. The 2004 second quarter performance marks the highest quarterly net sales in the Company's history and the tenth consecutive quarter of increased sales compared with the same prior year periods.

"As we expected, improvement in the availability of imported wood furniture and our expanded sales distribution network for Bradington-Young upholstered furniture fueled our record sales performance during the 2004 second quarter," said Paul B. Toms Jr., chairman and chief executive officer. Earlier in 2004, the Company had announced plans to increase finished goods inventory levels to support the higher sales rates for imported wood furniture product. Also, during 2003, the Company merged its Hooker and Bradington-Young sales forces, increasing the number of professional sales representatives selling Bradington-Young product(s) from 24 to over 100. Implementing both of these action plans contributed to the improvement in sales experienced during the 2004 second quarter.

Shipments of imported wood furniture increased $10.1 million, or 26.2%, to $48.5 million in the 2004 second quarter compared with $38.4 million in the same 2003 period. Shipments from leather upholstery specialist Bradington-Young accounted for $15.3 million in net sales during the 2004 three-month period, an increase of $3.1 million, or 25.2%, compared to $12.2 million during the 2003 second quarter. Second quarter 2004 shipments of the Company's domestically produced wood furniture declined $1.8 million, or 6.0%, to $27.7 million from $29.5 million in the year earlier quarter.

"Now that we are achieving better balance between imported wood furniture sales and inventory levels, we are seeing more stability in margins for these goods. Freight and other transit-related costs as a percentage of sales are more in line with our targets and we are not discounting product as much as we were during last year's second quarter when we were trying to move excess inventory," said Toms. Commenting on Bradington-Young's performance for the 2004 second quarter, Toms added, "We are beginning to see the benefits of our plans for expanded distribution of Bradington-Young's products. Higher volume is beginning to translate into improved margins for the upholstery operations."

Margins at the Company's domestic wood furniture factories declined during the 2004 second quarter compared with the same 2003 period. "Although we have lowered overhead and other costs as a percentage of sales through the closing of the Kernersville, N.C. manufacturing facility last summer, this savings has been more than offset by the effect of increasing production costs as a percentage of sales volume resulting from continued declines in order rates," Toms said. "Another factor has been competitive pressure from lower priced imports to value price our domestically produced wood furniture. We continue to carefully monitor our production schedules and capacity utilization."

"Our outlook for the 2004 third quarter is 'fairly bullish,' Toms said, with the Company forecasting an 8%-12% sales increase compared to third quarter 2003. "Our order backlog for imported wood furniture and domestically produced upholstery has improved, and our backlog of domestically produced wood furniture is comparable to last year at this time. We also experienced favorable dealer reaction to our imported furniture and upholstered furniture introductions at the April 2004 International Furniture Market," he added.

In June 2004, the U.S. Department of Commerce made an initial ruling that Chinese manufacturers are dumping wood bedroom furniture in the U.S. market and imposed preliminary duties on those imports. The Company imports certain lines of wood bedroom furniture and produces other lines in its domestic plants. Imported wood bedroom furniture accounts for less than 4% of the Company's net sales. Based on its preliminary review, the Company does not believe that the imposition of the duties announced by the U.S. Department of Commerce on wood bedroom furniture imported from China will have a material affect on the Company's sales or profitability.