Higher sales, increased production levels and operating efficiencies are helping to offset these higher costs
Jeffrey R. Scheffer, chairman, president and CEO

Stanley Furniture Company, Inc. (STLY) reported record sales and earnings for the second quarter of 2005. Both sales and earnings slightly exceeded the high end of management's previous guidance provided in late April 2005.

Net sales of $83.6 million increased 15.8% and earnings per share grew 10.0% to $.44 from an exceptionally strong second quarter of last year. This marks the thirteenth consecutive quarter of sales growth over the comparable prior year quarter and the seventh consecutive quarter of double digit sales gains over the comparable prior year quarter.

Second quarter operating income rose to $9.4 million, or 11.2% of net sales. Operating income for the first half of 2005 increased to $18.8 million, or 11.3% of net sales, from $16.5 million, or 11.5% of net sales, in the year-ago first half. Operating margins have remained consistently strong, ranging from 11.1% to 11.3% of net sales, in each of the last four quarters. Higher raw material costs, compensation costs, energy costs, freight costs, increased warehouse expense and tariffs imposed on wooden bedroom furniture imported from China are negatively impacting operating income. Higher sales, increased production levels and operating efficiencies are helping to offset these higher costs.

"We are pleased to report another quarter of significant progress," commented Jeffrey R. Scheffer, chairman, president and chief executive officer. For the most recent four quarters our sales have increased 15.7% from the previous four quarter period. Blending efficient domestic manufacturing in our highly focused facilities with strategic outsourcing of certain component parts and finished goods has allowed us to improve the styling and value of our products. Combining this with our culture and reputation for high quality and fast delivery differentiates us from our competition. We enter the second half with considerable momentum and have raised our earnings guidance for 2005."