Hooker Furniture Corporation

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Hooker Furniture Corporation

440 East Commonwealth Boulevard
P. O. Box 4708
Martinsville, Virginia 24115
U.S.A.
Telephone: (276) 632-0459
Web site: http://www.hookerfurniture.com

Public Company
Incorporated: 1924 as Company
Employees: 1,400
Sales: $341.78 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: HOFT
NAIC: 337121 Upholstered Household Furniture Manufacturing; 337122 Nonupholstered Wood Household Furniture Manufacturing; 421210 Furniture Wholesalers

Hooker Furniture Corporation is a leading supplier of furniture in the United States. It was ranked sixth in the country in 2004. The company specializes in home entertainment centers and other lifestyle furnishings and aims to provide quality furniture at mid-market prices. The 2003 acquisition of Bradington-Young added a complementary upholstered leather furniture product line.

The company formed in Henry County, Virginia, which grew to become a center of the furniture industry in the 20th century. Since the late 1980s, the company has been transforming itself from a manufacturer to a wholesaler of products sourced overseas. Although imports account for most of the company's revenues, Hooker does have some manufacturing operations and distribution centers.

ORIGINS

Hooker Furniture Corporation was formed in 1924 by J. Clyde Hooker, Sr. At the time, the town of Martinsville, Virginia, was experiencing hard times. Hooker, then just 29, suggested launching a furniture factory to provide jobs. Startup capital of about $28,000 was raised by the community, while a local newspaper publisher named Rorrer A. James, Jr., contributed 20 acres of land. Originally called the Bassett-Hooker Furniture Company, it began operations in the same year as another well-known Henry County manufacturer, the Stanley Furniture Co.

The company started by specializing in bedroom suites. Revenues were about $1 million in the first year, when the plant employed about 200 people. A line of dining room furniture was added in 1928.

Clyde Hooker, Sr., had wed Mabel Bassett of the famous Virginia furniture family in 1920. Their son, J. Clyde Hooker, Jr., became president of Hooker Furniture in December 1960 and was named CEO six years later. Clyde Hooker, Jr., joined the company after attending Virginia Military Institute and serving in the military in World War II.

Clyde Hooker, Jr., led the company through decades of change before stepping down from the CEO position in December 2000 and resigning as chairman in 2004 due to health issues. He was succeeded by his nephew, Paul Toms, Jr., who told the Roanoke Times that Hooker was credited with helping the company survive an influx of low-priced foreign competition by developing niche markets. During the younger Hooker's tenure, sales grew from $4 million in 1961 to $251 million in 2000.

The company spent about $1 million in the mid-1960s to add a warehouse and upgrade equipment. A separate, $2 million expansion was launched in 1969, bringing total production and warehousing space to 500,000 square feet, according to the detailed early history of the company in Foresight, Founders, and Fortitude: The Growth of Industry in Martinsville and Henry County, Virginia.

By this time, sales were about $10 million a year. The company had 500 employees. Fifty sales reps covered the country, and Hooker kept showrooms in the furniture center of High Point, North Carolina, as well as in New York City, Chicago, San Francisco, Los Angeles, and Dallas.

In 1970, Hooker acquired a former Burlington Industries and Linwood Co. plant in Kernersville, North Carolina. This site would employ about 300 people.

TRENDS INCLUDE OUTSOURCING AND OUTFITTING HOME OFFICES

Hooker began outsourcing production to the Far East and other low wage areas. This transition began in 1988. By 1999, about one-quarter of the company's products were being imported.

In 1990, the company established the Hooker Furniture Community Improvement Fund. This used proceeds from twice yearly sales of samples and returns to help charities and civic organizations.

Home offices were providing a booming market in spite of a slow economy. Renewed interest in personal computers was fueling the trend, a sales executive explained to Wood & Wood Products. The popularity of ever-larger big-screen televisions was giving the company another opportunity to develop new products. A former Thomasville Furniture plant in Pleasant Garden, North Carolina, was acquired in 1993 to provide more capacity for home entertainment center production.

In the mid-1990s, Hooker installed a state-of-the-art logistics system at its warehouses in Virginia and North Carolina. It used wireless bar-code scanners and radio frequency (RF) tags to provide real-time inventory control. The system was credited with raising productivity, increasing shipping accuracy to more than 99 percent, and improving customer service.

Revenues were $145 million in 1995; net income was about $9 million. Hooker averaged double-digit revenue (13 percent) and profit (14 percent) growth through the 1990s.

The company's manufacturing methods were also changing. More automation was used. State-of-the-art sanders and finishing machines were imported from Europe. The company was adopting a low-inventory approach, a plant manager told the Hickory Record in 2003. Smaller batch sizes were being run. Responsiveness was one remaining advantage domestic manufactures had, CEO Paul Toms told the Roanoke Times.

EMPLOYEE STOCK OWNERSHIP BEGINS

Hooker set up an employee stock ownership plan (ESOP) in 2000. The ESOP acquired a 31 percent holding in the company for $22.5 million. At the time, Hooker had about 2,000 people worked for Hooker, nearly half of them in Martinsville. Management continued to be dominated by family members after the ESOP. Paul B. Toms, Jr., who joined the business in 1983, succeeded his uncle J. Clyde Hooker, Jr., as chairman and CEO in December 2000.

COMPANY PERSPECTIVES

During its 80 years of operation, Hooker Furniture Corporation has sought to exhibit integrity in all its relationships with employees, customers, sales representatives and suppliers. The company has established a strong reputation for providing innovative, quality products at an exceptional value. At Hooker Furniture, our mission is to enrich the lives of the people we touch through innovative home furnishings of exceptional value. The core values we stand for as a company are: integrity, listening, caring, innovation, service, responsibility, citizenship and honesty.

The company was entering joint marketing agreements to expand its customer base. For a few years, Hooker produced trend-spotting guru Faith Popcorn's Cocoon collection aimed at women working from their homes. In 2001, Hooker brought out a line of PGA TOUR® furnishings aimed at people embracing the golfing lifestyle. It also maintained many other brands, including Intimate Home, Preston Ridge, Casa del Sol, Waverly Place, Modern Classics, Highgate Manor, Seven Seas, and Kimball Bridge.

Hooker's stock was listed on the NASDAQ Small-Cap Market in June 2002 after being traded over the counter. At the time, the company had about 1,850 employees in Pleasant Garden, Kernersville, and Maiden, North Carolina; Martinsville and Roanoke, Virginia; and other locations.

In 2003 the company made its largest acquisition to date by acquiring the Bradington-Young company of Cherryville, North Carolina, for $24.5 million. Bradington-Young was established in 1978. It made upholstered furniture and leather chairs and recliners and, like Hooker, competed in the higher end of the market. The product lines were seen as highly complementary. The deal added 400 employees to Hooker's workforce and brought its total annual revenues to nearly $300 million.

PLANT CLOSINGS BEGIN

Sales were slipping for domestic furniture, which was more expensive to produce domestically than that outsourced abroad. Hooker significantly cut the workforce at its Martinsville, Virginia, plant in 2001. The company closed a plant for the first time ever in August 2003, when the Kernersville site was shut down. Another, smaller North Carolina, plant, in Maiden, closed in 2004. More than 500 jobs were eliminated in the two closings.

The next year, Hooker shut down its Pleasant Garden, North Carolina plant, which had employed 280 people. A spokesperson explained that it was slated for closure because it was the least flexible of the company's remaining plants. Hooker still had facilities in Martinsville and Roanoke, Virginia.

After several years of top line growth, Hooker's total sales slipped $4 million to $342 million in the fiscal year ended November 30, 2005. Net income was $12.5 million, down nearly a third from the previous year. Bradington-Young contributed $62.5 million of revenues, a record for the unit. Imported furniture accounted for 62 percent of overall revenues; two-thirds of the imports were from China.

Hooker had joined a coalition of U.S. wood bedroom furniture manufacturers seeking higher import duties on furniture from China, which they said was unfairly priced below costs. However, many American retailers were vigorously opposed, and Hooker withdrew from the antidumping coalition after a few months.

Hooker still had a number of manufacturing sites after the plant closings. It was also investing millions in its distribution facilities with the aim of reducing shipment times. Most items were delivered to retailers within a month.

NEW PRODUCTS FOR EVOLVING LIFESTYLES

In the early 2000s, the company continued to respond to changes in technology and domestic home life with products designed for new consumer priorities. One line of innovative new products addressed the proliferation of flat screen televisions in American living rooms. Some of models featured pop-up consoles to conceal the TVs behind a bookshelf or panel while not in use.

Another new niche was the market for juvenile bedroom furniture. Hooker pitched its Youth Furniture for Life line, launched in 2004, as being appropriate for various stages in a growing person's life. It was also suited for guest bedrooms, and was especially appropriate for the the soon-to-be "empty nest" homes of the Baby Boom generation.

KEY DATES

1924:: J. Clyde Hooker, Sr., forms a furniture company; first year revenues are $1 million.
1960:: J. Clyde Hooker, Jr., succeeds his father as company president.
1970:: The Kernersville, North Carolina, plant is acquired.
1988:: Hooker begins importing furniture.
2000:: An employee stock ownership plan (ESOP) is established; Paul Toms becomes CEO.
2001:: The workforce at the Martinsville plant is reduced.
2002:: Stock begins trading on the NASDAQ Small-Cap Market.
2003:: Hooker acquires leather seating producer Bradington-Young and closes its first wood furniture plant in Kernersville, North Carolina.
2004:: The Maiden, North Carolina, plant closes.
2005:: The Pleasant Garden, North Carolina, plant closes.