Stanley Furniture Company, Inc.

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Stanley Furniture Company, Inc.

1641 Fairystone Park Hwy.
Stanleytown, Virginia 24168
U.S.A.
Telephone: (540) 627-2000
Fax: (540) 629-4085
Web site: http://www.stanleyfurniture.com

Public Company
Incorporated: 1924
Employees: 3,100
Sales: $264.7 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: STLY
NAIC: 337122 Nonupholstered Wood Household Furniture Manufacturing

Stanley Furniture Company, Inc. is a leading designer and manufacturer of furniture, employing over 3,000 people. The high-quality wood furniture produced by the company is targeted for the upper-medium price range of the residential market. The Stanley line includes furniture for bedrooms, dining rooms, home offices, living rooms, and entertainment rooms. The furniture is manufactured in the United States at facilities in Stanleytown and Martinsville, Virginia, and West End, Robbinsville, and Lexington, North Carolina. Distribution is achieved through a broad domestic and international client base of 3,500 furniture stores, department stores, and regional furniture chains. The company’s total sales rose seven percent in 1999 to $264.7 million with net income rising 32.4 percent to $19.2 million.

The Beginning of a Tradition: 1924

At age 33, Thomas Bahnson Stanley had a bright future ahead of him. In fact, his work as an executive at Bassett Furniture Company in Bassett, Virginia, was about to pay off. His employer, J.D. Bassett, was ready to recommend that Stanley be selected as president of the company in January 1924.

Thomas Stanley had a different goal, however. Not content to be president of someone else’s company, he was determined to found a company of his own. Consequently, he offered his resignation at Bassett and founded the Stanley Furniture Company. The youngest of seven children and born in Henry County, Virginia, Stanley founded the company in his home county. Two other family members were associated with the company from the beginning, nephew Fred A. Stanley and brother John W. Stanley.

As Thomas Stanley built his first factory, he realized that he would need workers to make his furniture products and that those workers would need homes. As the Stanley Furniture Company took shape so did Stanleytown—streets were laid and some 100 homes were built. The town and factory were built on 150 acres of what had been pasture, and the factory itself was 150,000 square feet. Rent for the brick and frame homes was four to five dollars per month.

Roaring Business for a Roaring Era: 1920s

One year after Thomas Stanley founded the company, the first suite of furniture was introduced: a dining room suite complete with buffet, china closet, server, table, and chairs. As the furniture was introduced in Grand Rapids, Michigan; Chicago, Illinois; and New York, it was met with enthusiasm.

From 1925 through 1928, the company’s profits steadily grew, as did the feverish pitch on Wall Street. By the beginning of 1929, the Stanley Furniture Company was debt-free and growing quickly.

Stanley’s goal was to manufacture high quality furniture at a price that Americans could afford, and he was succeeding. As sales soared and opportunities rose, Stanley decided to expand. The company doubled its size and production capacity to meet growing demands.

1929: Stock Market Crash

When the stock market collapsed in October 1929, Stanley Furniture Company was in debt from the recent expansion. Banks were closing, factories shutting down, and people everywhere were out of work.

Thomas Stanley promised that no one at Stanley Furniture Company would lose his job. Not willing to send his employees to the breadlines, Stanley asked the 400 employees to work with him to keep the factory open by accepting a pay cut. The employees accepted the cut as well as agreeing to work ten hours of time for nine hours of pay. Stanley himself took a pay cut of 125 percent, cutting his monthly income from $750 to $333.33. The rents in Stanleytown were dropped by 20 percent, and those who were having trouble were allowed to pay when able. The hard work paid off as the Stanley Furniture Company remained open during the Great Depression, operating with a narrow profit margin.

Politics and Business: 1930s-50s

Also in 1929, Thomas Stanley was elected to the Virginia House of Delegates. Despite the hardships his company was facing, Stanley decided to continue in public service and eventually he was elected first as a U.S. representative, then as governor of Virginia (1954-58). While Stanley pursued his political career, he remained dedicated to the company he had founded. Successful in both industry and government, Thomas Bahnson Stanley was respected by his colleagues. When he left the U.S. House of Representatives to become governor of Virginia, then-Majority leader Charles Halleck said, “We who have been trying to attain fiscal integrity in government and reasonable economy where it could be applied, will miss the sound business sense of Tom Stanley. He has been a stalwart warrior in our battle for economy.”

Eventually, his sons, Tom Stanley, Jr., and John David Stanley became involved in the business as well. Tom Stanley, Jr., worked his way from the machine room to the presidency of the company while his brother, John, became head of production.

Soon, it became necessary to expand the company again to modernize facilities and increase production. Unlike the first expansion in the late 1920s, the expansion in 1957 was not met with economic disaster.

That year, Stanley announced a $2.7 million expansion program which, by the time it was completed, cost $4 million. The goal of the expansion was to increase automation and bring the production facilities in line with modern capabilities.

Changing Times: 1960s-70s

In 1969, Stanley Furniture Company became part of Mead Corporation. Mead owned the company for ten years. Then, beginning in 1979, the company became part of several leveraged buyouts. Needless to say, this was a time of change and readjustment for the company, and in the late 1980s, it emerged as a wholly owned entity once more.

1990s and Beyond: Growth and Changing Markets

In November 1992, the company underwent a financial restructuring. A public offering of 1.7 million shares of common stock followed in July 1993. That same year, a fire damaged the Stanleytown plant, temporarily eliminating 12 percent of the company’s manufacturing facilities. A new 60,000-square-foot manufacturing facility, designed for maximum efficiency and future expansion, was built adjacent to the damaged plant.

In 1994 the company discontinued production of custom window treatments and bedcoverings and instead introduced upholstered furniture with a popular Saturday Evening Post/ Norman Rockwell theme. However, in 1998, the upholstered furniture was phased out to refocus on the company’s wood furniture, sales of which were on the rise.

One high growth area had been in the Young America (youth bedroom) product line. The product line had experienced 15 percent growth over the previous five years. Another growth area was in the home office category. In March 2000, the company opened a new facility near Martinsville, Virginia. The 300,000-square-foot building was planned to focus exclusively on the home office line. The company projected that nearly 50 million American households would have home offices by the year 2002. Therefore, the dedicated facility as well as the nearly 200 items in the office collection were planned to meet that growing need. The new $15 million facility was built in Henry County, Virginia, the home county of Stanley’s headquarters. Three hundred new jobs were added as a result.

Company Perspectives:

Dreams begin at home … home begins with Stanley.

Key Dates:

1924:: Thomas Bahnson Stanley founds Stanley Furniture Company, Inc.
1925:: Stanley Furniture offers its first suite of furniture.
1929:: Stanley promises no layoffs during Great Depression.
1957:: Expansion program is launched.
1969:: Company is bought by Mead Corporation.
1979:: Mead divests Stanley, which becomes the subject of several leveraged buyouts.
1988:: Albert Prillaman is named chairman, CEO, and president.
1993:: Company initiates public offering of 1.7 million shares of common stock; fire damages portion of Stanleytown, Virginia, manufacturing facility.
1994:: Company introduces its Saturday Evening Post/ Norman Rockwell collection and enters the upholstered furniture market.
1998:: Company announces phase-out of upholstered product line.
2000:: New facility opens in Martinsville, Virginia for the home office line.

Because of Stanley’s continued investment in the Henry County area as well as the state of Virginia, Governor James S. Gilmore approved a grant of $600,000 from the Governor’s Opportunity Fund to assist with site preparation.

As the new facility was designed and built, special consideration was given to creating a modern and efficient layout. The company planned to utilize state-of-the-art equipment, computerized routers, and ergonomic design for maximum safety, comfort, and.quality with a long-term goal of shipping customer orders in an average of two weeks. “We believe this new plant will be the largest, most modern manufacturing facility for home office furniture in the United States,” Prillaman said.

In April 2000, Prillaman commented on the company’s long stretch of record earnings. “We are very pleased with our first quarter performance, especially considering that we were starting up a new factory and lost production due to inclement weather in January,” he said. “We continue to experience strong demand for our products including excellent results at the recently completed International Home Furnishings Market in High Point, North Carolina. We believe the high growth potential in our Young America bedroom and home office product categories will allow us to continue to outpace industry sales growth.”

Principal Competitors

Ethan Allen Interiors, Inc.; Furniture Brands International; Life-Style Furnishings International; Bassett Furniture Industries, Inc.; Broyhill Furniture Industries, Inc.