Hooker Furnishings Corp (HOFT) 2009 Q4 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to Hooker Furniture's quarterly investor conference call reporting its operating results for the fiscal fourth quarter and year ended April 15, 2009. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Larry Ryder, Executive Vice President of Finance and Administration and CFO. Mr. Ryder, you may begin.

Thank you, Rufus. Let me go back and correct something there, we are reporting the operating results for November 3, 2008, through February 1, 2009, quarter and the fiscal year, which began in February 4, 2008, and ended February 1, 2009.

Good morning and welcome to our quarterly conference call review to review our fiscal year and fourth-quarter 2009 sales and earnings. We certainly appreciate your participation this morning. Joining me today is Paul Toms, our Chairman, President and CEO.

During our call today we may make forward-looking statements which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our SEC filings and the press release announcing our fourth-quarter 2009 and fiscal 2009 results. Any forward-looking statements speak only as of today and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call.

As we reported earlier this month, we produced net income of $6.9 million or $0.62 per share on sales of $261.2 million for our 52-week 2009 fiscal year ended February 1, 2009. For the year, net sales decreased $55.6 million or 17.6% compared to $316.8 million for the 53-week 2008 annual period while net income decreased approximately 65% compared to net income of $19.7 million or $1.58 per share for the 2008 fiscal year.

Net sales for the 13-week 2009 fourth quarter were $56.5 million, down 31.3% compared to net sales in the 14-week 2008 fourth quarter. We have reported a net loss for the fourth quarter of $719,000 or $0.07 per share, primarily as the result of a $4.9 million pretax intangible asset impairment charge recorded in the quarter. This charge amounted to $3.1 million after-tax or $0.28 per share.

The non-cash charge related to a write-off of all goodwill for the Bradington-Young leather upholstery and Opus Designs youth furniture lines and a write-down of the carrying value of the Bradington-Young trade name. Now Paul will comment on our performance for the 2009 year and fourth quarter.

Thank you, Larry, and good morning, everyone. Given Hooker Furniture's 85-year history of strong financial performance, 2009 obviously was not one of our better years. However, we successfully navigated the economic crisis this year and remained bullish on the long-term future of the Company. Hooker Furniture has been profitable in every annual reporting period since 1930 and we are gratified to have continued that track record by producing a profit of just under $7 million in fiscal year 2009.

We also maintained a respectable operating margin and effectively managed our balance sheet. We have a strong cash and credit availability position, no unutilized assets, and very little debt. In response to lower demand, we have reduced costs and shaped a leaner, more efficient organization.

Our financial strength has become a key differentiator that is increasingly important to our customers and suppliers. We want to be aligned with partners who can survive the current downturn, continue to invest for the future, and help them emerge successfully. We remain confident in the ability of our tested and proven business model to keep us competitive, well-positioned, and profitable in the long-term.

Even in the short term we see a few silver linings in our financial picture. First of all, we are encouraged by our ability to stabilize margins even in the face of a steepening decline in volume during the fourth quarter and an operating loss in our domestic upholstery operations for the year.

Excluding restructuring and special charges, our 2009 fourth-quarter operating margin was 6%, an improvement compared to our operating margin through the first nine months of fiscal year 2009. We accomplished this primarily by maintaining gross margins for our imported Wood Furniture business and by lowering operating costs at all of our businesses.

We have achieved this lower cost structure through a variety of measures including curtailed spending, workforce reductions at the Company's wood and upholstery operations during the second half of the year, and the implementation of lean office at Hooker Wood Division and also lean Manufacturing at our upholstery operations.

Secondly, net sales for our ongoing upholstery business or imported Wood Furniture product line did not decline as sharply as aggregate sales including discontinued domestically-produced wood furniture. While aggregate net sales declined almost 18% for the year, net sales per day excluding discontinued domestically-produced wood furniture declined 15%.

While this is one of the highest annual sales decreases we have ever experienced during our long history, we believe it is comparable or lower than average in the context of sales declines reported throughout the industry this year.

Third, we have lowered our breakeven points at both the Sam Moore and Bradington-Young upholstery divisions by approximately 20% under the leadership of Upholstery Division President, Alan Cole. We have accomplished this cost management and reductions and lean manufacturing at Bradington-Young's frame assembly and upholstery manufacturing facilities.

In addition to these cost reductions, we have reorganized and strengthened our Upholstery Division management teams with Alan more closely involved in the day-to-day operations at both companies.

At both Bradington-Young and Sam Moore we have added management talent. Highly respected upholstery merchant Mike Delgatti recently joined Bradington-Young as Executive Vice President of Merchandising, positioning the Company to address the trend towards more casual lifestyle seating. Sam Moore made improvements in customer service, inventory turns, and logistics while reducing costs through the addition of Steve [Shieler], our Vice President of Supply Chain.

While the sales slump has negatively impacted capacity utilization and profitability at our domestic upholstery facilities, we believe our upholstery brands are of vital importance to us in the long term. The cross-merchandising opportunities between wood and upholstered furniture are critical for developing major collections and for supporting retail programs like our SmartLiving ShowPlace store within a store galleries. We have already reaped the benefit of cross-merchandising in the home office category and see potential for coordinating home theater consoles and wall units with home theater seating and whole home collections as well.

Finally, another silver lining in our financial performance this year was our ability to reduce selling and administrative expenses by $5.8 million or 11% to $46 million, compared with $51.7 million in fiscal year 2008. Driving that decrease were lower selling expenses on lower sales, lower compensation, benefit, and other expenses as a result of workforce reductions at our wood and upholstery operations and actions taken throughout the year to reduce non-essential spending.

As important as cost reductions are we know we can't cut our way to success. True growth comes from creative, strategic initiatives and investments in the business. Our financial strength has enabled us to be proactive in several key areas this year.

First, we made strides towards -- this year towards our goal of being a complete home furnishings resource in all vital product niches and the premier marketing venue for better to best furniture brands. We expanded beyond our strength in traditionally-styled, upper medium price point product to offer retailers a broader spectrum of designs and price points, presenting opportunities for incremental sales and increased share of market.

Our launch of a moderately-priced casual lifestyle brand for younger consumers called Envision should help us reach a broader demographic group and a greater variety of household types. The Envision product is scaled for smaller homes, condos, apartments, and second bedrooms.

Secondly, in our warehousing, distribution, and global sourcing operations we increased our ability to service our customers by opening two Asian warehouses this year as well as our West Coast service center in Carson, California. We also this fall named Barney Peach as our Vice President of Asian Operations giving us a seasoned officer on the ground in Asia with responsibility for product quality, packaging, on-time delivery, and overall vendor performance. We are already benefiting from having Barney to oversee all these areas on a daily basis and develop our Asian team.

Another area where we made a strategic investment was in signing a lease and upfitting a new 32,000 square foot showroom for Sam Moore adjacent to our existing Bradington-Young showroom in High Point, North Carolina. By relocating the Sam Moore showroom to the 10th floor of the International Home Furnishings Center we now have all of our brands -- Hooker, Opus Designs by Hooker Furniture, Envision, Bradington-Young, and Sam Moore -- on the same floor in prime locations, which we expect will increase buyer traffic and cross-shopping between the showrooms.

Now that I have pointed out the upside of our financial picture and some of our investments and initiatives undertaken, I would like to call on Larry again to discuss factors that drove our sales and earnings performance this year.

Thanks, Paul. Obviously, the recession was the primary driving factor in our lower sales and profit, but there are other factors that should be pointed out as well. On the sale side revenue was negatively affected by shorter operating periods in the 2009 fourth quarter and fiscal year and by lower shipments of discontinued domestically-produced wood furniture as we exit that category.

Because we adopted a fiscal year that ends on the Sunday closest to January 31 of each year, the 2008 annual and quarterly periods were one week longer than the comparable 2009 periods. While sales declined nearly 18% on an aggregate basis, as Paul mentioned earlier, average daily net sales excluding the impact of discontinued domestically-produced wood furniture declined at a lower rate of 15%.

Another impact on revenues was the significant decline in the average selling prices. Contributing to this decline was a sharp drop in the average selling price of upholstered furniture due to the increased proportion of upholstery sales from Sam Moore's less expensive, predominantly fabric-covered seating in its first full year as a Hooker subsidiary. Bradington-Young's imported and domestically-produced leather upholstered furniture showed higher average selling prices while Sam Moore's average prices declined in both domestic and imported items.

Average selling prices were also impacted by our exit from the domestic wood and metal furniture business and heavy discounting of these discontinued products during the year. The volume of higher-priced domestically-produced wood products was partially replaced by lower-priced imports. The average selling price for imported wood and metal furniture decreased due to heavier discounting in a challenging market and the mix of products shipped.

Now on the profitability side, let's look at key factors affecting that performance. We experienced an erosion of gross profit margin to approximately 23% of net sales for fiscal 2009 compared with almost 26% in the prior fiscal year. Factors impacting this decline included underutilized capacity as a result of lower sales rates and its effect on overhead absorption, principally for domestically-produced upholstered furniture. Also, the rising cost of imported wood products and higher raw material costs for upholstered products, although these cost increases were partially mitigated by a mid-year price increase to the Company's customers.

Also, substantial discounting on the sale of remaining domestically-produced wood furniture and increased warehousing expense from the addition of two facilities in Asia and the West Coast Center in California. These costs were partially offset by lower salaries and benefits expenses resulting from staff reductions at our Bradington-Young and wood and metal furniture operations.

Selling and administrative expenses increased as a percentage of net sales for the year due to lower net sales. However, as Paul stated earlier, these expenses actually declined $5.8 million or 11.1%, driven primarily by lower selling and compensation expenses, lower professional fees, and lower contributions expense due to our donation of a high point showroom in fiscal 2008. The most significant overall impact in profits for the quarter and the year were the fourth-quarter intangible asset impairment charges.

The decline in our share price, which mirrored the declines experienced by other companies in our industry and the overall stock market, resulted in a decline of our market capitalization below book value. In completing our annual asset impairment testing that decline resulted in the total write-off of $3.8 million in goodwill related to the acquisitions at Bradington-Young and the Opus Designs youth bedroom line. In addition, we wrote down the value of Bradington-Young trademark by $1.1 million.

During the 2009 fourth quarter we recorded a restructuring credit of $132,000 compared to a net restructuring credit of $454,000 in the 2008 quarterly period. For the fiscal year 2009 we recorded a restructuring credit of $951,000 compared to a restructuring charge of $309,000 for fiscal 2008.

Our operating income margin for fiscal 2009 decreased to 4% of net sales compared to an operating income margin of 9.4% of net sales for fiscal 2008. The main factors in this decrease were a $3.7 million increase in restructuring and intangible asset impairment charges, a decrease in the gross profit margin to 23% from about 26%, and the increase in selling and administrative expenses as a percentage of net sales to 17.6% in the 2009 period compared to 16.3% in fiscal 2008.

In spite of all of these challenges, one of the bright spots in our financial performance and competitive position this year is our balance sheet, which is solid. As Paul mentioned earlier, we have a strong cash and credit availability position, no unutilized assets, and little debt.

Cash and cash equivalents declined by $21.3 million to $11.8 million as of February 1, 2009, from $33.1 million on February 3, 2008. We repurchased approximately 800,000 shares of our common stock during 2009 for $14.1 million completing that stock repurchase program early in the 2009 third quarter.

For the year, inventories increased to $60.2 million as of February 1, 2009, compared to $50.6 million a year ago. Also, inventory levels increased during the 2009 fourth quarter by $4.2 million as a result of the steepening decline in orders and sales experience during the periods and the receipt of inventory for new products introduced at the October 2008 furniture market.

As we reported in our press release earlier this month, forecasting demand continues to be a challenge in this economic environment. We continue to modify our inventory plan in reaction to the steepening demand -- decline in demand and expect to bring inventory levels down over the next two to three months.

Long-term debt of $5.2 million declined during the year by $2.7 million as a result of scheduled repayments. Our debt to total capitalization ratio stands at 3.9% as of year-end. Having a low level of debt in this tough economic environment enhances our financial flexibility and results in relatively low interest burden during times when operating profits are under pressure.

Total assets decreased $21.8 million to $153.5 million at February 1, 2009, from the $175.2 million the previous year, primarily as a result of a $21.3 million decrease in cash and cash equivalents. A $9.7 million increase in inventories, a $1.3 million increase in the cash surrender value of life insurance policies, and $1.2 million increase in prepaid expenses and other current assets were offset by an $8 million decrease in net receivables and a write-off of $4.8 million of goodwill and intangible assets from prior acquisitions.

Working capital decreased by $11 million to $91.3 million as of February 1, 2009, from $102.3 million at February 3, 2008, principally as a result of the decreases in cash and cash equivalents in receivables offset by an increase in inventories, prepaid expenses, and other current assets and a decrease in current liabilities. Now I will turn the discussion back over to Paul for his outlook.

Thanks, Larry. As the economy has worsened over the past six months, we have experienced a steepening decline in year-over-year incoming order rates. We believe we are in for another quarter or two of challenging conditions. However, we also believe the economy may have hit the trough and are encouraged by a pickup in housing activity over the last two months and steady gains in the stock market since March 9.

We expect to see a slight increase in consumer confidence by the third or fourth quarter if home values stabilize and the stock market continues to rebound from its low point earlier this year. That would be good news for furniture and other large-ticket consumer durable purchases. We are approaching our forecast and inventory planning with expectations for marginal improvement in business this fall and will time orders of our strongest introductions from the upcoming furniture market next week in High Point for late summer delivery.

We are excited about the new products and merchandising programs we will be introducing at the upcoming market and are optimistic that our dealers will see these product line expansions as opportunities to stimulate business and engage consumers this fall. At this point that concludes our remarks and I will turn the call back over to Rufus, the operator, for any questions.

(Operator Instructions) Todd Schwartzman, Sidoti & Company.

Good morning, Paul. Good morning, Larry. First question is how -- with all the personnel announcements and managerial appointments you have made in recent months -- I think there have been several. Given that as well as the workforce reductions that have already been put in place, how should we think about the net effect on compensation for this year?

I think our net compensation costs are going to be significantly less this year across the entire company, but let me address the two upholstery divisions because that is where we added the two senior executives at both companies. At Bradington-Young I think -- I am sure we noted this in our release in December -- our former president and head of merchandising, Scott Young, retired at the end of the December, and so Mike Delgatti came in in place of Scott and assumed the merchandising roles here.

In Sam Moore's case, mid-year/last year their president, Mike Moldenhauer, retired and also the head of merchandising, Erin Dooley, left the Company. And so really didn't replace either one of those people. Alan assumed the responsibilities of running the Company on a day-to-day basis and we used an independent merchandising professional to help us with the merchandising there. And so net-net we have less compensation costs in both those companies than we did.

Then across the total company a significant part of the officers' compensation is tied to profitability of the companies with the bonus. Obviously, we had significantly less profitability and bonuses were about 85% less than they were the prior year.

Okay. That is helpful, thanks. In which quarter this year will you reap the full benefits of the layoffs?

I think we have reduced the breakeven cost and breakeven point at both companies, so we are probably already seeing the benefit of that. But I think to really see the full benefit, we are going to have to have a little bit better sales environment. So I would say if we see the uptick that we are hoping for in the fall it would be our third and fourth quarters.

And with Q1 now 2.5 months in, where are you with the discounting on domestic wood?

We are almost out of domestic wood inventory. It's insignificant in our total scheme of things.

Todd, right now our domestic wood is about $250,000 at cost and we have got it fully reserved at this point. So there is no impact on the income statement going forward.

Great. Can you talk a little bit about the Asian supply chain -- Chinese costs, labor, materials, and such?

As you are aware, in the middle part of last year, probably second and third quarters, we saw tremendous inflation in almost everything coming out of Asia. The product costs for us, which we used to count on being stable from the time we introduced a product through its life, last year we started taking increases on in-line product, increases in a 5% to 10% range.

We also had cost increases for ocean freight as oil went to $145 a barrel. We had contracts that came up for renewal for ocean freight in May and I think the freight lines were trying to hedge their bets a little bit by increasing container costs plus putting in a quarterly fuel bunker surcharge. So in anything steel-based -- mechanisms for our reclining chairs -- went up. Foam went up for upholstered products here and coming out of Asia.

So we were in a very inflationary period in the middle of last year. However, by the fall with oil prices going down, commodity prices going down and business hitting the tank we started to see decreases in all of those costs. And are still seeing decreases up until right now in many of those costs.

Do you see that continuing for the full year?

I don't know. I really don't envision oil going much lower than it has and some of the other commodities -- probably not. I think as the economy strengthens, and hopefully that will begin third or fourth quarter this year, then I think you will start to see probably modest increases in some of that. I don't think we will -- we are not forecasting much inflation at all this year and last year we were looking at probably 7% or 8%.

And in terms of inventory getting that in line with your plan, you said that two to three months is your timetable for doing so?

Well, I think what we said is we expect to see improvement over the next two to three months. And we do, we have and I think to get to our targets it will probably take us until mid-year, say July/August. We might be able to get there a little bit quicker if we were willing to just totally curtail ordering, but I think there is implications to our vendors if we do that. We need for them to emerge on the other side of this healthy also.

So we will bring inventory levels down -- I think we can reduce total inventories maybe by 30% from what they were at a high water mark, but it may take us till mid-year or July/August to do that.

So that could reach the mid-40s lets say?

I think that is realistic.

Okay. Just curious about the Envision products, could you speak to the differences in construction between Envision and Hooker's older case goods? I realize that there is a size difference of course, but what about materials?

Not really significant difference in materials, maybe have slightly smaller drawers and the finishes are not as sophisticated as the Hooker bedroom at upper price points, but it's primarily scale and style. They are much cleaner styled bedrooms than the Hooker and they are slightly smaller scale to fit in smaller homes and condos and apartments.

And the wood species themselves -- similar?

They are similar.

Okay. Finally, geographically speaking, where does demand begin to pick up significantly first?

That is a good question and I don't have an answer to that. Certainly the areas that have been most impacted and where housing values have dropped the most are the areas that our business has suffered the most -- Southern California, Arizona, Las Vegas, Florida, Michigan. So you would think maybe those areas will come back because of the values that are out there in homes and perhaps people will start to go back into those markets. But that is only a guess on my part.

Are there any anecdotal signs that in some of those markets you just mention that is happening now?

No. I mean, I guess I have heard some reports of uptick in housing activity in Florida, say in the Naples/Fort Myers area. But as far as having statistics, no, I don't.

Okay. Thanks a lot, gentlemen.

Matt McCall, BB&T Capital Markets.

Good morning. So let's see, Larry, you talked about down 15% organic. Can you talk about --? And then, Paul, you mentioned bringing down the breakeven point each year in the two upholstery segments. Can you talk a little bit about the performance by business this year, probably qualitatively, both from a top-line perspective relative to that 15%? And how we progress through the year, what that looks like currently?

And then also the same question on the profitability front. You brought the breakeven down so how are each one of the segments looking from a profitability standpoint?

At this point we are still unprofitable in our Upholstery Divisions. Although we have brought the breakeven points down, I don't think we brought them down far enough to be profitable in this sales environment.

The environment has deteriorated as the year progressed. I think at Bradington-Young we were profitable up until we hit the economic downturn in late September. Sam Moore maybe less profitable, slightly unprofitable, but we have taken cost out as we have gone through the year. But I think -- we are constantly evaluating those businesses and breakeven points and capacity. We are going to need a little bit of help top-line, I think, to turn those companies around, although I think we can mitigate the losses by some of the initiatives we have underway.

Okay. And in the past you guys have highlighted some of the new national customer wins and the expectations there. Can you give us an update on where those stand? And in this environment have you been presented with any opportunities to take even more share as some, I guess, not as well-capitalized competitors face hard times?

That is an interesting question. I can tell you anecdotally that right after the spring one of our sales representatives who was then calling on a large regional player and the buyer said we are very interested in suppliers that we know are going to be here. He said that has never been part of our thinking before was worrying about whether our suppliers would be here in a year or two, but I think that has factored in to most people's decisions on who they are going to buy from.

We did have a large leather player, DeCoro, that went out of business just a month or two ago. I think this is a company that was doing over $250 million and they left a lot of their customers hanging. So I think that -- people are more concerned about the financial stability and staying power of their vendors than they have maybe been previously.

Matt, to follow up and as far as a little bit of a forecast, we are encouraged about the reception for our Envision product at the pre-market this year. We believe that this has an opportunity for presenting new product introduction, perhaps getting additional floor space, without cannibalizing the existing Hooker traditional line. So I think we are encouraged about the reception that I it got at that pre-market and the opportunities that we are faced with going forward this year.

I will also say, Matt, it's kind of like two steps forward and one step back when some of the national accounts and larger original accounts that we have targeted --

Okay.

-- efforts. The products that we have put on floors at these accounts have done pretty well. But their business is down 20% year-over-year and so we are feeling some of that as well. But I would echo what Larry said, I think the launch of the Envision product has been timely and it has helped us with some of the regional target accounts that we had.

Okay, all right. Paul, help me just think through something. So you are working down your inventory, maybe get to your goal in the July timeframe yet you are expecting a little bit of a seasonal uptick. Help me understand first from an inventory perspective, how quickly can you react should that occur? And, secondly, with all the costs you have taken out is there any cost that could return should you see that seasonal uptick in the back half, other than just the incremental selling expenses and commission?

No, I don't see us having to add cost as the business increases other than sales commissions and design royalties that are directly related to sales.

Okay.

I think other than that we are pretty good. I am sorry I am forgetting --

That is okay. The inventory -- working it down but yet expecting a seasonal pickup so I am just trying to make sure that you have got some lead time issues that you have to deal with.

Right and what we are doing with inventory is trying to get to a point where we can turn our inventory about 3.5 times. This year that may be a little bit aggressive, maybe it's three turns, but last year it was closer to two. I think that there is a lag time of say three to four months from when we place an order to often being able to get the products in to our warehouses.

As I mentioned in the previous question, we are trying to work with our suppliers to keep a steady amount of business. It's less orders than we were given last year, but it's probably -- we can be a little more patient in working the inventory down than just turning the faucet completely off. And that is to keep them healthy.

We have also already placed orders on the products that we feel best about that we are introducing at the market next week. We have had a chance to go out on the road and talk with large retailers about those products and gotten some commitments already and a lot of interest. Then we had 40 of our largest customers in High Point for free market in mid-March and got additional commitments and feedback.

So we are taking maybe a little more risk than historically when we order new products, but that is also to keep our vendors busy and to have us in an inventory position on new products in July/August so that if we get the normal uptick right around Labor Day that we will be well positioned. We are also probably keeping a little more inventory on our in-line bestsellers than what we would do if we had a little more continuity in the supply chain.

Okay. Just to clarify, you talked about deteriorating orders throughout the year and you talked about maybe some macro indicators stabilizing, but you haven't seen sequential stabilization in your order pattern. Has it continued to deteriorate?

You are correct. We have not seen sequential improvement in our incoming orders and it has deteriorated a little bit in the last 30 to 45 days. It typically does in our summer. You would like to hope that it was so poor in the fall and winter that it wouldn't get any worse, but probably realistic we will see the normal downturn in orders as we go through the May/June/July period.

Right. Maybe I will ask it a different way, Paul. Is the year-over-year change getting -- the year-over-year gap or decline getting wider or are you seeing the normal seasonal pattern from that and those year-over-year declines are basically holding?

Well, the year-over-year decline for the fourth quarter was the worst we have had yet. So, obviously, that was worse than the third quarter but the fourth quarter was really the first quarter where you had the full impact of what happened in the stock market and the credit cut starting in late September.

First quarter, we haven't really given guidance on that and I don't think we are ready to do that today. But incoming orders continue to trend down and I guess the comps may get a little bit easier as we go through the year. But (multiple speakers) basis we are still seeing a little bit of a downturn.

I got you. And then, finally, Larry, you guys are I guess in an enviable position from a balance sheet standpoint. I have got you generating a little cash this year. What is the plan there? Are you just going to hoard the cash for now or maybe get back and buy some stock at these levels?

Well, we think keeping our powder dry for the time being is a wise move at this point in time. We will probably take a look at additional stock repurchases as the year goes on, as it warrants. Right now on our cash flow projections, based on what we consider to be conservatives sales estimates going forward for the year in addition to our inventory plan that we have got in place, we are generating sufficient cash to operate the business. If we are able to reduce inventories, we will generate some excess cash.

But I think right now we feel that we just need to take a kind of a wait-and-see attitude. If we are correct and we start to see things move forward and we generate a little more excess cash later in the year then we will certainly consider the stock repurchase again.

Okay. Okay, that is fair. Thank you, guys.

And with that, ladies and gentleman, we have no further questions on our roster. Ladies and gentlemen, this does conclude the Hooker Furniture conference call. We do appreciate your participation and you may disconnect at this time.