Transcript Slide 1
Company and Industry Overview
(NYSE:FBN)
Company and Industry in great state of change.
Manufacturing realignment
• FBN has closed 33 of 59 plants (26 case good, 7 upholstery)
• Industry wide over 50% imports
Retail realignment
• FBN has shifted retail strategy – more control at retail
• Hundreds of undercapitalized or small retailers out of business
Competitor realignment
• Discounters expanding the market
• Lifestyle retailers fastest growing segment
Despite changes, industry continues to grow.
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Strategic Direction
(NYSE:FBN)
Furniture Brands is leading this change and has developed a new mission:
The Company's mission is
to fulfill the consumer’s highest expectations
in the home furnishings experience
through the promise of our Brands
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Brand Differentiation
(NYSE:FBN)
We must differentiate our brands and make them more relevant to the
furniture consumer.
Broyhill
• Massive product development cycle to bring values in line
• Most powerful brand within competitive segment
Lane
• World’s leader in motion upholstery due to innovative design
Thomasville
• Accessory program designed to generate transactional events
Drexel Heritage
• Lifestyle presentation and customization/design services
Henredon
• Powerful licensing partners
Maitland-Smith
• Extraordinary design
• Service initiatives and in-stock position
4
Distribution Strategy
(NYSE:FBN)
We ensure proper distribution of our branded products through an
intelligent focus on both dedicated and traditional distribution.
Single Brand Stores primary method of distribution for Thomasville
and Drexel Heritage
• New Thomasville prototype appeals to more customers
- Offers full design as well as transactional accessories
Lane and Broyhill focus on galleries and other traditional distribution
Percentage of our product sold through dedicated channels is 44%
Set to open 29 stores and 165 galleries in 2006
In our stores, sales per square foot 50 - 70% advantage over
traditional distribution
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Sourcing and Logistics
(NYSE:FBN)
We continue to shift the sourcing of our products to lower cost options, and
optimize distribution and warehousing.
Create competitive advantage by implementing a world class
sourcing supply chain
• Enhanced service to consumer
• Leverage size
• Speed to market
• Inventory control
Centralized supply chain solution
• Single freight forwarder and customs broker
• Single forecasting and replenishment system
• Best practice and central leadership
• West Coast distribution center in second half 2006
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Cost Structure
(NYSE:FBN)
We must leverage our size to minimize costs by consolidating back-office
functions and maximize our purchasing power.
Consolidate back-office operations of our high-end brands, HDM.
• $10 - $12 million in annual savings
We have implemented best practice and cost savings
• Medical benefits
• Retirement benefits
• Purchasing
• Retail development
We are pursuing best practice and cost savings initiatives
• Information technology
• Risk management
• Payroll
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Management Structure
(NYSE:FBN)
We are developing the quality of our management team to create an
organization that drives results.
New managers introducing new management systems and processes
New managers are from world class companies in varied industries and reflect
and understand our consumer base
Combination of industry talent and new managers from varied industries
makes for a more productive leadership team
We are developing a comprehensive development and succession program to
ensure the future leaders of Furniture Brands come from within
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Financial Overview
(NYSE:FBN)
We issued our mid-quarter update on Wednesday, June 7, 2006.
Seasonally challenging period, nevertheless sales and earnings
are tracking ahead of last year
Improving gross margins with higher utilization and imported product
Improving EBIT margins – plan for 7.5% – 8% EBIT in 2008
Strong cash flow
• Dividend – increased 7% in January 2006
• Share repurchase – 4.1 million shares in 2005
• 1 million (+) shares repurchased YTD in 2006
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Summary
(NYSE:FBN)
With the proper execution of our sound strategic plan, we are in a strong
position to grow this company.
We have:
a strategic plan that is substantive and imaginative
a stable of exceptional brands
a growing system of dedicated retail space that is serving the
consumer and building our brands
strong offshore manufacturing relationships
the leverage of size in a highly fragmented industry
strong cash flow generation
a strong and cohesive management team
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