Stanley Furniture Co. faces threat of delistment on the NASDAQ following a month of poor stock performance, according to a Securities and Exchange Commission filing.
In an 8-K filed Feb. 15, Stanley revealed company’s stock price is no longer in compliance with the NASDAQ’s minimum bid price requirement of $1 per share.
Stanley Furniture received a notice from the Listing Qualifications Department of the NASDAQ on Feb. 10, 2017, after the stock closed below $1 for 30 consecutive business days.
In order to regain compliance, the stock must trade above $1 for at least 10 consecutive business days before Aug. 9, 2017. If Stanley fails to do so, the company may petition the NASDAQ for a prolonged grace period with its stock listing transferred to the NASDAQ Capital Market.
The company saw a sharp drop in its stock price during the second half of 2016. Throughout the first half of the year, the stock’s price bounced between $2.30 and $2.80.
Stanley’s problems began in August, following the release of its second-quarter earnings. On Aug. 10 the stock spiked to $3.58 before beginning a nose dive in late August. The stock struggled to maintain $1 by November.
In its third-quarter earnings, Stanley reported net sales for 2016 are down more than 20 percent, from $43.6 million to $34.8 million. Stanley issued a $1.25 per share special dividend and repurchased $1 million worth of common stock.
Production delays due to an alliance with Starwood Manufacturing Corp. have prevented Stanley from shipping out new products. Over 60 percent of the company’s order backlog can be attributed to the Starwood alliance.
Stanley partnered with Starwood to construct a dedicated factory for Stanely in the Ho Chi Minh City area of Vietnam. The new factory did not make the progress expected during the third quarter, leading to an order backlog.
“Our recent performance is disappointing, however the expected value of our new product from both the Stanley and Stone & Leigh brands at retail remains of great interest to our customers,” said Glenn Prillaman, president and chief executive officer. “Our increasing backlog for new product demonstrates customer confidence in the company’s ability to overcome initial road blocks to success with our differentiated overseas strategy.”
The backlog has forced Stanley to continue selling older products at deep discounts, cutting the gross profit margin from 24.8 percent in the third quarter last year to 16.6 percent in the third quarter of 2016.
On Feb. 1, the company appointed Steven A. Hale II to its board of directors.
Hale is the founder of Hale Partnership Capital Management, LLC. Hale founded Hale Partnership Capital Management in 2007 and has been the sole manager of the firm since 2010.
This appointment results from an agreement the company made with the Hale Group, made up of the Hale Partnership Fund and other shareholders, that collectively owns 10.2 percent of the company’s common stock.
Stanley’s stock closed up 1.16 percent at 87 cents on Feb. 15.
The form 8-K can be found here.
