Stanley Furniture posted a second-quarter loss of $2.4 million, or 23 cents a share, on lower sales.

During Stanley's 2006 second quarter, the company net income of $3.9 million, or 32 cents per share.

At the end of fiscal 2005, Stanley had reported record sales and earnings for the year.

Compared with the company's second quarter last year, sales fell 12.6 percent, dropping to $67.7 million.

Like the chief executive officer for its neighbor and competitor, Bassett Furniture, Stanley CEO Jeffrey Scheffer attributed the decline of sales and earnings during its 2007 second quarter to "current industrywide conditions."

Furniture industry observers have said that increased gas prices and a housing recession have discouraged consumer spending for furniture.

Scheffer said the company does not anticipate demand will increase significantly for the remainder of its 2007 fiscal year.

Both second-quarter 2007 earnings and half-year results were lowered by the termination of the company's defined benefit pension plan. The related charge to earnings during the second quarter was $6.6 million. A year ago, Stanley announced it would terminate the pension plan. In 1995, the company's contributions to a 401K savings plan became its primary retirement benefit.

For the first half of 2007, sales of $142.8 million were off 11.3 percent when compared with the same period last year. This year, the company lost $700,000 during the period, compared with a profit of $9.3 million in the first half of 2006.

In trading on the Nasdaq exchange Tuesday, Stanley's stock price closed Tuesday at $19.16 per share, down $2.57.