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Flexsteel Industries Inc. Wednesday (Oct. 19) reported sales for its first fiscal quarter, ended Sept. 30, of $97.4 million compared to $97.9 million in the prior year’s quarter, a marginal decrease of 0.4%. Net income for the quarter was $1 million, or $0.15 per share, compared to $1.2 million, or $0.18 per share, in the previous year’s quarter, a decrease of 17.9%.
The prior year’s quarter included a net gain (after tax) of $0.4 million, or $0.06 per share, on the sale of a former manufacturing facility.
For the quarter ended Sept. 30, residential net sales were $58.1 million, compared to $59.0 million, a decrease of 1.5% from last year. RV net sales were $18.3 million vs. $21.8 million, a decrease of 16.3% from the comparable ‘04 quarter. “The decline in recreational vehicle net sales is due primarily to a weaker wholesale market environment,” the Dubuque, Iowa, company’s management stated in its quarterly release.
Meanwhile, commercial net sales were $21 million, compared to $17.1 million in ‘04, an increase of 23.5%, which, the company stated, is primarily due to improved commercial office product offerings and improved industry performance for hospitality products.
Gross margins for the quarter were 19.6%, compared to 18.2% in the prior year quarter, a result of “changes in product mix and selected price increases implemented to offset increases in raw material and transportation costs incurred during the prior fiscal year.”
“Flexsteel Industries Inc., and the furniture industry in general, continue to be impacted by increases in raw material and energy costs, as well as lower consumer confidence and higher interest rates,” says the company in its outlook statement: “While the increases in raw material costs were modest during the first quarter, the month of October has been dominated by news of unprecedented cost increases for poly foam and other materials with petrochemical content, which are major components in our seating products, as well as increases or expected increases in other key components such as fabric, steel and plywood. At the same time, the furniture manufacturing industry, including Flexsteel, is faced with competition and pricing pressures from imported products. The Company expects these adverse business conditions to continue to have an impact on its results of operations through the remainder of the fiscal year.”
In response to the aforementioned challenges, according to the release, Flexsteel is implementing price increases for seating products, and continues to explore cost control opportunities in all facets of its business. “The Company believes it has the necessary inventories, product offerings and commitments in place to take advantage of opportunities for expansion of certain markets, such as commercial office and hospitality,” the release states. “The Company believes that its strategy of providing furniture from a wide selection of domestically manufactured and imported products is sound business practice and will continue.”