Dubuque, Iowa-based Flexsteel Industries Inc. reported a fiscal third-quarter loss of $15.6 million, after reporting a profit of $3.1 million in the same period a year earlier.
The net loss included a pre-tax SAP business information system impairment charge of $18.7 million and a pre-tax defined benefit plan termination charge of $2.5 million.
The company said it had a loss of $1.97 per share. Earnings, adjusted for one-time gains and costs, came to 12 cents per share.
The furniture maker posted revenue of $111.5 million in the period compared to record net sales of $126.9 million in the prior year quarter, a decrease of 12.1%.
Gross margin as a percent of net sales for the fiscal third quarter was 19.1% compared to 21.8% for the prior year quarter. Operationally, labor costs worsened slightly relative to the prior year quarter primarily due to one-time inefficiencies associated with the relocation of the facility in Dubuque.
“The third-quarter results we reported today are unacceptable and reflect the challenges, many self-imposed, that have contributed to our underperformance over the past couple of years,” said Jerry Dittmer, president and CEO of Flexsteel Industries. “Part of our path forward will be to unwind the capital invested that has yielded very anemic returns and hold ourselves to a higher standard on investment choices and execution accountability that drives value creation and enhanced ROI for our shareholders.
“We have started that process by acknowledging the reality that our ERP system transition was a significant failure both in terms of customer and business disruption. Today, we took an $18.7 million impairment charge to reflect the known extent of this unsuccessful initiative.”
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