Flexsteel Industries reported net sales were $118.4 million for its fiscal quarter, ended Dec. 31, down 8.5% from record sales of $129.4 million a year ago. Net sales for the six months declined 7% to $231.8 million for the six months.
Net income during the second quarter totaled $1.56 million, or 20 cents per diluted share, compared with $6.2 million, or 78 cents per share, in the prior year period.
The company reported that lower residential net sales were primarily driven by decreased unit volume in residential ecommerce product, followed by lower unit volume in home furnishings products. Overall, on a sequential quarter basis, residential product unit volume excluding products sold through ecommerce distribution, improved by a percentage in the low-single digits.
Gross margin as a percent of net sales for the quarter were 18.2% compared to 21.2% for the prior year quarter. For the six months, gross margin as a percent of net sales was 18.7 percent, compared to 21.5 percent for the previous year period.
Flexsteel has worked to reduce Chinese sourced product costs in order to mitigate the size of sell price increases passed through to the marketplace during the first tariff implementation in September 2018. Although difficult to quantify, the Company believes there has been an adverse impact on order rates due to the current tariff level as some retailers have altered buying patterns and quantities since tariff implementation.
The company anticipates additional volume declines if the tariff is escalated to 25% in March 2019.
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