Declining U.S. share hits Springs Global profit
Thomas Russell -- Furniture Today, April 1, 2011
Sao Paulo, Brazil - Stronger sales in Brazil and better overall margins weren't able to offset declining U.S. business in fiscal 2010for Springs Global, which swung to a loss of about $10.5 million for the year compared to a profit of roughly $25.2 million last year.
Sales fell 3.4% to approximately $1.4 billion.
Sales in fashion bedding fell 8.6%, while sales were off 5.3% in bath and 27.4% in utility bedding. The company cited lower volumes from North America as well as the higher appreciation of Brazil's currency compared to the U.S. dollar.
The company also noted the impact of higher cotton prices.
"Cotton increased by approximately 200% and the contracts that we held with our
Asian suppliers were not fulfilled by them. In addition to the adjustments in prices requested by our suppliers, there were also reductions in payment terms, bringing a strong need for additional working capital. Naturally, the price adjustment for our retail customers did not occur at the same speed, which strongly impacted our margins and caused a decrease in sales volume in the United States," Springs Global said in its filing.
Sales in the Brazilian market rose 29.2% and now represent 44.9% of total business compared to 33.6% in 2009.
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