Flexsteel sales dip in fourth quarter

Earnings in period of 5 cents per share

Jay McIntosh -- Furniture Today, September 15, 2008

DUBUQUE, Iowa — Flexsteel Inds. said its residential furniture segment sales in its fiscal fourth quarter ended June 30 were off 6.4% from a year earlier to $66.9 million, while total company sales fell 12% to $100.6 million.

Earnings were $336,047 or 5 cents per share, down from $5.8 million or 89 cents per share in the fiscal 2007 fourth quarter. But the prior year period had one-time gains from a property sale and insurance proceeds, and excluding those the '07 earnings would have been $2.8 million or 44 cents per share, the company said.

For the full year, residential furniture sales inched down 0.6% to $258.1 million as total sales declined 4.6% to $405.7 million.

Net income for the year was $4.2 million or 64 cents per share, the company said, compared with $9.3 million or $1.42 per share a year earlier. Excluding the one-time gains, the fiscal 2007 earnings would have been $6.1 million or 93 cents per share.

Company officials said the latest fiscal year began well, with sales up in the first two quarters. But in the second half — the first half of this calendar year — business softened.

"Normally, at least one of the markets in which we sell products is doing well," the company said in a statement. But the company noted that in the fourth quarter, residential seating sales were off 6%, commercial seating was down 12% and recreational vehicle seating plunged 35%. "We do not believe we are losing market share in those categories," the company said.

Officials said they see "no near term improvement in operating conditions," which have been affected not only by the credit crisis and a soft U.S. dollar, but also by higher costs for raw materials and transportation.

In response, the company said it has implemented price increases where possible, moved to close two plants to adjust manufacturing capacity, and focused attention on credit risk. Flexsteel also said it is focusing on offering products and services its customers need, and is focusing on profitability and cash flow over top-line growth to maintain a strong balance sheet.