Flexsteel earns record profit as sales rise 15%

Company posts $4.1 million net income in fiscal 4Q

Gary Evans -- Furniture Today, August 19, 2010

DUBUQUE, Iowa — Upholstery and case goods resource Flexsteel Inds. said its sales were up 15% in its fiscal fourth quarter ended June 30 and the company had record earnings of $4.1 million or 61 cents per share, up from $798,000 or 12 cents per share in the same period a year earlier.

Sales of $85.6 million in the quarter included residential furniture sales of $57 million, also up 15% from a year ago. Commercial segment sales rose 13% to $19.9 million.

For the full fiscal year, sales crept up 1% to $326.5 million, but the company rebounded to earnings of $10.8 million or $1.61 per share, from a loss of $1.5 million or 23 cents per share in the prior year.

Flexsteel said it benefited from actions it took in 2009, including the consolidation of manufacturing operations and workforce reductions that brought production capacity and fixed overhead more in line with current product demand.

In fiscal 2009, the company said it recorded pre-tax charges of about $2.6 million related to facility consolidation and employee separation costs. The company cut its employment by 30%, and staffing remains at those reduced levels.

Gross margin for the year was 22.8%, compared with 18.8% for the prior year. Gross margin for the quarter improved to 23.5%, from 21% a year earlier.

The company said its residential category performed well against its competition, and that it expects continued improvement in the category. It cautioned, however, that "residential furniture remains a highly deferrable item and can be adversely impacted by factors such as low levels of consumer confidence, a depressed market for housing, limited consumer credit and high unemployment."