Flexsteel Profit Edges Up Despite First-Quarter Sales Drop
DUBUQUE, Iowa--Even though net sales fell 6.5 percent, Flexsteel ended its first fiscal quarter with an increase of 1.5 percent in net income, to $2.4 million.
Net sales for the quarter, which ended on Sept. 30, totaled $81.5 million, with sales to both residential and commercial customers experiencing declines (commercial sales dropped 14 percent). Gross margin did improve by 78 basis points to 23.3 percent, thanks to lower ocean freight costs and reduced fixed costs due to reductions in manufacturing capacity. Flexsteel's bottom line also benefited from the absence of facility closing costs, which in last year's first quarter were $1 million.
Selling, general and administrative expenses rose 2.9 percent in dollars and 173 basis points as a percentage of sales, to 18.8 percent.
Flexsteel said the outlook for its fiscal 2012 calls for modest top-line growth, with high unemployment, minimal job growth, a weak housing market and reduced consumer confidence combining to keep growth at low levels. The company said order trends from the commercial office sector are improving, and that pent-up demand from the hospitality sector will help bolster the fiscal 2012 numbers.