Leggett & Platt Net Drops 5.3 Percent in Third Quarter
CARTHAGE, Mo.-Although it reported a healthy increase in sales, Leggett & Platt's net income decreased by 5.3 percent in the third quarter, to $44.9 million.
Net sales were up 8.6 percent to $940.9 million. However--as David Haffner, president and CEO, noted--the sales increase occurred mostly from items that brought the company little in incremental profit. Competitive pricing pressure in some product categories, customers switching to lower-cost and lower-value components ("decontenting," as Haffner termed it) and the company's own efforts to reduce its inventory by curtailing production all played a part in slimming down the bottom line, Haffner said.
Those factors sliced into Leggett & Platt's gross margin, which fell 136 basis points to 18.1 percent. Selling, general and administrative expenses rose 7.2 percent in dollars, but did decline 13 basis points as a percentage of sales to 10 percent.
Leggett & Platt said it is anticipating a rise of 7 percent in sales for 2011 as a whole, to about $3.6 billion.