Flexsteel Industries, once one of the largest providers of furniture to the RV industry, announced that it will be shuttering its RV and hospitality businesses soon, with the actual timing being determined during the coming fiscal quarter.
In a press release issued moments before reporting its quarterly earnings on Tuesday, the company said it would be removing itself from those two businesses because of declining customer demand and changing market conditions driven by the COVID-19 pandemic. The company says that although it will keep its headquarters in Dubuque, Iowa, it will close its manufacturing facility there resulting in the loss of approximately 200 jobs.
It is also closing its Starkville, Miss., plant, which, according to reports, employs about 170.
“It has become clear that what was thought to be a short-term hit to these two already challenged businesses will now extend well into the future and will likely not return to pre-pandemic levels for some time,” said Jerry Dittmer, Flexsteel president & CEO. “These decisions were extremely difficult and in no way reflect the dedication or performance of our employees at the Dubuque and Starkville manufacturing facilities. This pandemic has been unforgiving to many companies, including ours, and we find ourselves with heavy hearts in making these hard decisions as we attempt to navigate these uncharted business conditions.”
Flexsteel had once been one of the largest OEM suppliers of furniture to the RV industry.
In its third-quarter earnings call with investors Tuesday the company cited a 25 percent tariff imposed on certain goods it imports from China, as well as store closures because of the coronavirus, as major factors that resulted in a more than 11 percent drop in sales over the same quarter the previous year. Also adding to the company’s woes, it noted, was the plant closures of several major RV customers due to COVID-19.
For the recent quarter, the company reported sales of about $99 million, compared with $11.5 million a year ago, a drop of 11.4 percent. Year-to-date, for its first three quarters of the fiscal year, Flexsteel reported sales of $302 million, a 12 percent drop over the $343 million of the same period a year ago.
“Regardless of the disruption across our industry and nation, we have reason to look ahead optimistically,” said Dittmer. “Rather than hunkering down during the crisis, we are planning to accelerate our business transformation by pushing out the boundaries of opportunity while streamlining our operations and footprint. By exiting the recreational vehicle and hospitality businesses, we will sharpen our organizational focus on growing those business platforms that strategically fit with our core competencies and have the greatest potential for long-term profitable growth.”
Those businesses, the company said, are home furnishings, e-commerce and products targeted at the workplace.
The company will announce the timing of the closing of its Dubuque and Starkville plants sometime in the coming fiscal quarter.
