Flexsteel Industries has reported fiscal first quarter 2020 results, showing net sales were $100 million for the quarter ended Sept. 30 compared to net sales of $113.5 million in the previous year quarter, a decrease of 11.6 percent.
Residential net sales declined 7.7 percent versus the prior year quarter as the ongoing 25 percent tariff and customer and consumer resistance to price increases to offset the tariff continued to pressure sales. Contract net sales fell 32.7 percent, due largely to our planned exit of the commercial office and custom-designed hospitality product lines along with a decline in demand for vehicle seating and healthcare.
The Company reported net earnings of $9.6 million for the quarter ended Sept. 30, compared to net income of $1.3 million in the prior year quarter. The reported net earnings included an $18.9 million pre-tax gain on the sale of the Riverside, Calif., facility, a $6 million pre-tax restructuring expense, and a $0.2 million pre-tax inventory impairment, which was related to the restructuring.
“Our first-quarter results reflected both the challenges we continued to experience due to the 25-percent tariff on furniture imported from China and customer and consumer resistance to price increases to offset the tariff, and also the early benefits from our restructuring activities,” said Jerry Dittmer, president and CEO of Flexsteel Industries. “While the environment remains difficult, we did see bright spots with improving demand in select residential categories as well as continued sequential growth in our e-commerce business. Our confidence in our ability to navigate the conditions is reinforced by the top talent we are attracting to Flexsteel, including key hires in sales and marketing during the quarter. We also strengthened our board with the addition of Charlie Eitel and Matt Kaness, both of whom have extensive expertise and valuable insight in areas critical to Flexsteel.”
