Flexsteel 3rd-quarter earnings slip on higher sales

Furniture designer and manufacturer Flexsteel Industries posted slightly lower third-quarter earnings on higher sales when compared with the same quarter last fiscal year.

The Dubuque-based company recorded net income of $3.1 million, or 42 cents per share, for the quarter that ended on March 31, down from $3.3 million, or 48 cents per share, in the same period last year.

Flexsteel posted third-quarter sales of $98.4 million, up 7.3 percent from $91.6 million in the third-quarter of fiscal 2012. Residential net sales were $79.9 million, an increase of 12.3 percent from the prior year quarter of $71.2 million, reflecting improved demand for upholstered products, according to Flexsteel President and CEO Karel Czanderna.

"We are benefiting from an expanded customer base in the residential market, as well as growth from new and existing products with our current customers," Czanderna told analysts Wednesday in a conference call.

Commercial net sales were $18.4 million in the third quarter, down 9.9 percent from $20.4 million in the prior year quarter.

"Purchasing trends in the recreational vehicle industry are shifting to moderate growth," Czanderna said. "We are seeing signs of optimism from the designers and buyers in the hospitality and health care markets.

"We believe less economic uncertainty will restore consumer confidence and further enable growth in the furniture industry."

Gross margin for the quarter that ended on March 31 was 23.2 percent, compared with 24.1 percent in the prior year quarter. The company said the percentage change in gross margin was primarily due to changes in product and customer mix, and to a lesser extent freight, raw material and finished product cost increases.

Flexsteel said it adjusts its selling prices to reflect market conditions and cost changes. The company produces, imports and markets upholstered and wood furniture for the residential, recreational vehicle, office, hospitality and healthcare markets.