Halfway through its fiscal year, a Dubuque-headquartered furniture company is showing signs of a resurgence.
Flexsteel Industries this week reported sales of $119.1 million in the quarter ending Dec. 31, an increase of 16% compared to the same three-month stretch the previous year. Company leaders discussed the results in a conference call Tuesday.
“The future of Flexsteel is exciting,” President and CEO Jerry Dittmer said. “We have a clear vision of where we want to go and a plan to get there.”
Flexsteel houses its corporate headquarters in Dubuque. Last year, however, company officials shut down their Dubuque manufacturing operations. The decision resulted in the loss of 213 jobs and marked a stunning change of course for the company, which had recently invested $28 million to build a new manufacturing plant.
Flexsteel ultimately sold the Seippel Road facility to Simmons Pet Food, which will begin operations there this summer.
The closure of the Dubuque facility was part of Flexsteel’s broader effort to exit the vehicle seating and hospitality markets to focus on home furnishings. Dittmer deemed that transformation a success.
“(These changes) have made us stronger and nimbler to meet the recent surging consumer demand for furniture,” he said.
Flexsteel is now shifting additional production to Mexico. Dittmer said the company has signed a lease for additional production space in Juarez, where Flexsteel already has a presence.
Flexsteel’s recent turnaround marks a dramatic shift.
The company reported a net loss of nearly $26 million in the fourth quarter of the previous fiscal year, which ended June 30.
The first two quarters of the current fiscal year have proved more promising. Flexsteel reported earnings of $3.9 million in the first quarter and $8.5 million in net income in the second quarter.
Even so, officials said the path forward is wrought with possible pitfalls.
Chief Financial Officer and Chief Operating Officer Derek Schmidt said shipping products overseas has become increasingly difficult, leading to supply chain concerns.
“Guidance in the third quarter is a bit challenging due to the highly volatile conditions with ocean container shortages and container rates,” he said. “… The situation is shifting on a daily basis.”
Demand for Flexsteel’s home furnishings is also hard to predict.
Some experts also believe the recent uptick in demand will dissipate when consumers start spending more money on travel, dining and events after the pandemic. Meanwhile, struggles with the current economic conditions could slow demand in the short term.
“The economic fallout of the pandemic, combined with ability of federal government to mitigate that impact through fiscal and monetary stimulus, will play a determining factor in the sustainability of consumer demand throughout 2021,” Dittmer said.