Just months after moving manufacturing operations out of Dubuque, leaders at Flexsteel Industries said the company’s drastic changes have achieved their desired results.
Flexsteel Industries this week reported net income of $3.9 million during its recently completed quarter, marking a major leap forward for a company that reported losses of $26 million in the previous quarter.
On Tuesday, CEO Jerry Dittmer attributed the improvement to recent strategic shifts within the company.
Earlier this year, Flexsteel completed its exit from the hospitality and vehicle seating industries, the latter of which was critical to Dubuque operations. The decision to cut ties with that industry led to the closure of the manufacturing plant on Seippel Road, resulting in the loss of more than 200 jobs.
Dittmer said such decisions were “difficult” but helped propel the company forward.
“The transformation plan is working,” he said. “With profitability restored and plans in place to sustain that profitability, we are now pivoting to the next phase in our transformation, to aggressively pursue new sources of profitable growth.”
Despite ceasing manufacturing operations locally, Flexsteel’s corporate headquarters remains at 385 Bell St. The company employs 130 workers in Dubuque, including corporate workers and some employed in a “fleet operation” division.
Flexsteel completed its new facility on Seippel Road in 2018. That property is now for sale, company officials confirmed Tuesday. An online listing places the cost of the 250,000-square-foot property at $16.5 million.
Derek Schmidt, Flexsteel’s chief financial officer and chief operating officer, indicated that there has been a high level of interest in the property.
“We have had multiple offers, several of which we thought were too low and we rejected,” he said. “We are going to be patient with that sale to make sure we get fair market value.”
In the first quarter of the current fiscal year, which concluded Sept. 30, Flexsteel benefitted from a sudden shift in consumer demand.
“The industry has seen a surge in demand for household furniture since June, as consumers spend more time at home and shift discretionary spending from travel and entertainment to home goods,” Dittmer said. “No one, including myself, anticipated the enormity of the rebound.”
Despite the improved performance, Dittmer acknowledged that numerous factors have complicated efforts to ramp up production and meet demand.
Off-shore suppliers decreased production earlier this year in the beginning stages of the pandemic and since have struggled to return their productivity to pre-pandemic levels, he said.
“We anticipate this supply-demand imbalance to linger through mid-2021,” Dittmer said.