UPDATED: Flexsteel sees 1st-quarter sales decline, but officials hopeful for year ahead

Officials for a Dubuque-headquartered manufacturing company said they are optimistic about the rest of their fiscal year, despite several challenges persisting. 

Flexsteel Industries reported net sales of $95.7 million for the first quarter of fiscal year 2023, which ended Sept. 30. That marks a 30.5% decrease from the $137.7 million in sales reported during the same period of the previous year. However, company officials noted last quarter’s total was a 7.3% increase over the same period in the last year before the COVID-19 pandemic. 

Flexsteel recorded $300,000 in net income in the recently completed quarter, compared to $4.4 million in the same quarter last year.

“Our performance in the first quarter was solid given the challenging conditions faced, including slower consumer demand,” Flexsteel President and CEO Jerry Dittmer said during a conference call with investors this morning. “But I’m encouraged by the fact that we were well prepared for these challenges and able to produce sales for this quarter.”

Dittmer noted that retailers still have higher-than-typical levels of inventory, though those levels have improved. 

“Labor Day was really strong (for sales),” he said. “A few weeks after that, we saw that slow down a bit. Though retail inventories are down at this time, most retailers have two, three, four months to get through. A lot will depend on the consumer out there and the buyer.”

Dittmer also noted that productivity at Flexsteel facilities continues to remain high even with the higher inventories. 

“Despite the fact that we’ve seen some slowdown in volume, all of our plants are hitting really, really good productivity numbers,” he said. “All our facilities are hitting highs over the last 18 months.”

Looking ahead in the current fiscal year, Flexsteel officials noted that challenges such as inflation and slower demand will continue to impact the industry.

However, they said their outlook is optimistic because of the company’s growth initiatives, such as new sales and product distribution. 

Flexsteel Chief Operating Officer Derek Schmidt pointed to several new product lines Flexsteel has debuted, including its sleep-oriented furniture and its Charisma upholstery line.

“Customer feedback has been great,” he said. “We have a healthy backlog of backorders already that consists of larger sofas and sectionals that are popular with younger consumers right now.”

Once inventory challenges subside, the new product lines also will cause the company’s sales to increase, Dittmer said. 

“Near-term challenges will continue to create choppiness in our short-term results,” he said. “However, we remain committed to delivering long-term profitability. … We’re really excited about getting back into the market, and we’re pretty excited about where we think we can take the company.”