Flexsteel Industries Reports Q3 Net Loss of $3.7 Million Amid Increased Sales

Flexsteel Industries, Inc. reported its financial results for the third quarter and nine months ended March 31, 2025, revealing a net loss of $3.7 million, or $(0.71) per diluted share, compared to a net income of $1.8 million, or $0.33 per diluted share, in the same period last year. For the nine-month period, the company achieved net income of $9.5 million, or $1.70 per diluted share, up from $5.6 million, or $1.04 per diluted share, in the prior year. Net sales for the quarter increased by 6.3% to $114.0 million, driven primarily by a 10.9% rise in home furnishings sold through retail channels, while e-commerce sales saw a significant decline of 36.7%.

The company's gross margin improved to 22.2% for the quarter, up from 21.7% in the prior year, attributed to better sales volume leverage and a favorable product mix. Selling, general, and administrative expenses decreased to $17.1 million, representing 15.0% of net sales, down from 16.5% in the previous year. This reduction was due to cost savings and operational efficiencies, although it was partially offset by investments in growth initiatives. The company also recorded a significant impairment charge of $14.1 million related to a right-of-use asset for a manufacturing facility in Mexicali, Mexico, reflecting challenges in subleasing the space amid changing trade policies.

Flexsteel's operational metrics showed a backlog of home furnishings orders at $78.3 million, a 25.8% increase from the previous year, indicating strong demand despite the challenges faced in the e-commerce segment. The company completed the sale of an ancillary building in Huntingburg, Indiana, generating $0.8 million in proceeds and a pre-tax gain of $0.7 million. Additionally, Flexsteel is actively marketing another building in the same complex, which is classified as held-for-sale on its balance sheet.

As of March 31, 2025, Flexsteel's total assets were reported at $266.1 million, a decrease from $274.5 million at the end of the previous fiscal year. Current assets increased slightly to $156.9 million, primarily due to a rise in cash and cash equivalents, which reached $22.6 million, compared to $4.8 million in the prior year. The company’s working capital also improved to $103.4 million, up from $95.0 million, reflecting a strategic focus on liquidity and operational efficiency.

Looking ahead, Flexsteel faces uncertainties related to potential tariffs on imports, particularly from Vietnam, which could significantly impact future sales and costs. The company is assessing strategies to mitigate these risks while continuing to optimize its distribution and logistics network. Management remains cautiously optimistic about the demand for home furnishings and is focused on leveraging its operational strengths to navigate the evolving market landscape.