Leggett & Platt Sales Rise, Profits Halved

October 16, 2008  by in UnCategorized   

By Home Furnishings Business in Bedding on October 2008 Furniture components maker Leggett & Platt, Carthage, Mo., saw third-quarter sales rise 3.7 percent to $1.13 billion, but as profits declined to $32.7 million from $65 million, the company cut its full-year outlook.

The company now expects full-year earnings of $1 to $1.10 per share, down from its July estimate of $1.10 to $1.40.

“The markets we serve weakened appreciably toward the quarter’s end, as consumers reign in spending during this unprecedented period of tight credit and high stock market volatility,” said CEO David Haffner. “On the other hand, we continue to successfully pass along higher raw material costs, and to gain market share as bedding manufacturers reduce their use of imported innerspring components. As a reminder, in late July the U.S. Department of Commerce announced preliminary duties on imported innersprings (from specific countries, including China) of between 116 percent and 235 percent.”

He said the company has concluded that its store fixtures business isn’t meeting profitability goals in its current form. Leggett & Platt plans to narrow the unit’s focus to “the ‘metals’ part of the fixtures industry, in alignment with Leggett’s core competency of producing steel and steel-related products.” It aims to eliminate additional store fixtures production facilities, reduce unit overhead, purge customer accounts with unacceptable margins, and trim annual trade sales between $250 million and $275 million.

Haffner also said, “Despite external economic and market issues, we are very comfortable with our strategic direction. ... We are absolutely committed to the continued execution of our plan, and believe our actions are reestablishing Leggett as a stronger and more profitable company. Our goal is to consistently generate total shareholder return of 12 percent to 15 cent per year, on average.”