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Flexsteel Records Double-Digit Profit Hike Despite Sales Decline

Upholstery and case goods resource Flexsteel Inds. (NASDAQ:FLXS) said sales slid 3.7% to $120.8 million in the quarter ended March 31, but profits rose nearly 10% to $7.6 million or 96 cents per share.

The company said the bottom line was aided by increased sales of higher-margin products and the recovery of $1.18 million in expenses from the settlement of a lawsuit in Indiana regarding groundwater contamination at a former factory site.

Flexsteel said retail demand was lower than the comparable quarter, but company officials believe demand has improved in the current quarter as consumer confidence appears to have stabilized.

Sales in Flexsteel’s residential furniture business fell 3% to $102.6 million, while sales in the commercial furniture unit fell 7.1% to $18.2 million.

For the nine months ended March 31, sales fell 6.9% to $351.3 million, with residential furniture sales off 6.6% and commercial furniture sales falling 8.4%.

Nine-month net income was $17.77 million or $2.26 per share. That was down from $18.1 million or $2.33 per share in the first nine months of the previous fiscal year. The most recent nine months included $1.18 million from reimbursement of the Indiana litigation costs, and the comparable period included a recovery of $2.28 million.

“Net sales for the fourth fiscal quarter are expected to remain steady with the current quarter, which would result in the second highest fiscal year net sales compared to the prior year record,” the company said in a statement accompanying the latest earnings. “The company continues focusing on streamlining product introductions to increase sales and controlling discretionary spending.”

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