Major business growth targets include new product segments, expanded distribution and new consumer groups
DUBUQUE, Iowa — Flexsteel’s latest conference call for its second fiscal quarter ended Dec. 31 brought the investment community up to date on several key initiatives the company expects will drive business in the months ahead — and beyond — as it continues to plan for the short and long term.
Among these were several product initiatives that, although previously reported, are worth mentioning once again, as well as its investments to support big-box and e-commerce channels and new consumer segments.
For example, the company said that it continues to expand its Charisma product line of smaller-scaled, entry-priced upholstery, with several new frames planned for the April High Point Market. The company said that initial retail reception has been positive and that it also plans to expand distribution of the line into e-commerce and big-box retail during the second half of the year.
It also is on track for nationwide distribution of Flex, its small-parcel, contemporary and modular upholstery line. The company said that following an October launch, this too has been well-received across all channels of its business and will be available for sale starting this quarter across four main platforms: direct-to-consumer, brick-and-mortar retail, e-tailers and big-box accounts.
Another product development it cited in the report was its Zecliner, a sleep solutions recliner that also launched in October with several models that begin shipping in March. The company said that this also received positive reaction from dealers and that it anticipates broad distribution across traditional retail and other channels.
“Development is already in progress to offer additional product enhancements and we are committed to driving meaningful innovation in the health and wellness category to make Zecliner a leader in the emerging space,” said Derek Schmidt, chief operating officer. “The organization is intensely focused near term on ramping up sales for these growth initiatives and we’re excited to see the results in the coming quarters.”
The product initiatives in particular, the company noted, address three key areas of its growth strategy, including new product categories, new sales distribution and new consumer segments.
For example, Schmidt noted that the company has landed a major big-box customer that it expects to become among its top 10 or even top five accounts over time.
He also noted that the company has market tests scheduled in the second half with several other large big-box retailers that also could increase revenues in the next fiscal year, becoming an even more important channel than it is today.
New consumer segments are another major area of growth, particularly with its Charisma and Flex brands, which respectively offer a mix of smaller-scale and easy-to-assemble pieces that can more easily be moved into high-rise apartments and condos occupied not just by younger consumers, but also those in their retirement years. Zecliner, with its sleep, health and wellness benefits, also addresses a broad demographic.
As it looks to these new growth opportunities, the company is also looking to boost its profitability, not just top-line sales.
“In terms of big-box, the margin profile is better than the current portfolio average. … We expect all of our growth initiatives to drive margin expansion, long term, big-box included,” he said, adding, “The vast majority of what we’re selling through that channel right now is online.”
President and CEO Jerry Dittmer also noted that a key goal as it pursues these avenues of growth is to drive working capital efficiency, pay down debt and further strengthen its balance sheet.
“In the near term, macroeconomic headwinds pose a challenge to industry growth,” he said during the call. “However, our commitment remains on delivering long-term profitable growth and we are making pragmatic investments to support these plans.”