by Company achieved 8th consecutive quarter of year-over-year revenue growth for quarter ended Sep. 30
DUBUQUE, Iowa — Flexsteel Industries reported an increase in net sales and an increase in net income for its first fiscal quarter ended Sept. 30.
Net sales totaled $110.4 million, compared with $104 million in the same period last year, a 6.2% increase that also was the company’s eighth consecutive quarter of year-over-year revenue growth. The company attributed this to growth in its sourced soft seating products, which it said was partially offset by lower unit volume in its made-to-order soft seating products and homestyles branded ready-to-assemble category.
Net income totaled $7.3 million, or $1.31 per share, compared with $4.1 million, or 74 cents per share, the same period last year.
It reported GAAP operating income of $9 million, or 8.1% of net sales, compared with 6 million, or 5.8% of net sales the same period last year.
Gross margin for the first quarter was 23.5%, compared to 21.5% for the prior-year quarter, up 200 basis points. The company attributed this growth to sales leverage and favorable foreign currency translation of its peso denominated assets in Mexico in the current quarter versus unfavorable foreign currency translation the prior year quarter.
It reported that selling, general and administrative expenses of $16.9 million decreased to nearly 15.4% of net sales in the first quarter of fiscal 2026 compared with $16.3 million, or 15.7% of net sales, in the prior-year quarter. The company said that the decrease was mainly because of leverage on higher sales, partially offset by investments in growth initiatives.
“We delivered strong results in the quarter, and I’m pleased with our continued growth momentum and margin expansion,” said Derek Schmidt, chief executive officer of Flexsteel Industries Inc. “Despite choppy consumer demand and a challenging macroeconomic environment, the strength of our product offerings and continued investments in innovation and marketing are propelling our consistent growth and enabled a 6.2% sales increase in the quarter, which represents our eighth consecutive quarter of year-over-year growth.”
“Our multipronged growth strategy is working well as we realized growth in the quarter from both our core market initiatives, driven largely by new products, and our new/expanded market efforts where we are ramping sales in both the case goods and health and wellness product categories,” Schmidt added. “Our revenue growth coupled with disciplined product portfolio management and operational cost savings are leading our continued margin expansion as we delivered a strong operating margin of 8.1% in the quarter, which represents our 10th consecutive quarter of year-over-year improvement and a 230 basis point increase compared to the prior year.”
Other highlights of the report were as follows:
+ The company reported income tax expense of $2.1 million, or an effective rate of 21.9%, during the first quarter compared to tax expense of $1.9 million, or an effective rate of 31%, in the prior-year quarter.
+ At the end of the quarter, the company reported a cash balance of $38.6 million, and working capital (current assets less current liabilities) of $116.9 million and availability of approximately $54.1 million under its secured line of credit.
+ Capital expenditures for the quarter ended Sept. 30, 2025, were $1.4 million.
Schmidt noted that he believes the company is executing well in a difficult environment, adding that he remains optimistic about the “drivers of long-term industry growth.”
However, he said that the industry continues to face significant risks and headwinds in the near term, particularly as it relates to inflation, employment growth and tariffs.
“Many of our retail partners noted that consumer traffic and sales were especially uneven during the recent quarter, suggesting that consumer confidence remains fragile given growing concerns about inflation and employment growth,” he said. “Additionally, tariffs persist as a major risk to both demand and margins. While we gained additional clarity on reciprocal tariff changes in August, and we subsequently took action to mitigate the adverse impact of those tariffs, on Sept. 29 the White House issued a proclamation establishing section 232 tariffs on imported timber, lumber and their derivative products, including upholstered furniture. The new section 232 tariffs superseded the prior reciprocal tariffs and put a 25% tariff on imported upholstered furniture effective Oct. 14, which will subsequently increase to 30% effective Jan. 1, 2026. We anticipate the tariff change to result in broad price increases for furniture and be highly disruptive to both consumer demand and industry margins in the short term. As we’ve demonstrated in the past, our company is agile and ready to respond to major shifts in market dynamics while remaining steadfast in our execution of our growth strategies and key investments to continue gaining market share.”
