By Stephen Nakrosis
Furniture manufacturer Flexsteel Industries Inc. on Monday said it was continuing to deal with supply chain disruptions and higher logistics costs.
On Logistics Costs:
Jerry Dittmer, the company’s president and chief executive, said, “Although our growth outlook is promising, we are contending with major supply chain challenges which are adversely impacting near-term profit results.”
Among the issues he cited were ancillary costs associated with ocean container logistics. “We’ve imported a record number of containers in the past seven months to support our robust growth and strategically build inventory,” he said. “However, severe congestion at ports and railroads combined with a lack of truck drivers and warehouse workers to pick up, unload, and return containers has financially burdened these imports with significant, unanticipated ancillary charges.”
He also said, “Rate increases and more stringent terms from transportation companies have exacerbated the cost issue.”
Mr. Dittmer said the company “deployed a variety of strategies to aggressively manage these expenses, and as a result, we expect ancillary charges to decrease substantially in the third quarter.”
On Supply Costs:
Mt. Dittmer said, “Inflationary cost pressures are building in other areas of our supply chain including materials, wages, and domestic transportation.” He said the company is “pricing increases to pass along these higher costs to the market where we can,” adding, “The lag in price realization will negatively impact gross margins near-term.”
On Monday, Flexsteel reported first-quarter net sales of $141.7 million, up from $119.1 million in the prior year’s quarter. The company said its retail home furnishings backlog was up 20.4% compared to the prior-year quarter.
Write to Stephen Nakrosis at [email protected]
