DUBUQUE, Iowa — Despite sales falling in quarterly and fiscal year results released Aug. 21, Flexsteel Industries reports that it has achieved sequential sales growth over multiple quarters.

Flexsteel, which ranked #28 on the FDMC300 listing of top North American wood products, realized net sales for the quarter decreased (15.0%) to $105.8 million compared to $124.5 million in the prior year quarter. For the year, net sales decreased (27.7%) to $393.7 million compared to $544.3 million in the prior year.

Fourth quarter net sales grew 6.8% sequentially compared to $99.1 million in the third quarter, which similarly grew 6.4% sequentially compared to $93.1 million in the second quarter, said Derek Paul Schmidt, company COO.

"More importantly," he said, "our sales results represent a sequential increase of 6.8% from the third quarter, which is our second consecutive quarter of sequential sales growth and reflects the strong sales momentum driven by our growth initiatives.

During an investor call, Jerald K. Dittmer; President, CEO & Director, pointed to the "advancement of our strategic growth initiatives which included expanding our big-box distribution channel, launching our Zecliner sleep solutions recliner and our flex contemporary modular furniture solution and launching the new Charisma brand. The impact of these growth initiatives created sequential quarter-over-quarter sales growth in the second half of the fiscal year despite the challenges already mentioned."

He said that the company continues to see near-term challenges due to competitive pricing pressure and a return of demand to pre-pandemic levels amid macroeconomic uncertainty. "However, we are maintaining our commitment to our strategic priorities in delivering long-term profitable growth. With that in mind, we will continue to invest pragmatically in growth initiatives to drive sales and focus on operational excellence to drive margin expansion.
I'll now turn the call over to Derek to discuss our strategic initiatives and financial results as well as our outlook for Q1 2024. I'll be back at the end of the call with some closing comments on what we see ahead.

Schmidt said he was "optimistic about the trajectory of our business and feel great about the momentum we've built with our growth initiatives. A few noteworthy highlights to share. With respect to new sales distribution, we continue to execute well and gain momentum with big-box customers most notably Costco."

Big box represented approximately 5% of our total sales in the fourth quarter and is expected to grow faster than our other channels in fiscal year 2024 as we expand the breadth of product offerings and optimize our marketing and demand generation efforts within this channel. As important, we are building Flexsteel brand awareness with a different consumer audience through big box, which we feel will have positive, long-term growth benefits across all our channels.

In new product categories, we had good, early success with flex, which is our small parcel, contemporary, modular furniture solution. Flex was initially launched in the big-box channel last quarter, and we've accelerated distribution expansion to make flex available across a wide variety of selling platforms, including e-commerce partners like Amazon; Wayfair; Overstock, which recently rebranded itself as Bed Bath & Beyond; homedepot.com; and our own direct-to-consumer site, www.flexsteelstore.com.

"In addition, we are aggressively expanding flex into brick-and-mortar retail with our strongest, independent retail partners. New product additions will be released in October with additional plans developed to meaningfully expand the line over the next 18 months. Zecliner, our new sleep solutions recliner, has become a home run. Over 500 retailers have placed the product with strong initial sales.

"We've also signed up multiple regional sleep store chains with more anticipated in fiscal year 2024. We expanded the line in April and have more innovation planned for release in October.

"This is an exciting category, and our plan is to stay ahead of any competition by constantly innovating. To expand our customer base. Last year, we launched our new Charisma brand, targeting the style and price preferences of younger consumers. With a major competitor in the sub-$1,000 sofa market recently closing their operations, we have an opportunity near term to gain additional retail penetration with Charisma. In the midterm, we are also pursuing cost-efficient innovations to bolster Charisma's brand position of differentiated quality and comfort at affordable prices."