CARTHAGE, MO - Leggett & Platt said it may divest its store fixtures operations as the business unit continues its financial struggles. An investment banker has been retained by the company to explore strategic alternatives.
Leggett & Platt said it expects to take a $108 million non-cash goodwill impairment in the second quarter of the fiscal. First quarter net sales for the Commercial Fixturing & Components operations were at $89.9 million, down $25.7 million from the same period a year ago. This segment also includes office furniture components, which conversely grew 4% in the quarter.
In reporting its first quarter results in April, the company noted it was "disappointed with current year demand levels in Store Fixtures," and projected the second quarter to be down approximately $25 million than in 2013 due to the stoppage of some retailer programs. "While we believe we are making progress with new customers, many expected new programs have been slow to start. In response, we are reducing costs at each operation to offset some of the earnings impact from very soft sales."
In its July 14 filings to the U.S. Security and Exchange Commission, the company stated: "[A]s the second quarter progressed, anticipated orders did not materialize and the Store Fixtures group business deteriorated, most pronounced in May and June. As part of our normal second quarter annual goodwill impairment review we concluded that an impairment charge was required."
The store fixtures group manufactures casegoods, shelving, counters and racks for major retailers. Once composed of more than 30 wood and metal fixtures manufacturers, in late 2008, Leggett & Platt narrowed its focus primarily on metal components. Today, the Leggett & Platt Store Fixtures Group includes: Capitol Hardware, Spartan Showcase and Beeline Group.
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