Flexsteel Industries (NASDAQ:FLXS) reported fourth-quarter fiscal 2026 net sales of $115.4 million, up 0.7% from $114.6 million a year earlier, as growth in soft seating products offset declines in ready-to-assemble and case goods categories. Management said the furniture market remained difficult amid uneven consumer demand, inflation and geopolitical uncertainty. For the full fiscal year, the company generated approximately $459 million in sales, a 4% increase from the prior year.
President and Chief Executive Officer Derek Schmidt said Flexsteel expanded adjusted operating margin to about 7.5%, produced record adjusted diluted earnings per share of $4.94 and generated more than $47 million in free cash flow. → Applied Materials Beat Everything but Wall Street's Expectations for Margins "While the operating environment became increasingly challenging throughout the year, particularly during the second half, our team continued to execute at a high level and delivered another year of strong financial and strategic progress," Schmidt said. Fourth-quarter GAAP operating income was $16.3 million, or 14.2% of sales, compared with $14 million, or 12.2% of sales, in the year-earlier period. The reported operating margin included a 780-basis-point benefit from refunds of previously paid IEEPA tariffs, which the company recorded as a reduction in cost of goods sold. → AMG's Alternatives Boom Powers Record Growth Flexsteel Flexes Its Muscles In The Second-Quarter The quarter also included a 70-basis-point negative effect from Flexsteel's exit from its Homestyles ready-to-assemble product category, including employee separation costs, inventory liquidations and write-downs.
Excluding the tariff refunds and Homestyles exit costs, adjusted operating margin was 7.1%, compared with 9% in the prior-year quarter. The prior-year period benefited from a 160-basis-point favorable foreign-currency translation impact. Chief Financial Officer Mike Ressler said the company's product pricing was up approximately 10% to 11% on average from the prior year.
Although unit volumes declined overall, he said they did not fall enough to outweigh pricing actions. → Microsoft's Maia 300 Chip Targets NVIDIA's AI Dominance Ressler said volumes rose in several strategic growth initiatives, including Flexsteel's health and wellness category, Zecliner products, new Zen chairs and certain strategic accounts. Made-to-order products and case goods were weaker, however. During the quarter, Flexsteel decided to exit the Homestyles ready-to-assemble category, which management said had become increasingly competitive and was no longer generating attractive returns.
The business contributed roughly $12 million in fiscal 2026 sales. The company expects to monetize the remaining Homestyles inventory over the next three to six months and prepare its Huntingburg, Indiana, distribution center for sale. The facility currently serves the ready-to-assemble category and is not required for Flexsteel's longer-term growth plans, Ressler said.
Homestyles had lower gross profitability than the company's category average, according to management. While the exit will reduce sales, Ressler said it should provide a modest improvement in overall portfolio profitability. Schmidt said fiscal 2026 sales growth would have been closer to 6.5% to 7% excluding the Homestyles drag, compared with the reported 4% increase.
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