Flexsteel Extends Sales Growth Streak as Homestyles Exit

The Tip Desk · October 26, 2026 · 3 min read

First-quarter sales reached $114.0 million, up 3.2%, while GAAP operating income fell to $6.9 million, or 6.0% of sales.

Flexsteel Industries (FLXS), a manufacturer, importer and marketer of residential furniture, extended its year-over-year sales streak to a twelfth consecutive quarter in the period ended September 30, 2026, as branded seating more than offset a planned exit from ready-to-assemble Homestyles.

Net sales were $114.0 million, up 3.2% from $110.4 million a year earlier. Chief executive Derek Schmidt said the increase sat toward the upper end of the company’s guidance range. Year-over-year growth had been 0.7% in the fourth quarter of fiscal 2026.

Flexsteel branded product sales were $112.6 million, a $5.5 million, or 5.1%, increase from $107.1 million. The company said the lift came from Flexsteel branded soft seating. Homestyles ready-to-assemble sales fell to $1.4 million from $3.3 million, a $1.9 million, or 57.6%, decline as Flexsteel exits the category. Flexsteel branded casegoods were relatively flat.

GAAP operating income was $6.9 million, or 6.0% of net sales, compared with $9.0 million, or 8.1%, a year earlier. Net income was $5.4 million, or $1.24 a share, versus $7.3 million, or $1.31 a share.

Gross margin was 22.0%, down 150 basis points from 23.5% a year earlier. The company said the 150-basis-point decrease was primarily a 130-basis-point unfavorable foreign-currency translation impact on peso-denominated assets in Mexico and inflation from elevated energy prices. Schmidt said a $0.8 million, or 70-basis-point, unfavorable currency translation related to that Mexico peso exposure was included in the 6.0% operating margin and that, excluding the impact, operating margin was in line with the company’s expectations.

Selling, general and administrative expense was 16.0% of net sales, up from 15.4% a year earlier. The company attributed the increase to investments in consumer insights, innovation, new products, marketing and demand generation, and talent.

Schmidt said orders increased 5% and ending backlog grew 8.2% versus the prior-year period. He cited new product introductions, strategic account share gains, and expansion in health and wellness as contributors.

The company said ocean transportation rates had nearly doubled over the last six months and that higher fuel prices and rising material costs continued to pressure margins. It said teams mitigated a portion of those headwinds through cost savings, productivity improvements, and product-portfolio management. Schmidt said the operating environment is expected to remain challenging as consumer confidence, affordability, geopolitical uncertainty, and tariff policies weigh on demand and costs.

Cash ended the quarter at $4.4 million, down from $16.7 million at June 30, 2026. Working capital was $80.5 million and availability under the secured line of credit was about $29.1 million. Capital expenditures were $1.0 million. Share repurchases were $2.2 million and dividends paid were $1.1 million. Operating cash flow used $1.5 million.

For the second quarter of fiscal 2027, Flexsteel expects sales of $119.5 million to $123.0 million, growth of 1% to 4% versus the prior-year quarter, or 3.5% to 6.5% excluding the Homestyles exit, and GAAP operating margin of 6.5% to 7.0%. The company said the most significant drivers of variability are consumer demand and logistics and material cost inflation from elevated energy prices.