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DUBUQUE, Iowa — Flexsteel Industries today announced an initial restructuring action to increase organizational effectiveness and gain manufacturing efficiencies.
This first action includes exiting the commercial office and custom-designed hospitality product lines.
In addition, the company will immediately close its Riverside, Calif., manufacturing facility. The company expects to complete the wind down of these product lines and the closure of the manufacturing site within the current quarter.
“While exiting businesses and reducing staff is not an easy decision, we are confident it is the right first step toward Flexsteel’s future,” said Jerry Dittmer, president and CEO.
“The commercial office and custom-designed hospitality product lines we are exiting represent approximately 7% of our annual revenue and did not align with our strategic direction to focus on profitable core businesses,” he explained.
“Regarding the facility closure, we are taking advantage of a window to take excess capacity offline within our network, generate cost savings through fixed overhead reduction and position the company to monetize a real estate asset we believe has significant value – all without disruption to our customers,” said Dittmer.
“We are working aggressively to reposition the company and are committed to moving quickly from planning to execution in real time with transparency to all of our stakeholders,” he added.
As a result of the announcements, the company expects to reduce its workforce by approximately 130 people.
In total, Flexsteel expects to incur approximately $4 million in one-time cash charges for employee severance and related costs and approximately $9 million in non-cash charges for inventory impairments due to the restructuring action.
Over time, the company expects to benefit from the resulting reduction in employee-related costs as well as reduced occupancy costs in addition to a one-time benefit driven by the sale of the real estate in Riverside, Calif.
SOURCE: Flexsteel press release