Leggett & Platt (Carthage, Mo.) has announced that first quarter earnings for the period ending March 31, 2001, are down 38 percent from a year ago. Sales were up 0.9 percent, but offset by a 7.4 percent decline in same-location sales, as weak market demand continued to impact all five of its business segments. Production cutbacks contributing to reduced plant utilization significantly impacted profit margins and earnings for the quarter, the company said.
“First quarter results are disappointing in light of our long track record of consistent growth,” said president and ceo Felix Wright. “During this period of economic downturn, we are focusing on the four-point tactical plan we announced last September, thereby positioning the company for strong future performance. Over the last six months we have closed or sold nine facilities, and have consolidated most of this production into other Leggett operations. In many areas, we are running short production weeks, and staggering shifts, which allows us to trim back production yet retain the majority of our skilled workforce. Though we could trim labor costs more dramatically, we are looking beyond the current downturn and want to be well-situated to ramp up production when the economy improves.”
Wright said the company remains cautious about the economic outlook for the balance of the year. “We expect this trend [lower sales and earnings] to continue for the second quarter, as we have yet to see signs of change,” he said. “Sales are not deteriorating further, but are also not showing improvement. Accordingly, we have modified our business outlook. We now believe that economic weakness will persist through the third quarter, and we do not anticipate year-on-year growth in sales until the fourth quarter.”
Like a lot of companies dependent on retail consumer spending, Wright said Leggett & Platt hopes yesterday's 0.5 percent interest rate cut (see above) – the fourth such rate cut by the Federal Reserve since January 1 – will spur spending, “especially if accompanied by tax relief and stable energy prices.”
L&P's Commercial Furnishings sector, which includes its Store Fixture & Display Group, reported a 17.6 percent sales increase, and a “small increase in sales of store fixtures, displays, and storage products” which was offset by reduced sales of components for office and contract furniture.
Leggett & Platt is a Fortune 500 diversified manufacturer of a broad variety of engineered products, and the largest company – by sales and by manufacturing square footage – in the store fixturing industry. Over the past decade, it has built its fixture business by acquiring some of North America's leading companies, such as Excell Store Fixtures (Etobicoke, Ont.), Rodgers-Wade Manufacturing (Paris, Texas), Tarrant Interiors (Fort Worth, Texas), Wilson Display (Mississauga, Ont.), Syndicate Systems (Middlebury, Ind.), Dann Dee Display Fixtures (Niles, Ill.), MET Displays (Chicago) and, most recently, Edron Fixture Corp. (Miami).