Highlights

  • Flexsteel reported 9.0% year-over-year net sales growth during fiscal second quarter 2026.
  • Gross margin expanded by 170 basis points despite tariff-related cost pressures.
  • NASDAQ-listed FLXS shares closed higher following the quarterly earnings release.

Flexsteel Industries, Inc. (NASDAQ:FLXS), a U.S.-based residential furniture manufacturer and importer, reported its financial results for the fiscal second quarter ended December 31, 2025. Net sales for the quarter reached USD 118.2 million, compared with USD 108.5 million in the same period last year, reflecting a 9.0% increase.

The rise in revenue was primarily driven by higher unit volumes in sourced soft seating products and pricing adjustments related to tariff surcharges. This growth was partially offset by lower unit volumes in made-to-order soft seating products and the homestyles branded ready-to-assemble category.

Margin Trends Reflect Product Mix Shifts
Gross margin for the quarter improved to 22.7%, up from 21.0% in the prior-year quarter, representing a 170 basis point increase. The improvement was mainly attributed to a favorable sales mix that included higher-margin products. However, the benefit was partially reduced by the impact of tariffs on product costs.

Selling, general, and administrative expenses accounted for 15.1% of net sales, compared with 14.9% in the prior-year quarter. The increase reflected continued spending on growth-related initiatives.

Earnings Comparison Shows Mixed Movement
Operating income for the quarter was reported at USD 9.0 million, compared with USD 11.7 million in the prior-year quarter. On an adjusted basis, operating income increased to USD 9.0 million from USD 6.7 million, reflecting a year-over-year increase of 35%.

Net income for the quarter totaled USD 6.6 million, or USD 1.18 per diluted share, compared with USD 9.1 million, or USD 1.62 per diluted share, in the prior-year period. Adjusted net income per diluted share also stood at USD 1.18, up from USD 0.95 a year earlier. The effective tax rate for the quarter was 28.9%, compared with 22.4% in the prior-year quarter.

Balance Sheet and Liquidity Position
As of December 31, 2025, Flexsteel reported a cash balance of USD 36.8 million and working capital of USD 126.0 million. The company also had approximately USD 54.1 million available under its secured line of credit. Capital expenditures for the first six months of fiscal 2026 totaled USD 3.1 million.

Stock Market Reaction
Shares of Flexsteel Industries closed at USD 41.66 on February 2, reflecting a gain of 4.07%.