Steelcase Inc. Expects Lower Sales; Revises Third Quarter and Full Fiscal Year 1999 Outlooks
GRAND RAPIDS, Mich., Nov. 16, 1998, Steelcase Inc. (NYSE: SCS) today stated that third-quarter and full-year financial results are not expected to meet analysts' current estimates.
The Company stated that orders in September and October were softer than anticipated, and therefore expects third-quarter sales to be approximately 1 to 3 percent lower than sales for the third quarter of fiscal year 1998, as well as the prior quarter of the current year. In addition, the Company noted that its gross margins for the quarter will be negatively impacted by this volume reduction. The Company expects earnings per share for the third quarter to be in the range of $.33 to $.35 per share compared with $.32 per share in the same quarter a year ago. Sales for the full fiscal year 1999 are expected to be flat when compared to sales for the prior year and, as a result, earnings could be less than analysts' current estimates. However, 1999 net income is still expected to exceed the record levels achieved for full year 1998.
"While we had previously indicated that full fiscal year growth would be less than originally anticipated, we are disappointed that the softness has continued in September and October sales order levels. Therefore, we are emphasizing actions to increase sales volumes and contain expenses," said James P. Hackett, president and chief executive officer. "We have delayed company-wide hiring, with the exception of 60 new field sales positions tied to the launch of Pathways, and are reviewing all planned expenditures for the remainder of this fiscal year to better align costs with sales volume and to maintain high levels of profitability. Our energies will be aggressively focused on top-line growth, both internally generated and through acquisition."
Hackett noted that the Company is actively pursuing domestic and international growth opportunities, and remains confident in its overall long-term strategies. It continues to be the Company's goal to grow the business to $6 billion in sales over the next five years. This growth includes goals to drive operating expenses down to 22 percent of sales and to achieve a 14 percent operating income margin. Hackett added that Steelcase intends to continue working closely with investors to communicate its direction, earn their confidence and deliver on its performance objectives.
Steelcase Inc., headquartered in Grand Rapids, Michigan and founded in 1912, is the world's largest designer and manufacturer of high performance work environments. The company portfolio includes office furniture, furniture systems, interior architectural products, and related products and services. Fiscal 1998 worldwide sales, including those of unconsolidated joint ventures, were $3.26 billion.
Portions of this release contain current management expectations regarding anticipated sales, margins, earnings, net income, growth goals and reduction of expenses. Such statements involve certain risks and uncertainties that could cause actual results to vary from stated expectations. The Company's performance may differ materially from that contemplated by such statements for a variety of reasons, including, but not limited to, competitive and general economic conditions; changes in customer order patterns; the ability to grow new business and successfully integrate and operate any acquired businesses; and other risks detailed in the Company's 10-K Report for the year ended February 27, 1998, and its other filings with the Securities and Exchange Commission.