CARTHAGE, Mo.-Although it reported a healthy increase in sales, Leggett & Platt’s net income decreased by 5.3 percent in the third quarter, to $44.9 million.
Net sales were up 8.6 percent to $940.9 million. However—as David Haffner, president and CEO, noted—the sales increase occurred mostly from items that brought the company little in incremental profit. Competitive pricing pressure in some product categories, customers switching to lower-cost and lower-value components (“decontenting,” as Haffner termed it) and the company’s own efforts to reduce its inventory by curtailing production all played a part in slimming down the bottom line, Haffner said.
Those factors sliced into Leggett & Platt’s gross margin, which fell 136 basis points to 18.1 percent. Selling, general and administrative expenses rose 7.2 percent in dollars, but did decline 13 basis points as a percentage of sales to 10 percent.
Leggett & Platt said it is anticipating a rise of 7 percent in sales for 2011 as a whole, to about $3.6 billion.