“We have a strong business powered by a portfolio of well-known brands and high quality products, but we are certainly not immune to the current economic environment,” said Dana Messina, chief executive officer. “We have a clear plan to deal with these economic conditions and strengthen our long-term competitive position.”
Fourth quarter results saw sales drop 22 per cent to $94 million, creating a net income of some $3 million, which was down 56 per cent. Adding these to the previous three quarters and the manufacturer saw sales drop five per cent to $387 million, creating a net income of $8 million. Over the year, shareholders have seen earnings per share drop just 11 per cent.
Despite the downward trend, the company had, at the end of December 2008, over $40 million in cash and working capital of over £225 million as well as significant real estate holdings.
Messina continued: “Our results reflect the outstanding efforts of our worldwide organisation to react to difficult market conditions. Steinway has always emerged stronger from economic downturns thanks to the strength of its brands, the quality of its products and the resolve of its people. We approach the challenges and the opportunities of 2009 with confidence, determination, a strong balance sheet and a clear vision of how to strengthen our leadership position in our industry.”
The company went on to state that it expected further drops in unit sales during 2009, but has implemented plans for reducing operating costs and spending throughout the year. Included in these plans are the reduction of the workforce by some 13 per cent since June 2008 and the suspension of pay increases, as well as the elimination or reduction of benefit programmes.
“We anticipate a slow start to 2009 as our dealers continue to reduce inventory in response to lower store activity and a severe contraction of third-party inventory financing,” concluded Messina. “Many musical instrument retailers are being negatively impacted by this downturn and we believe that the industry will consolidate in 2009 and 2010. On a brighter note, our piano sales to institutions have been holding up well and we expect that to mitigate the impact of continued weak consumer demand.
The full report can be seen here.