• Thomas Russell

Declining U.S. share hits Springs Global profit

Sao Paulo, Brazil - Stronger sales in Brazil and better overall margins weren't able to offset declining U.S. business in fiscal 2010for Springs Global, which swung to a loss of about $10.5 million for the year compared to a profit of roughly $25.2 million last year.
Sales fell 3.4% to approximately $1.4 billion.
Sales in fashion bedding fell 8.6%, while sales were off 5.3% in bath and 27.4% in utility bedding. The company cited lower volumes from North America as well as the higher appreciation of Brazil's currency compared to the U.S. dollar.
The company also noted the impact of higher cotton prices.
"Cotton increased by approximately 200% and the contracts that we held with our
Asian suppliers were not fulfilled by them. In addition to the adjustments in prices requested by our suppliers, there were also reductions in payment terms, bringing a strong need for additional working capital. Naturally, the price adjustment for our retail customers did not occur at the same speed, which strongly impacted our margins and caused a decrease in sales volume in the United States," Springs Global said in its filing.
Sales in the Brazilian market rose 29.2% and now represent 44.9% of total business compared to 33.6% in 2009.

 

Thomas RussellThomas Russell | Associate Editor, FurnitureToday
trussell@furnituretoday.com

I'm Tom Russell and have worked at Furniture/Today since August 2003. Since then, I have covered the international side of the business from a logistics and sourcing standpoint. Since then, I also have visited several furniture trade shows and manufacturing plants in Asia, which has helped me gain perspective about the industry in that part of the world. As I continue covering the import side of the business, I look forward to building on that knowledge base through conversations with industry officials and future overseas plant tours. From time to time, I will file news and other industry perspectives online and, as always, welcome your response to these Web postings.

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