NOV. 8 I STEINWAY I FINANCIAL
Steinway Q3 Band
Steinway Musical Instruments’ third-quarter band sales increased 14 percent over the prior-year period, leading to a 9-percent increase in overall revenues. For the nine-month period that ended Sept. 30, gross profit increased $2 million, or 8 percent, as improved piano margins lessened the impact of lower band margins. Operating profit increased 4 percent over the prior year.
Sales of professional trumpets and trombones continued to improve in the third quarter, leading to a 14-percent increase in revenues over the prior-year period. Production levels at the company’s Elkhart, Ind., brass plant remain on target, but continued costs resulting from the strike and lower levels of production of woodwind instruments led to a reduction in overall band gross margins to 19.5 percent from 20.7 percent in the comparable quarter.
Sales declined to $125.7 million, or 7 percent, as a result of dealer consolidation and customer inventory reduction. Gross margins improved to 20.7 percent from 19.3 percent on improved sales mix of higher-margin professional instruments and lower-inventory reserve charges.
“We’re happy to report that third-quarter revenues in our band segment were back to pre-strike levels,” said Steinway CEO Dana Messina. “For the first time this year, we shipped more band instruments than in the comparable prior-year period.”
Overall piano revenues increased 5 percent for the quarter. A 38-percent increase in worldwide shipments of mid-priced pianos, led by the Essex line, offset a 7-percent decrease in sales of Steinway grand pianos as compared to third quarter of last year.
Strong domestic retail sales; a mixed shift toward higher-margin, limited-edition and larger sized pianos; and favorable purchasing of mid-priced pianos led to an overall piano gross-margin increase from 35.4 percent to 36.3 percent. Year-to-date, piano revenues were up 11 percent to $159.3 million. Worldwide shipments of mid-priced pianos were up 66 percent, offsetting a 7-percent decrease in unit shipments of Steinway grands. For the nine-month period, gross margins improved to 36.3 percent from 34.3 percent.
“The fourth quarter is the beginning of the selling season in our band business,” Messina said. “Although it is too early to evaluate our programs and product offerings, we expect band sales in the fourth quarter to improve over the prior year. Looking at our piano business, the U.S. piano market remains challenging. Our domestic inventories remain too high and our domestic production levels will need to be reduced. Overseas, we expect our fourth-quarter business to be stable.”