Steinway has announced results for the quarter and six months that ended June 30.

Revenues for the second quarter rose 7 percent over the prior year period on the strength of sales in both the band and piano segments, as well as $900,000 in sales from a new online music business.

Overall gross margins decreased from 31 percent to 29.5 percent. This was due to $600,000 in severance costs for band plant closures and $400,000 of costs associated with a shutdown at the domestic piano plant taken to control inventory levels. Operating expenses increased 8 percent as compared to the prior year period, primarily due to $1.1 million of costs related to band facility rationalization.

Band Operations
Band sales for the quarter increased $3.1 million, or 8 percent. Gross margins decreased from 22.7 percent to 21.8 percent as a result of severance costs associated with plant closures. Adjusted margins improved to 23.2 percent for the quarter.
Steinway recently sold its clarinet facility in France and moved production to its woodwind facility in Indiana. No severance costs were incurred as the existing workforce transferred to the new owner.

Piano Operations
Piano revenues for the second quarter increased $2.2 million, or 4 percent. Worldwide, unit shipments of Steinway grand pianos remained level with the prior year period. Domestically, shipments of Steinway grand pianos increased 10 percent over the prior year period. Overseas, Steinway saw a 9 percent decrease in shipments of grands due to the absence of a large institutional sale, which was recorded in the second quarter of 2007. Excluding that sale, overseas unit shipments would have increased 10 percent.
Unit shipments of mid-priced pianos declined 15 percent, as compared to the second quarter of 2007. This decrease is a result of unusually high shipments in the second quarter of 2007 when many dealers took initial delivery of the relaunched Essex piano line. In order to control inventory levels of Steinway pianos, the company operated its New York piano factory under a reduced production schedule during the second quarter of 2008.

For the six-month period, piano revenues increased 4 percent. Steinway grand unit shipments declined 7 percent and mid-priced piano unit shipments remained level with prior year. Sales remained strong in China and former Eastern Bloc countries. Gross margins for the six-month period decreased from 36.3 percent to 34.8 percent primarily as a result of lower production levels at the New York piano plant. MI

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