| NOV. 14 I STEINWAY I FINANCIAL|
Soft Third Quarter
Steinway has announced its results for the quarter and nine months, which ended Sept. 30. Revenues for the third quarter increased 1 percent over the same period last year. A 7-percent increase in piano segment revenues, which includes the company’s recently acquired online music business, offset a 5-percent decrease in band segment revenues. Overall gross margins improved to 29.8 percent from 28.3 percent.
For the first nine months of 2008, revenue increased 3 percent and gross margins went from 29.4 percent to 29.5 percent.
Band revenues in the third quarter decreased $2.5 million, or 5 percent. Declines occurred in all major product categories, most significantly in student-level instruments. Gross margins improved from 20.7 percent to 22.2 percent despite $900,000 of severance costs during that period.
Piano segment revenues for the third quarter increased 7 percent. An increase in piano sales overseas offset the domestic decline, while online music sales contributed an additional $1.8 million in revenue. Overall unit shipments of Steinway grand pianos decreased 5 percent from the prior year period. Domestic shipments decreased 6 percent and overseas shipments decreased 3 percent. Mid-priced pianos declined 7 percent. Gross margins declined from 36.3 percent to 35.1 percent due to a decline in domestic retail sales and a change in the product mix toward lower-margin upright pianos.
For the nine-month period, piano revenues increased 5 percent. Steinway grand unit shipments declined 6 percent and mid-priced piano unit shipments decreased 2 percent. Gross margins decreased to 34.8 percent from 36.3 percent primarily as a result of lower production levels at Steinway’s New York piano plant.
“The outlook for the worldwide economy is uncertain, and we expect general weakness in many of our markets for the next few quarters,” said Steinway CEO Dana Messina. “Our balance sheet is strong, and we have substantial liquidity to handle this present economic environment.”