MAY 11 I STEINWAY I FINANCIAL
Steinway Q1 Decline
Steinway reported its results for the first quarter of 2009, which ended on March 31. The company's sales were down 26 percent, and gross margins decreased from 29 percent to 26 percent. Net income was down 48 percent at $1 million.
Pianos took the biggest hit with sales down 32 percent and a 34.5-percent decrease in gross margin.
“Piano sales have been dismal as dealers struggle with low traffic, a general lack of affordable financing and excess inventories,” said Dana Messina, Steinway’s CEO. “We expect continued soft sales during the next few quarters until dealers gain more confidence that consumer demand is improving.”
Messina said Steinway has made efforts to reduce operating expenses in the piano segment by lowering production rates and production days. Steinway has also reduced its staff and lowered salaries. Overall operating expenses were reduced 13 percent.
Band Sales Look Ahead
In the first quarter, band sales were down 17 percent, and the gross margin decreased 21.6 percent. Steinway also reduced operating expenses in the band segment by 28 percent. Messina said he’s looking to the school band rental season to improve the third quarter outlook.
“In the second quarter, we anticipate continued softness in band instrument sales,” Messina said. “We expect our back-to-school season in the third quarter to be better and are building inventories to meet the expected customer demand. Our new products are gaining traction in the marketplace. We are excited about their prospects and expect them to do well for us beginning in 2010.” MI