Steelcase to Take On-Line Bids from Contract Suppliers
December 16, 2002
New York — Steelcase is running a live auction on the Internet January 18 in the hope of getting better prices for its contract textile lines. The Steelcase purchasing department is running this auction.
Until now, the Grand Rapids, Michigan-based contract furniture manufacturer has been purchasing its upholstery collections from Mastercraft.
Mastercraft, rumored to be in the $12-$15 million range, could be the big loser in this auction. Even if it is the successful bidder against all other vendors, it will see substantially reduced prices and subsequent profit margins as the result, a competitor reasoned.
Steelcase is taking this unusual action because of dire business conditions. It is attempting to lower its costs in the face of declining sales of furniture to the corporate marketplace. In September, the company reported that for the quarter that ended August 23, 2002 (second quarter, fiscal 2003), sales totaled $659.3 million, compared with $792.5 million in the same quarter last fiscal year. That figure, however, represented a sequential quarter increase of 2.5 percent over the $643.1 million reported in the first quarter.
"Revenue continues to track substantially below historic quarterly levels due to lower business capital spending levels and reduced industry-wide demand," the report said.
Designtex, a division of Steelcase, has seen its sales decline precipitously as well. The contract jobber recently filled the vacancy created by the departure of long-time employee and chief designer, Susan Lyons, earlier this year.F&FI
Until now, the Grand Rapids, Michigan-based contract furniture manufacturer has been purchasing its upholstery collections from Mastercraft.
Mastercraft, rumored to be in the $12-$15 million range, could be the big loser in this auction. Even if it is the successful bidder against all other vendors, it will see substantially reduced prices and subsequent profit margins as the result, a competitor reasoned.
Steelcase is taking this unusual action because of dire business conditions. It is attempting to lower its costs in the face of declining sales of furniture to the corporate marketplace. In September, the company reported that for the quarter that ended August 23, 2002 (second quarter, fiscal 2003), sales totaled $659.3 million, compared with $792.5 million in the same quarter last fiscal year. That figure, however, represented a sequential quarter increase of 2.5 percent over the $643.1 million reported in the first quarter.
"Revenue continues to track substantially below historic quarterly levels due to lower business capital spending levels and reduced industry-wide demand," the report said.
Designtex, a division of Steelcase, has seen its sales decline precipitously as well. The contract jobber recently filled the vacancy created by the departure of long-time employee and chief designer, Susan Lyons, earlier this year.F&FI