Flexsteel Industries (FLXS) risk factors, FY2026 10-K

Risks related to our industry

1. 01Changes in U.S. trade policy, including the imposition of tariffs and other trade restrictions, could materially adversely affect our business, financial condition and results of operationsNew
2. 02Following the invalidation of certain tariffs previously imposed under the International Emergency Economic Powers Act, we became entitled to refunds of tariffs previously paid on certain imported products. As of June 30, 2026, we had received substantially all of our eligible refund claimsNew
3. 03Cost inflation, including significant increases in ocean container rates, tariffs, raw materials prices, labor rates, and domestic transportation costs, has and could continue to impact profitability. Imbalances between supply and demand for these resources may continue to exert upward pressure on costs
4. 04The Company’s products are considered deferrable purchases for consumers during economic downturns. Prolonged negative economic conditions could impact the business
5. 05Future success depends on the Company’s ability to manage its global supply chain
6. 06Competition from U.S. and foreign finished product manufacturers may adversely affect the business, operating results or financial condition
7. 07Additionally, most of our sales are to distribution channels that rely on physical stores to merchandise and sell our products and an involuntary shut down of those or a significant shift in consumer preference toward purchasing products online could have a materially adverse impact on our sales and operating margin27% rewritten
8. 08Future costs of complying with various laws and regulations may adversely impact future operating results
9. 09Failure to anticipate or respond to changes in consumer or designer tastes and fashions in a timely manner could adversely affect the Company’s business and decrease sales and earnings
10. 10Use of social media to disseminate negative commentary may adversely impact the Company’s reputation and business
11. 11Public health events could have a materially adverse effect on our ability to operate, our ability to keep employees safe from a pandemic, our results of operations, and financial condition

Risks related to our operations

1. 12Business information systems could be impacted by disruptions and security breaches37% rewritten
2. 13The implementation of a new business information system could disrupt the business38% rewritten
3. 14The Company’s participation in a multi-employer pension plan may have exposure under the plan that could extend beyond what its obligations would be with respect to its employees
4. 15Future results may be affected by various legal proceedings and compliance risk, including those involving product liability, environmental, or other matters
5. 16We may experience impairment of our long-lived assets, which would decrease our earnings and net worth
6. 17If the Company is not successful in recruiting and retaining key employees and highly skilled workers or experiences the unexpected loss of those employees, the operations may be negatively impacted
7. 18We may not be able to collect amounts owed to us