The Middle Is Getting Crushed

Originally published August 18, 2026. This version was rebuilt from Flexsteel and Gordon Brothers releases for the FIN archive, and the facts are as of that date.

Mid-August earnings showed how much tariff refunds were flattering results, while a familiar mid-priced brand returned aimed at the shoppers squeezed most by prices.

The short version

• Flexsteel's sales grew slightly and its gross margin jumped, mostly from tariff refunds.
• Without the refund, Flexsteel's margin would have been lower than a year earlier.
• The Broyhill brand returned through licensees in furniture, mattresses and rugs.

Flexsteel's refund-driven margin

Flexsteel reported fourth-quarter net sales of $115.4 million, up 0.7%, on higher soft seating volume. Gross margin rose to 30.0% from 23.9%, and the company said IEEPA tariff refunds added 780 basis points.

Taking out the refund, gross margin would have been about 170 basis points below a year earlier, based on the components the company disclosed. Refunds were a one-time boost, so the underlying margin was the better guide to the year ahead.

For the full year, Flexsteel said sales grew about 4% to $459 million, the fourth quarter was its eleventh straight quarter of year-over-year growth, and it bought back about $64 million of stock. For the first quarter of fiscal 2027 it guided to sales growth of 1% to 4% and an operating margin of 6.5% to 7%, citing consumer demand and energy-driven logistics and material costs as the main risks.

Broyhill comes back

Gordon Brothers, which owns the Broyhill brand, added three licensees. Living Style covers furniture and lighting, Bedding Industries of America covers mattresses and Town & Country Living covers rugs and decor. The collection debuted at the spring High Point Market.

Broyhill's name still carries weight with mainstream shoppers. Bringing it back through licensees put a known mid-priced brand in front of retailers whose middle-income customers were under pressure.

The squeezed middle

Refunds were propping up reported margins, and mid-priced brands were competing for a shopper with less room to spend. Underlying costs were the number to watch once refunds ran out.

Related on FIN

• Follow the Tariff Dollars
• The Wholesale Furniture Rep

Sources

• Flexsteel Industries, Fourth quarter and fiscal 2026 results (SEC exhibit 99.1)
• Gordon Brothers, Gordon Brothers Expands Broyhill with Three New Licensees