HNI Corp. announced today that its net income from continuing operations for the three months ended March 29 fell 80.7 percent to $4 million from $20.7 million in the year-ago period. Sales were down 7.5 percent to $563.4 million.

“We faced very challenging economic conditions during the quarter,” said Stan Askren, chairman, president and CEO, in a press release. He added that the company faced weak demand in small office and home office purchases, but its contract business, which often involves larger companies, performed to the company’s expectations.

Office furniture sales were down 6.4 percent to $466 million in the quarter, with acquisitions contributing $6.9 million to sales. Hearth product sales fell 12.6 percent to $97.4 million. Excluding acquisitions in that segment, sales plummeted 24.5 percent, driven by a severe decrease in new construction channel revenues.

The company said net income also was negatively affected by increased freight costs and higher-than-anticipated transition costs related to a plant shutdown, a facility ramp-up, closure of two distribution centers and the start-up of a new distribution center. HNI also completed the purchase of HBF, a provider of upholstered seating, textiles, wood tables and wood case goods for offices during the quarter, but transaction funding did not go through until March 31.

“We expect the economy to continue to be difficult,” Askren said. “We’ll work to offset market weakness by eliminating waste, attacking structural cost and streamlining our businesses, consistent with our past practice. We remain optimistic about the future and will continue our investment in growth initiatives and position for the market recovery.”