Universal Forest Products (UFPI) slipped into a net loss of $3.7 million in the first quarter from net earnings of $1 million a year before, the company reported Wednesday. Sales slipped 1.5% to $387.2 million.

Storms, fewer sales to new home and manufacturers' home customers, reduced sales to the DIY/retail market, and last year's run-up in lumber prices all helped make the results from January through March of this year look worse in comparison with the same period of 2010, UFPI said.

"We are not satisfied with our results this quarter, but we know that our business was affected by challenging external factors and we have reason for optimism for the balance of the year," CEO Michael B. Glenn said in a statement. "We expect a more stable market this year and have improved performance expectations, particularly in the back half of the year."

UFPI's results would have shown even greater losses had it not been for the industrial packaging/components market. Sales to that market jumped 14.2% to $143.9 million as Grand Rapids, Mich.-based UFPI added new customers and sold more to existing customers.

In contrast, sales to the site-built construction market fell 11.3% in the first quarter from the year before to hit $54 million, sales to the do-it-yourself/retail market shrank 8.8% to $150 million, and sales to manufactured housing shrank 4.2% to $46.3 million.UFPI noted that housing starts nationwide through February were 9.2% from the first two months of 2010, in part because tax incentives boosted sales early last year. "The company expects to see improved sales in the second half of 2011 and is focused on multifamily, commercial and government projects, where it sees the most opportunity," UFPI said.

As for the DIY/retail market, UFPI said it believes pent-up demand and a slowly improving economy will boost sales in the next few years. "The company expects to add new customers, especially in the independent retailer arena, and to add new products to its portfolio," it said. "The company's development of a new wood-alternative product that holds opportunity in the DIY and other markets continues to show great promise."

UFPI noted that the brief jump in lumber prices early last year boosted margins in 2010's first quarter and then melted away. Last year also saw some DIY/retail customers build up inventories in a way that they didn't do in 2010. In addition, major winter storm this year cost 35 UFPI locations a total of 219 production days.

"We expect more favorable year-over-year comparisons in the second half of the year, but our goal is to grow sales and profits, despite market conditions," Glenn said. "We are committed to adding new products to our sales efforts and we are devoting considerable resources to keep this commitment. We believe new products will enable us to improve our position as a favored vendor to our customers."

Against the $387.2 million in net sales, the cost of goods sold totaled $345.8 million, leaving a gross profit of $41.4 million. Selling, general, and administrative expenses amounted to $46.5 million, leading to an operating loss of $5.1 million. An income-tax benefit of $2.3 million helped lessen the net loss.