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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>A good week for furniture and furnishings stocks. The Water Tower Research Commercial/Contract Index (+3.5%) and Home Goods Retailers Index (+2.5%) posted strong returns relative to the market (-0.5% to +0.1%) and the Mass Retailers Index (-0.6%).</li><li>Our Residential Manufacturers &amp; Suppliers Index (-0.5%) was in line with the broader market.</li><li>The China price is now the highest in Asia. According to Science Is Strategic (citing Haver Analytics), unit labor rates in China are now ~2.5x to 4x higher than other Asian countries (see Figure 1). </li></ul>

A good week for furniture and furnishings stocks. The Water Tower Research Commercial/Contract Index (+3.5%) and Home Goods Retailers Index (+2.5%) posted strong returns relative to the market (-0.5% to +0.1%) and the Mass Retailers Index (-0.6%).Our Residential Manufacturers &amp; Suppliers Index (-0.5%) was in line with the broader market.The China price is now the highest in Asia. According to Science Is Strategic (citing Haver Analytics), unit labor rates in China are now ~2.5x to 4x higher than other Asian countries (see Figure 1). 

Furniture/Furnishings Weekly - June 3, 2024

<ul><li>A tough week for our indexes. It was a down week in the market for Water Tower Research’s Residential Manufacturers &amp; Suppliers Index (-6.4%) and Home Goods Retailers Index (- 6.7%) relative to the broader market indexes (-0.1% to -1.5%) and the Mass Retailers Index (-1.6%).</li><li>On a relative basis, the Commercial/Contract Furniture Index (-1.0%) outperformed.</li><li>Leggett reappointed Karl Glassman as CEO. Amidst the ongoing mattress industry recession/depression, Glassman, who served as Leggett’s CEO from 2016 to 2021 and Board Chair since 2020, was again appointed President and CEO, succeeding CEO Mitch Dolloff, who resigned.</li></ul>

A tough week for our indexes. It was a down week in the market for Water Tower Research’s Residential Manufacturers &amp; Suppliers Index (-6.4%) and Home Goods Retailers Index (- 6.7%) relative to the broader market indexes (-0.1% to -1.5%) and the Mass Retailers Index (-1.6%).On a relative basis, the Commercial/Contract Furniture Index (-1.0%) outperformed.Leggett reappointed Karl Glassman as CEO. Amidst the ongoing mattress industry recession/depression, Glassman, who served as Leggett’s CEO from 2016 to 2021 and Board Chair since 2020, was again appointed President and CEO, succeeding CEO Mitch Dolloff, who resigned.

Furniture/Furnishings Weekly - May 28, 2024

<ul><li>Furniture and furnishing stocks performed well last week. All three of the WTR indexes outperformed the broader market, led by Residential Manufacturers &amp; Suppliers (+3.3%), Commercial/Contract Furniture (+3.2%) and Home Goods Retailers (+2.7%), which outperformed the broader markets (- 0.1% to +0.8%) and the Mass Retailers Index (+0.1%).</li><li>Mattress demand remains weak. Tempur Sealy International (TPX) CEO Scott Thompson noted in his 1Q24 remarks, “You’d have to say the bedding industry is in a depression and has been in one for a number of quarters” , with demand down an estimated 15% industry-wide in the first three months of the year.</li><li>For TPX, sequentially, demand was weakest in January and improved (though erratically) through April, where it was ‘flattish’. Higher- end price points were a bright spot.</li></ul>

Furniture and furnishing stocks performed well last week. All three of the WTR indexes outperformed the broader market, led by Residential Manufacturers &amp; Suppliers (+3.3%), Commercial/Contract Furniture (+3.2%) and Home Goods Retailers (+2.7%), which outperformed the broader markets (- 0.1% to +0.8%) and the Mass Retailers Index (+0.1%).Mattress demand remains weak. Tempur Sealy International (TPX) CEO Scott Thompson noted in his 1Q24 remarks, “You’d have to say the bedding industry is in a depression and has been in one for a number of quarters” , with demand down an estimated 15% industry-wide in the first three months of the year.For TPX, sequentially, demand was weakest in January and improved (though erratically) through April, where it was ‘flattish’. Higher- end price points were a bright spot.

Furniture/Furnishings Weekly - May 13, 2024

<ul><li>It was a mixed week in stocks, with most Water Tower Research furniture/furnishings indexes outperforming (with Residential the weak spot following LEG’s dividend cut).</li><li>Our Home Goods Retailers Index (+6.0%) significantly outperformed the broader market (+0.2% to +1.0%) as well as our Mass Retailers Index (+1.8%) and our Commercial/Contract Furniture Index (+1.6%).</li><li>Our Residential Manufacturers &amp; Suppliers Index declined 0.9%, driven in part by Leggett &amp; Platt’s steep 23.9% sell-off following its 1Q24 earnings release and investor call.</li></ul>

It was a mixed week in stocks, with most Water Tower Research furniture/furnishings indexes outperforming (with Residential the weak spot following LEG’s dividend cut).Our Home Goods Retailers Index (+6.0%) significantly outperformed the broader market (+0.2% to +1.0%) as well as our Mass Retailers Index (+1.8%) and our Commercial/Contract Furniture Index (+1.6%).Our Residential Manufacturers &amp; Suppliers Index declined 0.9%, driven in part by Leggett &amp; Platt’s steep 23.9% sell-off following its 1Q24 earnings release and investor call.

Furniture/Furnishings Weekly - May 6, 2024

<ul><li>Residential furniture and home goods retailer issues performed well last week versus the market, while the Commercial/Contract Furniture stocks, by and large, tread water.</li><li>Our Residential Manufacturers &amp; Suppliers index advanced 3.2%, outperforming the broader market indexes (up between 1.6 to 1.8%), while our Home Goods Retailers and Mass Retailers indexes each grew by 0.7%.</li><li>Only our Commercial/Contract Furniture Index lagged, down 0.3%.</li></ul>

Residential furniture and home goods retailer issues performed well last week versus the market, while the Commercial/Contract Furniture stocks, by and large, tread water.Our Residential Manufacturers &amp; Suppliers index advanced 3.2%, outperforming the broader market indexes (up between 1.6 to 1.8%), while our Home Goods Retailers and Mass Retailers indexes each grew by 0.7%.Only our Commercial/Contract Furniture Index lagged, down 0.3%.

Furniture/Furnishings Weekly - Weak Bedding, Furniture Demand

United States

Ethan Allen Interiors Inc. designs, manufactures, sources, sells, and distributes a range of home furnishings and accessories. The Company offers a variety of products including case goods items, such as beds, dressers, tables, chairs, buffets, entertainment units, home office furniture, and wooden accents. Ethan Allen Interiors serves clients worldwide.

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Ethan Allen Interiors (ETD US)

Furniture/Furnishings Weekly - June 3, 2024

The Water Tower Research Commercial/Contract Index (+3.5%) and Home Goods Retailers Index (+2.5%) posted strong returns relative to the market (...

Water Tower Research

Furniture/Furnishings Weekly - May 28, 2024

It was a down week in the market for Water Tower Research’s Residential Manufacturers & Suppliers Index (-6.4%) and Home Goods Retailers Index (-...

Water Tower Research

Furniture/Furnishings Weekly - May 13, 2024

Furniture and furnishing stocks performed well last week. All three of the WTR indexes outperformed the broader market, led by Residential...

Water Tower Research

Furniture/Furnishings Weekly - May 6, 2024

It was a mixed week in stocks, with most Water Tower Research furniture/furnishings indexes outperforming (with Residential the weak spot following...

Water Tower Research

Furniture/Furnishings Weekly - Weak Bedding, Furniture Demand

Residential furniture and home goods retailer issues performed well last week versus the market, while the Commercial/Contract Furniture stocks, by...

Water Tower Research

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