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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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Thematic (Sector/Industry)

<ul><li>For its 4QFY23 (November), Bassett Furniture Industries, Inc. reported a GAAP EPS loss of $0.47 on sales of $94.7 million.</li><li>GAAP EPS included a goodwill impairment of $0.63. Excluding the impairment, operating EPS was $0.15, ahead of an expected loss of $0.06.</li><li>Revenue beat analysts’ expectations of $90 million.</li></ul>

For its 4QFY23 (November), Bassett Furniture Industries, Inc. reported a GAAP EPS loss of $0.47 on sales of $94.7 million.GAAP EPS included a goodwill impairment of $0.63. Excluding the impairment, operating EPS was $0.15, ahead of an expected loss of $0.06.Revenue beat analysts’ expectations of $90 million.

Furniture/Furnishings Weekly - Bassett Adjusted Results Top Expectations

<ul><li>Economic headlines had two items affecting furniture/furnishings: one good, one not.</li><li>The Positive: The University of Michigan Consumer Sentiment gauge (as distinguished from Consumer Confidence reported below) surged 29% over two months.</li><li>The mid-January reading jumped 13% to 79, the highest since early 2021.</li></ul>

Economic headlines had two items affecting furniture/furnishings: one good, one not.The Positive: The University of Michigan Consumer Sentiment gauge (as distinguished from Consumer Confidence reported below) surged 29% over two months.The mid-January reading jumped 13% to 79, the highest since early 2021.

Furniture/Furnishings Weekly - Conflicting News Items Dominate Headlines for the Sector

Equity Bottom-Up

<ul><li>Flexsteel led the news in the furniture and furnishings industry last week with a positive preannouncement.</li><li>The company said 2QFY24 EPS will be $0.57 versus preannouncement consensus of $0.27.</li><li>Sales are expected to hit $100 million in the quarter, ahead of the preannouncement consensus of $96 million.</li></ul>

Flexsteel led the news in the furniture and furnishings industry last week with a positive preannouncement.The company said 2QFY24 EPS will be $0.57 versus preannouncement consensus of $0.27.Sales are expected to hit $100 million in the quarter, ahead of the preannouncement consensus of $96 million.

Furniture/Furnishings Weekly - FLXS Announces Positive Surprise Ahead of Conference

<ul><li>Furniture &amp; furnishings equity issues slumped in the final two weeks of 2023 and into the first week of 2024. The group had a positive year.</li><li>The commercial/contract furniture stocks gained 46%, beating all major broad market indices.</li><li>Steelcase led the sector with a ~91% gain for the year.</li></ul>

Furniture &amp; furnishings equity issues slumped in the final two weeks of 2023 and into the first week of 2024. The group had a positive year.The commercial/contract furniture stocks gained 46%, beating all major broad market indices.Steelcase led the sector with a ~91% gain for the year.

Furniture/Furnishings Weekly - WTR Furniture/Furnishings Conference Approaching

<ul><li>Stocks have had a few good weeks and last week was another. The furniture/furnishings group has focused on restoring and defending margins.</li><li>The “rolling recession” rolled over the sector this year. Despite sales pressure, earnings improved for the best in the group, notably the commercial/contract names, residential manufacturers, and select retailers.</li><li>Costco, which includes furniture in its broad merchandise mix, reported 1QFY24 revenue of $57.8 billion, matching estimates. </li></ul>

Stocks have had a few good weeks and last week was another. The furniture/furnishings group has focused on restoring and defending margins.The “rolling recession” rolled over the sector this year. Despite sales pressure, earnings improved for the best in the group, notably the commercial/contract names, residential manufacturers, and select retailers.Costco, which includes furniture in its broad merchandise mix, reported 1QFY24 revenue of $57.8 billion, matching estimates. 

Furniture/Furnishings Weekly - Costco Shows Why It's Best in Class

United States

Flexsteel Industries, Inc. manufactures and sells wooden and upholstered furniture for the retail, contract, and recreational vehicle (RV) furniture markets. The Company's products are sold to furniture dealers, department stores, and RV manufacturers throughout the United States. Flexsteel also sells its products to several national chains that sell on a private label basis.

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Flexsteel Inds (FLXS US)

Furniture/Furnishings Weekly - Bassett Adjusted Results Top Expectations

GAAP EPS included a goodwill impairment of $0.63. Excluding the impairment, operating EPS was $0.15, ahead of an expected loss of $0.06.

Water Tower Research

Furniture/Furnishings Weekly - Conflicting News Items Dominate Headlines for the Sector

The Positive: The University of Michigan Consumer Sentiment gauge (as distinguished from Consumer Confidence reported below) surged 29% over two...

Water Tower Research

Furniture/Furnishings Weekly - FLXS Announces Positive Surprise Ahead of Conference

Flexsteel led the news in the furniture and furnishings industry last week with a positive preannouncement.The company said 2QFY24 EPS will be...

Water Tower Research

Furniture/Furnishings Weekly - WTR Furniture/Furnishings Conference Approaching

Furniture & furnishings equity issues slumped in the final two weeks of 2023 and into the first week of 2024. The group had a positive year.

Water Tower Research

Furniture/Furnishings Weekly - Costco Shows Why It's Best in Class

Stocks have had a few good weeks and last week was another. The furniture/furnishings group has focused on restoring and defending margins.

Water Tower Research

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