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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>During the past two weeks, key big-box retailers reported the quarter ended in October, providing near real-time views into the state of the consumer and retailing.</li><li>Top-line results were mixed.</li><li>Our Read: Consumer spending continues to retreat from the pandemic bubble, with consumers moving down market to low-price and bargain retailers.</li></ul>

During the past two weeks, key big-box retailers reported the quarter ended in October, providing near real-time views into the state of the consumer and retailing.Top-line results were mixed.Our Read: Consumer spending continues to retreat from the pandemic bubble, with consumers moving down market to low-price and bargain retailers.

Furniture/Furnishings Weekly - A Glance at Big-Box Retailers Shows Mixed Top Line

<ul><li>Last week, we considered our outlook for furniture and furnishings. Today, we look at current indicators.</li><li>Economic fundamentals largely deteriorated over the past two weeks, but the stocks surged as interest rates eased.</li><li>Existing home sales dipped to a seasonally adjusted rate of 3.96 million in September, the first reading below 4 million since 2010, shortly after the Great Recession. </li></ul>

Last week, we considered our outlook for furniture and furnishings. Today, we look at current indicators.Economic fundamentals largely deteriorated over the past two weeks, but the stocks surged as interest rates eased.Existing home sales dipped to a seasonally adjusted rate of 3.96 million in September, the first reading below 4 million since 2010, shortly after the Great Recession. 

Furniture/Furnishings Weekly - Falling Rates Lift All Stocks

<ul><li>Following a spate of earnings last week and major retailer earnings ahead, we pause here to reflect on where the furniture and furnishings sectors—residential and commercial/contract— are now and a peek at their likely tracks in the early 2024.</li><li>Where are we in broad strokes? Residential: Following demand surges fueled by a once-in-a-lifetime focus by consumers on their homes during the pandemic, residential furniture and furnishings demand slumped as the focus shifted to “experiences” from goods.</li><li>Commercial: New demand (orders) didn’t enjoy the surge (though backlog deliveries fueled reported sales).</li></ul>

Following a spate of earnings last week and major retailer earnings ahead, we pause here to reflect on where the furniture and furnishings sectors—residential and commercial/contract— are now and a peek at their likely tracks in the early 2024.Where are we in broad strokes? Residential: Following demand surges fueled by a once-in-a-lifetime focus by consumers on their homes during the pandemic, residential furniture and furnishings demand slumped as the focus shifted to “experiences” from goods.Commercial: New demand (orders) didn’t enjoy the surge (though backlog deliveries fueled reported sales).

Furniture/Furnishings Weekly - Looking Ahead: What We Expect in 2024

<ul><li>The commercial/contract (office) furniture stocks rallied last week following HNI’s strong 3Q23 earnings report.</li><li>The commercial/contract furniture issues rose more than 12.7%, outperforming the broad indexes, with HNI leading the group.</li><li>HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable distractions restored margins.</li></ul>

The commercial/contract (office) furniture stocks rallied last week following HNI’s strong 3Q23 earnings report.The commercial/contract furniture issues rose more than 12.7%, outperforming the broad indexes, with HNI leading the group.HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable distractions restored margins.

Furniture/Furnishings Weekly - Office Furniture Back in Focus After Strong HNI Quarter

<ul><li>Home goods retailers and furniture manufacturers fell in a week of tough earnings news.</li><li>Ethan Allen Interiors (ETD) reported adjusted EPS of $0.63 for 1QFY24, down from $1.11 last year and below consensus of $0.72. </li><li>Positives in the quarter included a 70-basis point improvement in gross margin of 61.1% despite 23% lower sales. </li></ul>

Home goods retailers and furniture manufacturers fell in a week of tough earnings news.Ethan Allen Interiors (ETD) reported adjusted EPS of $0.63 for 1QFY24, down from $1.11 last year and below consensus of $0.72. Positives in the quarter included a 70-basis point improvement in gross margin of 61.1% despite 23% lower sales. 

Furniture/Furnishings Weekly -  Earnings Misses Lead Home Furnishings Lower

United States

The Lovesac Company retails home furnishing products. The Company offers alternative furniture store, sectionals, bean bags, bean bag chairs, as well as other accessories such as blankets, footsacs, and throw pillows. Lovesac serves customers in the State of Connecticut.

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Lovesac Co (LOVE US)

Furniture/Furnishings Weekly - A Glance at Big-Box Retailers Shows Mixed Top Line

During the past two weeks, key big-box retailers reported the quarter ended in October, providing near real-time views into the state of the...

Water Tower Research

Furniture/Furnishings Weekly - Falling Rates Lift All Stocks

Existing home sales dipped to a seasonally adjusted rate of 3.96 million in September, the first reading below 4 million since 2010, shortly after...

Water Tower Research

Furniture/Furnishings Weekly - Looking Ahead: What We Expect in 2024

Following a spate of earnings last week and major retailer earnings ahead, we pause here to reflect on where the furniture and furnishings...

Water Tower Research

Furniture/Furnishings Weekly - Office Furniture Back in Focus After Strong HNI Quarter

HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable...

Water Tower Research

Furniture/Furnishings Weekly - Earnings Misses Lead Home Furnishings Lower

Home goods retailers and furniture manufacturers fell in a week of tough earnings news. Ethan Allen Interiors (ETD) reported adjusted EPS of $0.63...

Water Tower Research

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