Fourth quarter proves godsend for furniture stocks
By Jay McIntosh -- Furniture Today, January 13, 2002
HIGH POINT — After a sluggish start, home furnishings turned into a hot segment for investors last year as Furniture/Today's Furniture Stock Index surged 33%.
All the gain occurred in the fourth quarter as the index jumped 44%, riding a general rise in stock prices as America recovered from the Sept. 11 terrorist attacks. Furniture stocks also appeared to benefit from Wall Street analysts' belief that consumers would focus more on the home.
It was an up-and-down year for furniture stocks in 2001. Prices firmed in the spring and summer as the Federal Reserve kept reducing interest rates — always a positive for home-related stocks —and the economy seemed to be heading toward improvement. Then stocks fell sharply in the two weeks after Sept. 11, with the index down 22% for the third quarter.Last year's increase was the Furniture Stock Index's best year since 1996, when it rose 35.1%. The gain also erased declines of 6.4% in 2000 and 14.2% in 1999.
If the market is the leading indicator it's supposed to be, a number of companies could see their profits rising in 2002. Among all publicly traded home furnishings firms that Furniture/Today tracks, 31 stocks rose in price last year, 15 declined and one — rent-to-own chain Bestway — was unchanged.
Several companies posted impressive turnarounds last year, led by Restoration Hardware. The lifestyle retailer of furniture and other home goods restored its own reputation by adding a new chief executive officer in March — former Pottery Barn executive Gary Friedman — raising additional capital, closing several underperforming stores and freshening its product line.
Those moves boosted the retailer's stock from 94 cents at the end of 2000 to $8.94 as last year closed. Restoration lost money in 2001, but investors are looking for profits and revenue growth down the road.
A pair of fabric suppliers, Quaker and Culp, also won back investors' confidence. Both started 2001 on a down note and reported strengthening results as the year wore on. While their year-end prices were down from their midyear peaks, Quaker's stock rose nearly 108% for the year and Culp's was up 90%.
Although last year wasn't a stellar one for sales and profit gains, many of the industry's largest and highest-profile companies saw stock prices rise more than 20%. Retailers Havertys and Pier 1 Imports, manufacturers Dorel Inds., Furniture Brands International, La-Z-Boy, Bassett and Natuzzi, and suppliers Valspar and Leggett & Platt were among the major upward movers.
Posting the largest declines were struggling fabric producers Guilford Mills and Cone Inds., both hit hard by foreign competition and softening demand, and upholstery producer and retailer Rowe Cos., which reported net losses amid a slight sales decline.
Two companies have dropped off the furniture stocks radar in the past year. Fabric company Burlington Inds.' stock stopped trading on the New York Stock Exchange when it filed for Chapter 11 bankruptcy protection in November, and technology provider Styleclick sold the home furnishings part of its business, the former Modacad video catalog software.
DMI Furniture saw its stock price fall 22% last year, but the stock price rose strongly last week and erased nearly all the decline after a favorable earnings report.
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| Close 12/28/00 | Close 12/27/01 | Percent Change | |
|---|---|---|---|
| GAINERS | |||
| Restoration Hardware¹ (O,RSTO) | 0.94 | 8.94 | 851.1% |
| Quaker Fabric (O,QFAB) | 4.00 | 8.31 | 107.8 |
| Culp¹ (N,CFI) | 2.00 | 3.80 | 90.0 |
| Haverty Furniture (Class A) (N,HVTA) | 9.38 | 16.35 | 74.3 |
| Pier 1 Imports¹ (N,PIR) | 10.31 | 17.34 | 68.2 |
| Haverty Furniture¹ (N,HVT) | 9.88 | 16.55 | 67.5 |
| Furniture Brands International¹ (N,FBN) | 21.06 | 32.02 | 52.0 |
| Foamex International¹ (O,FMXI) | 5.38 | 8.10 | 50.6 |
| Select Comfort¹ (O,SCSS) | 1.44 | 2.00 | 38.9 |
| La-Z-Boy¹ (N,LZB0) | 15.75 | 21.82 | 38.5 |
| Rainbow Rentals (O,RBOW) | 5.25 | 7.11 | 35.4 |
| Rent-Way (N,RWY) | 4.44 | 5.99 | 34.9 |
| Bassett Furniture¹ (O,BSET) | 11.25 | 14.01 | 24.5 |
| Ethan Allen1 (N,ETH) | 33.50 | 41.59 | 24.1 |
| Valspar (N,VAL) | 32.18 | 39.60 | 23.1 |
| Leggett & Platt¹ (N,LEG) | 18.94 | 23.00 | 21.4 |
| Natuzzi² (N,NTZ) | 12.25 | 14.64 | 19.5 |
| The Bombay Company¹ (N,BBA) | 1.94 | 2.28 | 17.5 |
| Aaron Rents¹ (N,RNT) | 14.06 | 16.30 | 15.9 |
| Hooker Furniture¹ (O,HOFT) | 8.13 | 9.25 | 13.8 |
| Chromcraft Revington¹ (N,CRC) | 10.00 | 10.78 | 7.8 |
| Spiegel (O,SPGL) | 4.31 | 4.55 | 5.6 |
| Kimball International (O,KBAL) | 14.50 | 15.15 | 4.5 |
| Jennifer Convertibles¹ (O,JENN) | 2.38 | 2.45 | 2.9 |
| Aaron Rents (Class A)¹ (N,RNTA) | 13.44 | 13.50 | 0.4 |
| Knape & Vogt (O,KNAP) | 13.13 | 13.15 | 0.2 |
| UNCHANGED | |||
| Bestway (O,BSTW) | 4.00 | 4.00 | 0.0% |
| LOSERS | |||
| Stanley Furniture¹ (O,STLY) | 24.13 | 23.77 | -1.5% |
| Flexsteel Inds.¹ (O,FLXS) | 11.50 | 11.25 | -2.2 |
| Rent-A-Center (O,RCII) | 34.50 | 33.57 | -2.7 |
| Masco (N,MAS) | 25.69 | 24.50 | -4.6 |
| Keller Mfg.¹ (O,KMFC) | 3.25 | 3.05 | -6.2 |
| Bush Ind.¹ (N,BSH) | 11.63 | 10.86 | -6.6 |
| Cost Plus¹ (O,CPWM) | 29.38 | 26.50 | -9.8 |
| CFC International (O,CFCI) | 4.63 | 4.00 | -13.6 |
| Decorize (O,DCRZ) | 4.00³ | 3.25 | -18.8 |
| DMI Furniture¹ (O,DMIF) | 2.06 | 1.60 | -22.3 |
| Cone Mills (N,COE) | 2.56 | 1.80 | -29.7 |
| Rowe¹ (N,ROW) | 2.63 | 1.20 | -54.4 |
| Guilford Mills (N,GFD) | 1.63 | 0.59 | -63.8 |
| CANADIAN COS.4 | |||
| BMTC Group (T,GBTA) | 9.45 | 17.25 | 82.5% |
| Dorel Inds. (T,DIIA) | 19.05 | 32.25 | 69.3 |
| RTO Enterprises (T,RTO) | 0.31 | 0.47 | 51.6 |
| Shermag (T,SMG) | 6.50 | 9.70 | 49.2 |
| Leon's Furniture (T,LNF) | 19.95 | 23.00 | 15.3 |
| Bestar (T,BES) | 1.40 | 1.25 | -10.7 |
| Amisco (T,IAC) | 5.75 | 5.00 | -13.0 |
| 1. The Furniture/Today index includes 24 footnoted furniture stocks (Dec. 30, 1988 = 100). | |||
| 2. American Depository Receipts (ADRs). | |||
| 3. Closing price on July 5, the stock's first trading day as Decorize. | |||
| 4. Prices in Canadian dollars. | |||
| Source: Data Network, Huntington, N.Y. Information and data herein though believed accurate, is not guaranteed. Data Network is not liable for any inaccuracies. | |||
| A = American Stock Exchange; M = Montreal Stock Exchange; N = New York Stock Exchange; O = Over the counter; T = Toronto Stock Exchange | |||
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