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Analysts trim earnings estimates

By Larry Thomas -- Furniture Today, March 9, 2003

High Point — Concerned about continuing weak demand, two prominent industry analysts have cut earnings estimates for several publicly traded furniture manufacturers and retailers.

Both Jerry Epperson of Ferris Baker Watts and John Baugh of Wachovia Securities trimmed estimates for retailers Havertys and Ethan Allen, and manufacturers Furniture Brands International and La-Z-Boy.

The analysts cited, among other things, rising energy prices, fears of a war with Iraq, and the massive Presidents' Day weekend blizzard in the Northeast as factors that continue to dampen consumer demand for furniture.

"Collectively, these factors point to additional near-term weakness in industry fundamentals beyond which we already had reflected in our models," Baugh said.

Epperson said the blizzard virtually wiped out what usually is a brisk sales weekend. "We don't believe sales will recover quickly from the dismal weekend, given the weak economic picture, depressed consumer confidence levels, and fears regarding the Iraq confrontation," he said.

Baugh cut his 2003 per-share estimate for Furniture Brands to $2.30 from $2.36 and lowered his 2004 estimate to $2.56 from $2.60. For La-Z-Boy, he now sees earnings of $1.65 per share for fiscal 2003, which ends in April, a drop of 2 cents per share. He now believes earnings for fiscal 2004 will be $1.83 per share, also a drop of 2 cents per share.

In addition, Baugh lowered his fiscal 2003 estimate for Ethan Allen to $2.34 from $2.38, and cut his fiscal 2004 estimate to $2.62 from $2.65. Havertys was trimmed 2 cents to $1.08 per share for 2003, but Baugh left his 2004 estimate unchanged at $1.25 per share.

Epperson decreased his Furniture Brands 2003 estimate by 8 cents to $2.37, and lowered his La-Z-Boy estimate by 3 cents to $1.65 per share for fiscal 2003. He cut Ethan Allen's fiscal 2003 and fiscal 2004 projections by 4 cents each, to $2.39 and $2.71 per share, respectively. He now projects Havertys will earn $1.21 in 2003, a drop of 4 cents per share.

Epperson is managing director of Mann, Armistead & Epperson and publishes stocks research through the brokerage Ferris Baker Watts.

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