Furniture/Furnishings Weekly
Mattress sales and companies tied to the mattress supply chain showed weakness in sales results reported last week. After market close on Thursday, supplier Leggett & Platt (LEG) reported 4QFY23 adjusted EPS of $0.26. On January 16, management disclosed a massive restructuring plan, causing analysts’ estimates to change before the “print”. Still, “under the covers,” Leggett’s bedding segment sales missed the revised $463 million estimate at $448 million, down 14% Y/Y. Soft demand accounted for ~6% of the sales decline. CEO J. Mitchell Dolloff commented, “The US bedding market continues to be in deep recession with mattress consumption at levels comparable to 2016…(we) expect mattress demand in 2024 to be flat to down slightly.” Mattress manufacturer/retailer Tempur Sealy International (TPX) reported 4QFY23 adjusted EPS of $0.53 on Thursday, missing expectations by $0.01. On the call, CEO Scott Thompson said preliminary figures showed double-digit declines in bedding units in 2023. He added, “We have recently seen stabilization in category demand.” On a more positive note, furniture maker Flexsteel (FLXS) reported 2QFY24, which was pre-announced in mid-January. EPS was $0.57 on sales of $100.1 million. Flexsteel also announced the closing of its Dublin manufacturing plant late in FY24. With the closure, Flexsteel’s North American manufacturing will be entirely in Mexico. The Dublin plant accounted for 5% of sales. Elsewhere, the commercial/contract furniture group had modestly positive indicators. Kastle Systems’ Return to Office Index rose to 53%, the highest since the beginning of the pandemic. The index counts employees entering the office with magnetic badges. A measure of corporate CEO expectations ticked higher as well. A conference board measurement of CEO sentiment on the economy turned positive for the first time in two years. CEO credibility on macroeconomic forecasting is probably no better than the Fed economists or the Wall Street analysts, but they likely have decent insight into the prospects of their own business.
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