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Furniture/Furnishings Weekly

In a holiday-shortened trading week (US Independence Day fell on a Thursday), larger-cap stocks outperformed smaller-cap stocks and the Water Tower Research Furniture/Furnishings indexes trailed the market. For the week, the WTR Commercial/Contract Furniture Index (-1.2%), Residential Manufacturers & Suppliers Index (-1.1%), and Home Goods Retailers Index (-3.1%) trailed the Mass Retailers Index (+2.2%) and the broader market indexes (-1.0% to +2.0%). The US Federal Trade Commission (FTC) is officially seeking to prevent Tempur Sealy from acquiring Mattress Firm, citing concerns over corporate power and potential anti-competitive outcomes. According to the FTC’s publicly available (though highly redacted) complaint, it is concerned Tempur Sealy’s acquisition of Mattress Firm (one of the major distribution channels for mattresses, especially at the ‘premium’ end) would give Tempur Sealy the means to effectively exclude rivals from a large part of the market, geographically speaking, thereby ‘harming’ consumers (less competition giving TPX the ability to raise prices and enhance margins). This is an FTC (and Chairperson) that has signaled concerns over ‘excessive’ corporate power and market dominance. We are not terribly surprised by its action. Yet, Tempur Sealy signaled its intention to contest. Given the speed with which these types of issues move, we would not be surprised if this “issue” is not ultimately resolved after the upcoming election. Tempur Sealy is hosting a call on Monday, July 8 to discuss. New Serta Simmons Bedding (SSB) CEO Jim Loree said the top priority is improving operational excellence and financial performance, targeting sales growth, margin improvement, and cash flow generation. Loree, who has been an SSB board member since July 2023, joins SSB after careers at both Stanley Black & Decker and General Electric, both of which are known for emphasizing operational excellence and rigorous financial and management discipline. Per industry trade reports, top 20 US furniture and Bedding retailer Conn’s may be on brink of bankruptcy on the heels of weak industry demand. The Texas-based retailer acquired Florida-based Badcock Home Furniture in 2023. The report sent the company’s stock down sharply, ending the week down ~48%. LL Flooring was also reported to be contemplating bankruptcy this week as current management remains opposed to activist investor F9 and former CEO Tom Sullivan’s bid for control. Divergent ideas regarding the firm’s strategic direction and assessment of its performance during the industry-wide decline in demand are both in contention. LL Flooring fell 61% during the week on these stories. BSET reports 2QFY24 earnings on Wednesday, July 10 and will host an investor call on Thursday, July 11. Link to this call and others mentioned are accessible in our full report.