By Karen Jacobs
\nATLANTA, June 15 (Reuters) – Furniture companies are facing tougher times as higher gasoline prices and rising interest rates put more pressure on middle-class consumers, leading them to pull back from big-ticket purchases.
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\n This week, Stanley Furniture Co. (STLY.O: Quote, Profile, Research) became the latest in the sector to cite sales weakness when it warned that second-quarter results would fall short of previous estimates. Its shares closed down 4 percent on Thursday after falling as much as 7 percent earlier in the day.<\/p>\n
“We’ve seen retail furniture (sales) be slow since March,” said Jerry Epperson, an furniture analyst with Mann, Armistead & Epperson in Richmond, Virginia. “The recovery just isn’t there right now.”<\/p>\n
Though furniture sales are typically weakest at this time of year and stronger in the second half, an added challenge is getting middle-income consumers to buy in an atmosphere of higher gasoline prices, minimal wage increases and slower housing growth, Epperson said.<\/p>\n
“The investment climate hasn’t been the best,” Epperson said. “Asset prices, particularly home prices, aren’t growing like they were before. We’re not seeing the home refinancings that put a lot of money in people’s pockets.”<\/p>\n
Last week, La-Z-Boy Inc. (LZB.N: Quote, Profile, Research) forecast profit for its current quarter below Wall Street estimates on flat sales, saying it was concerned about the economy in light of volatile energy markets and rising interest rates.<\/p>\n
And Furniture Brands International Inc. (FBN.N: Quote, Profile, Research) announced another plant closing at its Broyhill mid-priced brand, which has seen sales weakness in recent quarters.<\/p>\n
Geoff Wissman, vice president with consultants Retail Forward, says traditional furniture companies are also seeing more mass-market retailers beef up their furniture merchandise, making it harder, but more important to compete on price for middle-class dollars. he furniture store channel is also coming under increased competition as you see stores such as Target Corp. (TGT.N: Quote, Profile, Research) and Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) go more upscale” with their furnishings offerings, Wissman said.<\/p>\n
LUCK AT THE HIGH END<\/p>\n
Not all furniture makers are cutting estimates. Those that cater to more upscale consumers are not feeling as much pain.<\/p>\n
For example, Ethan Allen Interiors Inc. (ETH.N: Quote, Profile, Research) recently said analysts’ estimates for its fourth quarter ending June 30 were within reach, noting that business trends “have remained positive.”<\/p>\n
And Furniture Brands, which sells the high-end Henredon and Thomasville brands, as well as Broyhill, affirmed its quarterly profit guidance and said sales were running “slightly positive” from a year ago.<\/p>\n
“Better-quality goods are doing better than low-end goods,” Epperson said. “If you’re selling to the higher-end consumer, they don’t seem to be suffering as much.”<\/p>\n
The slowing U.S. housing market and rising interest rates are casting a cloud over a range of home-goods companies. For instance, Masco Corp. (MAS.N: Quote, Profile, Research), the maker of faucets, paint and cabinets, said on Tuesday it reduced its sales forecast for this year because of expected weakness in new-home builds.<\/p>\n
“My feeling is that people are putting too much emphasis on the housing market at this point and that the economic backdrop is still strong, demographic trends are still very strong,” said Wissman.<\/p>\n
Sales growth for home-goods companies should be solid, if not as strong, he added.<\/p>\n","protected":false},"excerpt":{"rendered":"
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