Wrapping up Q2 earnings, we look at the numbers and key takeaways for the home furnishings stocks, including La-Z-Boy (NYSE:LZB) and its peers.
A healthy housing market is good for furniture demand as more consumers are buying, renting, moving, and renovating. On the other hand, periods of economic weakness or high interest rates discourage home sales and can squelch demand. In addition, home furnishing companies must contend with shifting consumer preferences such as the growing propensity to buy goods online, including big things like mattresses and sofas that were once thought to be immune from e-commerce competition.
The 6 home furnishings stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 3.7% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Thankfully, home furnishings stocks have been resilient with share prices up 5.3% on average since the latest earnings results.
La-Z-Boy (NYSE:LZB)
The prized possession of every mancave, La-Z-Boy (NYSE:LZB) is a furniture company specializing in recliners, sofas, and seats.La-Z-Boy reported revenues of $495.5 million, up 2.9% year on year. This print exceeded analysts’ expectations by 2.8%. Despite the top-line beat, it was still a mixed quarter for the company with a narrow beat of analysts’ operating margin estimates but a miss of analysts’ Wholesale revenue estimates.
Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy Incorporated, said, “We continue to deliver positive results amidst a challenging macroeconomic backdrop.”
La-Z-Boy scored the biggest analyst estimates beat and fastest revenue growth of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 19.7% since reporting and currently trades at $39.76.
Is now the time to buy La-Z-Boy? Find out by reading the original article on StockStory, it’s free.
Best Q2: Mohawk Industries (NYSE:NYSE:MHK)
Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications.Mohawk Industries reported revenues of $2.80 billion, down 5.1% year on year, falling short of analysts’ expectations by 1.2%. However, the business still had a strong quarter with optimistic earnings guidance for the next quarter and a decent beat of analysts’ operating margin estimates.
The market seems happy with the results as the stock is up 19.7% since reporting. It currently trades at $161.25.
Weakest Q2: Tempur Sealy (NYSE:TPX)
Established through the merger of Tempur-Pedic and Sealy in 2012, Tempur Sealy (NYSE:TPX) is a bedding manufacturer known for its innovative memory foam mattresses and sleep productsTempur Sealy reported revenues of $1.23 billion, down 2.8% year on year, falling short of analysts’ expectations by 3.5%. It was a slower quarter as it posted underwhelming earnings guidance for the full year.
Interestingly, the stock is up 2.5% since the results and currently trades at $49.82.
Leggett & Platt (NYSE:LEG)
Founded in 1883, Leggett & Platt (NYSE:LEG) is a diversified manufacturer making products for various industries.Leggett & Platt reported revenues of $1.13 billion, down 7.6% year on year. This result was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it also recorded underwhelming earnings guidance for the full year.
Leggett & Platt scored the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 1.6% since reporting and currently trades at $13.06.
Lovesac (NASDAQ:LOVE)
Known for its oversized, premium beanbags, Lovesac (NASDAQ:LOVE) is a specialty furniture brand selling modular furniture.Lovesac reported revenues of $156.6 million, up 1.3% year on year. This number was in line with analysts’ expectations. More broadly, it was a satisfactory quarter as it also produced an impressive beat of analysts’ EBITDA estimates.
Lovesac had the weakest full-year guidance update among its peers. The stock is up 37.2% since reporting and currently trades at $28.85.
This content was originally published on Stock Story
