The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Mohawk Industries (NYSE:MHK) and the rest of the home furnishings stocks fared in Q2.
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 slower Q2. As a group, revenues missed analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 3.7% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, home furnishings stocks have been resilient with share prices up 9.9% on average since the latest earnings results.
Best Q2: Mohawk Industries (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. This print fell short of analysts’ expectations by 1.2%, but it was still a strong quarter for the company with optimistic earnings guidance for the next quarter and a decent beat of analysts’ operating margin estimates.
Commenting on the company’s second quarter results, Chairman and CEO Jeff Lorberbaum stated, “Our performance in the quarter reflected our focus on the controllable factors of our business, including sales initiatives, cost containment and restructuring actions."
Interestingly, the stock is up 17.7% since reporting and currently trades at $158.51.
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La-Z-Boy (NYSE: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, outperforming analysts’ expectations by 2.8%. The business performed better than its peers, but it was unfortunately a mixed quarter with a narrow beat of analysts’ operating margin estimates but a miss of analysts’ Wholesale revenue estimates.
La-Z-Boy pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems content with the results as the stock is up 2% since reporting. It currently trades at $42.69.
Weakest Q2: Purple (NASDAQ:PRPL) Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.
Purple reported revenues of $120.3 million, up 2% year on year, falling short of analysts’ expectations by 6.3%. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations.
Purple delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 14.5% since the results and currently trades at $1.
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 print met analysts’ expectations. Zooming out, it was a weak quarter as it recorded underwhelming earnings guidance for the full year. Similarly, full-year revenue guidance missed analysts’ expectations.
Lovesac scored the highest full-year guidance raise among its peers. The stock is up 31.6% since reporting and currently trades at $27.67.
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 number met analysts’ expectations. Aside from that, it was a weak quarter as it produced underwhelming earnings guidance for the full year.
Leggett & Platt had the slowest revenue growth among its peers. The stock is up 9.8% since reporting and currently trades at $14.12.
This content was originally published on Stock Story
