Although sluggish sales at furniture retailers last year indicated that lots of people were making do with their threadbare old couches, Ethan Allen's (NYSE: ETH) fiscal second-quarter earnings release included the hint that the outlook may be improving.
Ethan Allen said its second-quarter earnings rose slightly, to $24.4 million, or $0.64 per share, from $23.1 million, or $0.60 a share last year. Analysts had expected its earnings to be flat for the quarter, at $0.60 per share. Net sales increased 5%, while same-store sales crept up 1.8%.
The company said it expects to post a 5% increase in sales and a 10% increase in earnings for the fiscal year that will conclude in June. In addition, the company revealed that it has decided to lower its prices overall, rather than run periodic furniture sales. According to news agencies, Ethan Allen's CEO pointed to the rash of renters transforming themselves into homeowners as the catalyst for more pleasant days ahead for business.
Just because one's a renter doesn't necessarily mean home furnishings consist of milk crates, bean bags, chairs and sofas rescued from the curbside, or Grandpa's hand-me-down La-Z-Boy (NYSE: LZB) recliner. Of course, there's definitely some credence to the temptation to fill a new house with furnishings befitting a new "homeowner" persona. That is, unless the economy stinks and you think you'd better wait before shelling out for the big-ticket items, which was probably the case a year ago.
Indeed, consumer confidence was hardly strong last March, when Fool Robert Brokamp pointed out how deals could be had as furniture purveyors cut prices to lure reluctant consumers.
Other furniture retailers that have had varying degrees of success with fickle consumers over the last year include La-Z-Boy, Furniture Brands International (NYSE: FBN), and Stanley Furniture (Nasdaq: STLY). Another company that may be positioned to benefit from increased consumer confidence is Hooker Furniture (Nasdaq: HOFT), a Motley Fool Hidden Gems pick.
Furniture retailers have been waiting for the pent-up consumer to come out and pay -- for new furnishings, that is. There's certainly a lot of cabin fever at work, and with an increase in jobs and more infusions of confidence, maybe shoppers will introduce themselves to Ethan Allen. Then again, if the economy starts to show signs that it's still not so strong... there's always the old armchair.
Alyce Lomax welcomes your feedback via e-mail.
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