Bombay Heads South

Today's word out of Bombay (NYSE: BBA  ) really comes as no surprise. Although the provider of household furnishings beat analysts' estimates by a penny, quarterly income dropped. Anybody who has been following who's hot and who's not in the furniture sector is hardly fazed by this news, although the company made investors wait a little longer, having rescheduled the release from last week.

Bombay reported fourth-quarter earnings down 42% to $7.1 million, or $0.20 per diluted share, compared to last year's $12.3 million, or $0.34 per diluted share. Sales fell 4% to $203.4 million, while same-store sales for the quarter decreased by 7%. Gross margins declined to 28.7% from 31.8%.

For the year, Bombay reported a loss of $0.36 per diluted share. It forecasts earnings of $0.02 to $0.08 per share for fiscal 2005, with same-store sales in the low- to mid-single-digit range. Not surprisingly, it anticipates that most of the same-store sales improvement will occur during the back end of the year.

On a more upbeat note, the company ended the year with no debt and $9.2 million in cash. Of course, while it's nice to know that the company does have cash in the coffers, it's a far cry from the $25.6 million in cash and short-term investments it had this time last year.

Again, this is not a surprise given recent performance from companies like Bombay and Pier 1 (NYSE: PIR  ) . It's been an ongoing struggle to become relevant again in the eyes of shoppers. And of course, there are many theories as to why consumers haven't had much appetite for furniture lately. However, some furniture providers' stocks have weathered the storm quite well, despite a less-than-stellar environment, such as Motley Fool Hidden Gems picks Hooker Furniture (Nasdaq: HOFT  ) and Stanley Furniture (Nasdaq: STLY  ) .

Investors bid down shares of Bombay today, and it's not surprising. Not long ago, Rick Munarriz suggested waiting on the sidelines with some of these furniture stocks; as cheap as some may appear after a protracted period of tough times, a turnaround may be less than imminent.

Take a seat and read the following recent Foolish content for more on this industry:

• Is the furniture piling up?
• Bombay's still battered and bruised.
• Pier 1's still dark.

Hooker Furniture and Stanley Furniture are both Motley Fool Hidden Gems picks. If small-cap stocks are your cup of tea, click here to find out more about this service.

Alyce Lomax does not own shares of any of the companies mentioned.