It's Bad When Sales Decline, Right?

Late last month, I suspected the furniture industry was jinxed until Ethan Allen (NYSE: ETH  ) reported more promising results. Every company in the business, including Hooker Furniture (Nasdaq: HOFT  ) , Stanley (Nasdaq: STLY  ) , Bassett (Nasdaq: BSET  ) , La-Z-Boy (NYSE: LZB  ) , and Natuzzi (NYSE: NTZ  ) , was releasing wobbling top-line growth.

While I'd like to say Ethan Allen set a new trend, I'm afraid Furniture Brands (NYSE: FBN  ) did not follow in its footsteps. The company behind such famous furniture brands as Broyhill, Lane, and Thomasville reported yet another quarter of declining sales last evening -- down 9% this time around. Hooray!

Hooray?
Indeed, hooray. Because you may recall that in September, Furniture Brands (FBI) was promising us a double-digit decline in sales -- 12%, to be exact. And if this feels like deja vu to you, there's good reason for that. At the time of the earnings warning, I pointed out that FBI had run this game on us last quarter as well, issuing dire warnings before the Q2 report, only to end up saying things had turned out to be much less horrible than feared.

(Speaking of which, if you're wondering why CEO Mickey Holliman summed up the quarter by pronouncing, "Our financial results for the third quarter were as expected," you're not alone. Either the gentleman needs to seek immediate medical attention to address a problem with short-term memory, or he simply doesn't read his own press releases.)

Which is not to say the numbers weren't horrible
Leaving the lipsticks and pigs to the professionals up on Wall Street, let's see how FBI's quarter looks without any makeup. Like I said, FBI's sales were down 9%. The firm also lost $0.28 per share compared to a net profit of $0.12 a share last year.

The best news, however, was not about the firm's accounting profits, but its cash profits. Year to date, FBI has generated a whopping $91.3 million in free cash flow through a combination of increased cash generated from operations and decreased capital expenditures -- a significant improvement over burning $29.2 million in cash during the first three quarters of fiscal 2006.

Uh-oh
And now we come to the news that I expect will doom this stock for quarters to come. Citing "public company best practices," FBI announced that it will no longer issue quarterly earnings guidance -- just annual. Fools ordinarily commend management taking a stand against short-term thinking, but the time to ascend to the moral high ground is when you've got good news to tout. All FBI is doing today is promising not to keep investors up to date on how badly it's doing. So forgive me if I hold my applause.

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