What happened 

Shares of furniture company HNI (NYSE:HNI) dropped as much as 10.7% in trading Tuesday after the company reported fourth-quarter 2018 results. As of 11:30 a.m. EST, there wasn't much of a recovery on the horizon, with shares down 9.5% in midday trading.

So what

Net sales in the quarter rose 2.4% versus a year ago to $598.1 million, and GAAP earnings per share were down 5.2% to $0.73. On a non-GAAP basis, earnings were up 106.4% to $0.97 per share. Analysts were expecting $604.9 million in revenue and $0.96 per share in non-GAAP earnings. 

Office with furniture in it.

Image source: Getty Images.

For the first quarter of 2019, management expects sales to be down 2% to 4% on an organic basis, with earnings per share expected to be between a loss of $0.02 and a profit of $0.04. For the year, organic sales are expected to rise 3% to 7%, with earnings coming in at $2.50 to $2.90. This compares to analysts expecting a profit of $0.33 per share next quarter and $3.02 for the full year. 

Now what

There's pressure on the bottom line from tariffs and other cost increases, but it's the top line that investors should be concerned about. Companies appear to be cutting back on their spending, and that's going to hit the quarters that are most visible to management. They expect sales to pick up as the year goes on, but that may not be the case in a slowing environment, which is why shares are down big today.