The ledger: Looking for a silver lining in industry financials

A trophic cascade of woes is throwing gasoline on what previously were merely the glowing embers of the residues of Covid. These woes include worsening supply chain issues in Asia, war, and, most recently, rampant inflation. The industry can’t seem to catch a break. 


For the week ending April 23, the roster of home furnishings retailers reporting losses is frightfully long. 

Williams-Sonoma caught my eye, looking as I was for news on RH since its bracing earnings call at the end of March. The NYSE’s 14th-largest retailer in terms of market cap, Williams-Sonoma saw its stock sink nearly 9%, or nearly six percentage points more than the average for companies indexed by the S&P 500. 


Headquartered in San Francisco, Williams-Sonoma has 625 stores and distributes to more than 60 countries, with brands that include Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Mark and Graham, and Rejuvenation. 

The dip diminished the company’s market cap by nearly $1 billion on volume 1.2 times the average trading volume, underlining how volatile the market has been of late. 

The week was even worse to, the NASDAQ’s 11th largest e-commerce company in terms of market cap. Overstock’s share price dropped more than 12%, its fifth consecutive weekly decline for a streak that has cost the share price 36% of its value. By comparison, the NASDAQ-100 Index fell 3.9%. 

The NYSE’s third largest broadline retailer, Macy’s, saw a 6% drop in stock value, while Kirkland’s watched its stock price sink more than 12% during a week of above-average volatility. This cost Kirkland’s $13.3 million in market cap.

Bed Bath & Beyond reported its fourth straight disappointing quarter to finish out its fiscal year on a sour note. Not surprisingly, Chief Executive Officer Mark Tritton cited the helixed challenges haunting most in the sector: “the derailing of the global supply chain,” continued disruptions caused by Covid, rising interest rates, “unprecedented” inflation, and a turbulent geopolitical landscape, which is to say, Russia’s unprovoked war with Ukraine.

These woes present the industry with hardening challenges on the supply side, consumer angst and uncertainty on the retail side, and macro market volatility in the middle.

How short are most of our memories. In Trump’s first year, the market soared before slamming on the breaks and even backing up during his second year, at one point yielding nearly 19% of its previous gains.

Another reassuring fact going back more than a century is the market’s favor for Democratic presidents. According to Ned Davis Research, the Dow has grown an average of 3.8% per year under Democratic presidents compared to 1.4% annualized under Republicans. Make of that what you will, but all presidents know a strong market translates into good results at the ballot box.

The silver lining

And not all the news on Wall Street even for the week ending April 23 disappointed. Two companies that routinely defy trends, especially the negative ones, are Leggett & Platt and Ethan Allen.

It might surprise you to learn that Leggett & Platt is the NYSE’s third-largest home furnishings company by market cap, and while it had a slight dip in share price for the difficult week, the Carthage, Missouri-based company chugs along year after year after year posting annual revenue growth. It adds up. In the last decade, sales have grown by nearly 40%. That steady growth is seemingly impervious to the vicissitudes of the economy.

By outperforming the market, Leggett & Platt’s earnings per share record is even more impressive. Leveraging admirable margin discipline and greater control over its supply chain, the company’s EPS has grown more than 160% over the last 10 years. Dividend increases have been as dependable as its components, including bedding springs and motion upholstery mechanisms. How many furniture industry concerns can claim 50 years of increasing sales, earnings, and dividends? 

Another industry leader in terms of earnings per share is Ethan Allen, a company that sails turbulent waters with the stability of an aircraft carrier. Analysts are predicting a positive year-over-year EPS growth rate of more than 30% for the company’s fiscal year. The vertically integrated chain again posted revenues in its last quarter ended Jan. 27 that out-performed expectations — $208 million, or 16.4% higher than revenues for the same quarter the year prior. Analysts had expected just $187 million.

It is worth noting that Truist Financial Corp. bought a new position in Ethan Allen during that strong first quarter, a position valued at more than $5 million. Also taking new positions were the Louisiana State Employees Retirement System, Oregon Public Employees Retirement Fund, Redhawk Wealth and Zurich Cantonal Bank. That’s good company.

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