As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the home furnishings industry, including Mohawk Industries (NYSE:MHK) and its peers.
A healthy housing market is good for furniture demand as more consumers are buying, renting, moving, and renovating. On the other hand, periods of economic weakness or high interest rates discourage home sales and can squelch demand. In addition, home furnishing companies must contend with shifting consumer preferences such as the growing propensity to buy goods online, including big things like mattresses and sofas that were once thought to be immune from e-commerce competition.
The 5 home furnishings stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 1.1% above.
While some home furnishings stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.6% since the latest earnings results.
Weakest Q3: Mohawk Industries (NYSE:MHK)
Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications.
Mohawk Industries reported revenues of $2.76 billion, up 1.4% year on year. This print exceeded analysts’ expectations by 1.6%. Despite the top-line beat, it was still a mixed quarter for the company with a decent beat of analysts’ revenue estimates but EPS guidance for next quarter missing analysts’ expectations.
Commenting on the Company’s third quarter, Chairman and CEO Jeff Lorberbaum stated, “Our net sales in the quarter were in line with our expectations, slightly ahead of prior year as reported. Though economic conditions across our regions weakened more than anticipated compared to the prior quarter, we believe we outperformed our markets. Our sales and product mix continued to benefit from the success of our premium residential and commercial offering and collections introduced during the past two years. Our results reflected benefits from ongoing productivity and restructuring initiatives as well as the impact of favorable currency exchange and lower interest expense, offset by higher input costs and temporary plant shutdowns. Across our markets, material and energy expenses are now improving from peak levels, though higher costs from earlier in the year will continue to impact our fourth quarter earnings.
The stock is down 19% since reporting and currently trades at $104.40.
Read our full report on Mohawk Industries here, it’s free for active Edge members.
Best Q3: La-Z-Boy (NYSE:LZB)
The prized possession of every mancave, La-Z-Boy (NYSE:LZB) is a furniture company specializing in recliners, sofas, and seats.
La-Z-Boy reported revenues of $522.5 million, flat year on year, outperforming analysts’ expectations by 1.2%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
The market seems happy with the results as the stock is up 20.4% since reporting. It currently trades at $35.70.
Is now the time to buy La-Z-Boy? Access our full analysis of the earnings results here, it’s free for active Edge members.
Leggett & Platt (NYSE:LEG)
Founded in 1883, Leggett & Platt (NYSE:LEG) is a diversified manufacturer of products and components for various industries.
Leggett & Platt reported revenues of $1.04 billion, down 5.9% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a mixed quarter as it posted a miss of analysts’ Bedding revenue estimates.
Leggett & Platt delivered the slowest revenue growth and weakest full-year guidance update in the group. As expected, the stock is down 3.6% since the results and currently trades at $8.85.
Read our full analysis of Leggett & Platt’s results here.
Purple (NASDAQ:PRPL)
Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.
Purple reported revenues of $118.8 million, flat year on year. This number came in 3.6% below analysts' expectations. More broadly, it was actually a strong quarter as it logged an impressive beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.
Purple delivered the highest full-year guidance raise but had the weakest performance against analyst estimates among its peers. The stock is down 11.3% since reporting and currently trades at $0.72.
Read our full, actionable report on Purple here, it’s free for active Edge members.
Somnigroup (NYSE:SGI)
Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup (NYSE:SGI) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products
Somnigroup reported revenues of $2.12 billion, up 63.3% year on year. This result beat analysts’ expectations by 3%. It was a strong quarter as it also produced a solid beat of analysts’ Direct revenue estimates and full-year EPS guidance topping analysts’ expectations.
Somnigroup scored the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 5.4% since reporting and currently trades at $83.91.
Read our full, actionable report on Somnigroup here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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