Stanley Furniture Co. (STLY)

Stanley Furniture makes wood furniture that retails in the upper-medium price range, engages in the design, manufacturing, and distribution of residential wood furniture in the United States. The Company’s products include home and office furniture, as well as youth and infant furniture by brand “Young America” and “Young America baby”.

Sales for the quarter dipped 11.3% compared to a year ago, and expects to see no signs of upturns in the industry in near future, company expect that, it’s sales for the year will decline further by 7.65 % to 8.3% and it forecasts its EPS in the range of $0.13 to $0.16 which shows a drastic decline of approximately 65% compared to last year. Lack of volume and high raw material costs are viewed as major reasons for low margins. Stanley should effectively manage the variable cost component of their business, but due to high fixed costs structure, we anticipate continued margin pressures, until the demand side of the equation returns.

Overall performance for the year has been dull due to soft retail conditions. New home sales and existing home sales (which are the major drivers for the furniture industry) have also been showing a declining trend from past four quarters and these trends are expected to continue. Additionally, higher borrowing costs lead some consumers to pull back from big-ticket purchases. Given all these company would underperform.