Ahead of the Bell: Furniture Brands

Stifel, Nicolaus Cuts Rating on Furniture Brands, Cites Challenging Environment
NEW YORK (AP) — A Stifel, Nicolaus & Co. analyst on Friday cut his rating on Furniture Brands International Inc., saying the retailer of Lane, Thomasville and other furniture brands has few options in light of a difficult industry environment.


John A. Baugh in a client note cut his rating on the stock to “Sell” from “Hold.”
“Our downgrade reflects our growing concerns that the weakness in housing will continue to dampen furniture sales and that a strategic restructuring will be difficult given the current environment,” wrote Baugh.
The analyst also noted weak near-term demand for furniture, which is tied to a lagging home building industry.
He said domestic furniture makers are increasingly becoming “middle men,” and are importing and distributing Chinese-made products, which hurts value-generating potential.
While the St. Louis-based company has hinted at changes in its strategic direction, Baugh is not optimistic about prospects, including spin-offs of its more successful brand names. He also said the company’s 4.4 percent dividend could be threatened by operating losses.
Shares closed at $14.50 Thursday, near its 52-week low of $14.30.