Select Comfort tops list with 163% stock gain
By Jay McIntosh -- Furniture Today, January 12, 2004
HIGH POINT — HIGH POINT — Breathing new life into a once-deflated airbed company, the executives at Select Comfort led the way in furniture stocks in 2003 with a stunning 163% gain.
Rent-to-own chain Rent-Way and manufacturers Hooker and Rowe also saw share prices rise over 100% during a year that brought a healthy rebound to most of the industry's publicly held companies.
Furniture/Today's Furniture Stock Index rose 12.4% in 2003, with most of the gain coming in the second and third quarters. That easily outshone the 1.2% decline in 2002, although it fell short of the 2003 gains in broader market measures, with the Dow Jones Industrials index rising 22.2% and the Nasdaq jumping 51.2%.
Select Comfort's gain was its third in a row. At the beginning of 2001, reeling from declining sales and net losses, its stock was selling at $1.44. As 2003 ended with rising sales, a high-profile TV ad campaign and steadily climbing income from operations, the airbed maker and retailer was trading at $24.76, a three-year gain of 1,619%.
With Rent-Way, the second highest-flying stock last year, it was a turnaround story. The RTO chain's stock declined 41% in 2002. In early 2003, the company sold 295 stores to competitor Rent-A-Center and improved revenues at remaining units, strengthening operating earnings during the year.
Hooker and Rowe took varied approaches last year.
Case goods maker Hooker expanded into upholstery with the acquisition of Bradington-Young, boosting sales 24.4% and topping $300 million for the first time. Profits dipped 4.4%, partly because of the cost of closing a North Carolina plant, but the closure should lead to improved capacity utilization and better margins.
Manufacturer and retailer Rowe, meanwhile, sold its Mitchell Gold subsidiary in April and completed consolidation of its Home Elements stores into its Storehouse chain. In its latest report, for the quarter ended Aug. 31, the company had a strong improvement in operating income and an improved rate of incoming orders.
Of all the U.S. and Canadian stocks tracked by Furniture/Today, 34 gained in price and 10 declined.
As a group, the best performers were rental and rent-to-own companies, ranging from Aaron Rents Class A stock's 22.2% gain to Rent-Way's 134%. Results are generally improving for this segment, which is benefiting from consolidation and a move into some higher-end products, including flat-screen TVs.
Stocks of the two largest U.S. furniture manufacturers went different directions, with Furniture Brands International's rising 23% and La-Z-Boy's dipping 12.5%.
FBI achieved the gain despite flat sales and declining profits. Some analysts raised their price targets in December when the company announced it was sticking to its earlier earnings forecast, breaking a string of lowered estimates.
La-Z-Boy reported a 9.3% dip in sales and a 52.1% decline in operating profits for its first half ended Oct. 25, and some Wall Street analysts were questioning whether the company soon could improve results in its case goods division. Kurt Darrow, promoted to president and chief executive officer in September after Jerry Kiser stepped down, said in November he was "confident we can get this company back on the road to profitable growth."
Lagging the field last year was Jennifer Convertibles, whose stock price fell 29.8% for the year. The Woodbury, N.Y.-based retailer said revenues declined 16.3% in 2003 and it posted a net loss. The company is looking for improvement from newly opened stores and a shift in sourcing from Italy to China.
| F/T Stock Index in past five years | |
|---|---|
| 2003 | +12.4% |
| 2002 | -1.2% |
| 2001 | +33% |
| 2000 | -6.4% |
| 1999 | -14.2% |
