Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

Bassett Furniture Inds / Equity Bottom-Up

<ul>
<li>BSET posted an adjusted EPS loss of ($0.41) for 3QFY24, down $0.11 from the prior year and $0.08 below our estimate of ($0.33).</li>
<li>While the quarter was affected by continued challenging industry conditions, including the weak housing market (housing is a traditional driver of residential furniture sales) and wary consumers (many of whom updated their homes during COVID), the earnings miss was also, in part, a consequence of a July hack of Bassett’s IT systems that forced the firm to sideline production for a week, costing the firm $1-2 million on the bottom line from lost sales and associated manufacturing inefficiencies.</li>
<li>We estimate that this production shutdown cost Bassett $0.085 to $0.17 in EPS.</li>
</ul>


BSET posted an adjusted EPS loss of ($0.41) for 3QFY24, down $0.11 from the prior year and $0.08 below our estimate of ($0.33).
While the quarter was affected by continued challenging industry conditions, including the weak housing market (housing is a traditional driver of residential furniture sales) and wary consumers (many of whom updated their homes during COVID), the earnings miss was also, in part, a consequence of a July hack of Bassett’s IT systems that forced the firm to sideline production for a week, costing the firm $1-2 million on the bottom line from lost sales and associated manufacturing inefficiencies.
We estimate that this production shutdown cost Bassett $0.085 to $0.17 in EPS.


Bassett Furniture Industries, Inc. - 3QFY24 Adjusted EPS Of ($0.41) As Conditions Remain Tough

Thematic (Sector/Industry)

<ul><li>A mixed week for furniture and furnishings stocks as technology stocks once again drive the market.</li><li>The Water Tower Research Commercial/Contract Furniture Index (-1.7%) and Home Goods Retailers Index (-3.9%) were both down for the week, while the Residential Manufacturers &amp; Suppliers Index (+1.2%) was up.</li><li>The Mass Retailers Index was basically flat (+0.1%), while the three major indexes were all down modestly, with the S&amp;P 500 and DJ30 both down (-0.2%) and the R2K down (-0.8%).</li></ul>

A mixed week for furniture and furnishings stocks as technology stocks once again drive the market.The Water Tower Research Commercial/Contract Furniture Index (-1.7%) and Home Goods Retailers Index (-3.9%) were both down for the week, while the Residential Manufacturers &amp; Suppliers Index (+1.2%) was up.The Mass Retailers Index was basically flat (+0.1%), while the three major indexes were all down modestly, with the S&amp;P 500 and DJ30 both down (-0.2%) and the R2K down (-0.8%).

Furniture/Furnishings Weekly - October 7, 2024

<ul><li>Furniture and Furnishing stocks performed well against the major market indices, where the relative calm at the level of the overall indices belied the leadership churn and rotation back into tech following the recent Fed rate cuts (1).</li><li>The Water Tower Research Commercial/Contract Furniture index (+0.5%), Residential Manufacturers &amp; Suppliers (+4.5%), and Home Goods Retailers index (+1.0%) we up all up more than the DJ30 and SP50 (both +0.3%) while the Mass Retailers index (-1.5%) and R2K (-0.2%) were both down.</li><li>In a market where technology stocks are again leading and big caps are outperforming smaller caps, the relative outperformance of the Water Tower Research indices is notable. </li></ul>

Furniture and Furnishing stocks performed well against the major market indices, where the relative calm at the level of the overall indices belied the leadership churn and rotation back into tech following the recent Fed rate cuts (1).The Water Tower Research Commercial/Contract Furniture index (+0.5%), Residential Manufacturers &amp; Suppliers (+4.5%), and Home Goods Retailers index (+1.0%) we up all up more than the DJ30 and SP50 (both +0.3%) while the Mass Retailers index (-1.5%) and R2K (-0.2%) were both down.In a market where technology stocks are again leading and big caps are outperforming smaller caps, the relative outperformance of the Water Tower Research indices is notable. 

Furniture/Furnishings Weekly - F/F Stocks Poised for a Breakout (?)

<ul><li>As smaller-cap stocks outperformed, the Water Tower Furniture and Furnishings indexes posted strong gains.</li><li>The Water Tower Research Commercial/Contract Manufacturers Index (+3.5%), Residential Manufacturers &amp; Suppliers Index (+3.8%), Home Goods Retailers Index (+10%), and Mass Retailers Index (+5.3%) outperformed the S&amp;P 500 and DJ30 (both +2.8%). The R2K was up (+4.0%).</li><li>RH and LOVE earnings calls shine additional light on tough industry conditions.</li></ul>

As smaller-cap stocks outperformed, the Water Tower Furniture and Furnishings indexes posted strong gains.The Water Tower Research Commercial/Contract Manufacturers Index (+3.5%), Residential Manufacturers &amp; Suppliers Index (+3.8%), Home Goods Retailers Index (+10%), and Mass Retailers Index (+5.3%) outperformed the S&amp;P 500 and DJ30 (both +2.8%). The R2K was up (+4.0%).RH and LOVE earnings calls shine additional light on tough industry conditions.

Furniture/Furnishings Weekly  - September 16, 2024

<ul><li>Stocks had a tough week on growth concerns, worries that Fed rate cuts might be more gradual than previously anticipated.</li><li>The Water Tower Residential Manufacturers &amp; Suppliers Index (-3.9%) and Home Goods Retailers Index (-3.7%) outperformed the Commercial/Contract Furniture Index (-6.7%) and all three major indexes (-4.2% to -5.5%).</li><li>The Mass Retailers Index had the week’s best performance (-2.9%).</li></ul>

Stocks had a tough week on growth concerns, worries that Fed rate cuts might be more gradual than previously anticipated.The Water Tower Residential Manufacturers &amp; Suppliers Index (-3.9%) and Home Goods Retailers Index (-3.7%) outperformed the Commercial/Contract Furniture Index (-6.7%) and all three major indexes (-4.2% to -5.5%).The Mass Retailers Index had the week’s best performance (-2.9%).

Furniture/Furnishings Weekly - Industry Conditions Remain Challenged

United States

Bassett Furniture Industries, Incorporated manufactures and sells a full line of furniture for the home.  The Company offers bedroom and dining suites, occasional tables and entertainment units, upholstered sofas and love seats, recliners, and mattresses, among other products.  Bassett's products are sold through retailers, including Bassett Furniture Direct.

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Bassett Furniture Inds (BSET US)

Bassett Furniture Industries, Inc. - 3QFY24 Adjusted EPS Of ($0.41) As Conditions Remain Tough

BSET posted an adjusted EPS loss of ($0.41) for 3QFY24, down $0.11 from the prior year and $0.08 below our estimate of ($0.33).

Water Tower Research

Furniture/Furnishings Weekly - October 7, 2024

The Mass Retailers Index was basically flat (+0.1%), while the three major indexes were all down modestly, with the S&P 500 and DJ30 both down (...

Water Tower Research

Furniture/Furnishings Weekly - F/F Stocks Poised for a Breakout (?)

In a market where technology stocks are again leading and big caps are outperforming smaller caps, the relative outperformance of the Water Tower...

Water Tower Research

Furniture/Furnishings Weekly - September 16, 2024

RH’s upcoming push into the European fashion capitals of Milan, Paris, and London, and continued reimaging of its US retail footprint, could be the...

Water Tower Research

Furniture/Furnishings Weekly - Industry Conditions Remain Challenged

Stocks had a tough week on growth concerns, worries that Fed rate cuts might be more gradual than previously anticipated.

Water Tower Research

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