Ethan Allen Interiors (ETH) & Bed Bath & Beyond (BBBY) Face Reality
Furniture and home decor stock Ethan Allen Interiors (ETH) confronts empty homes as Bed Bath & Beyond (BBBY) confronts Amazon.com (AMZN).
Home decor or home goods stocks Ethan Allen Interiors (NYSE: ETH) and Bed Bath & Beyond (NASDAQ: BBBY) are making or set to make big moves in the wake of company announcements or other news. Specifically, Ethan Allen Interiors (ETH) sank 11.48%, apparently over comments at an investor conference as well as disappointing sales at La-Z-Boy (NYSE: LZB) while Bed Bath & Beyond (BBBY) was sinking over 10% in after hours trading after it giving a weaker than expected outlook. So did the markets overreact?
Starting with Ethan Allen Interiors (NYSE: ETH), its a manufacturer and retailer of home furnishings and accessories with a network of approximately 300 Design Centers in the USA and abroad. Apparently, Ethan Allen Interiors said at an investors' conference that traffic was slowing in its stores plus La-Z-Boy (NYSE: LZB) reported disappointing sales. The problem? People are buying homes, especially foreclosed ones, but if the homes are kept empty of furniture because they are being bought for speculative purposes – its not good for furniture stocks. On Wednesday, Ethan Allen Interiors sank 11.48% to $19.66 (ETH has a 52 week trading range of $12.30 to $28.37 a share) for a market cap of $567.45 million plus the stock is down 17.1% since the start of the year, down 0.4% over the past year and down 44.3% over the past five years.
Moving on to Bed Bath & Beyond (NASDAQ: BBBY), it operates 1,180 stores, including 995 Bed Bath & Beyond stores in all 50 states plus Canada, 72 Christmas Tree Shops stores, 68 buybuy BABY stores and 45 stores under the names of Harmon or Harmon Face Values. The liquidation of Linens 'n Things eliminated a big competitor for Bed, Bath & Beyond plus BBBY announced back in May that it will acquire Cost Plus – eliminating another competitor. However and on Wednesday, Bed Bath & Beyond gave a weaker-than-expected profit outlook for the current quarter because its been forced to spend more aggressively now to improve its e-commerce business as Amazon.Com (NASDAQ: AMZN) looks set to enter the home goods space. Specifically, Bed Bath & Beyond is spending money on a new e-commerce distribution center, a new data center and a new website plus there are all the other acquisitions its been doing (e.g. Cost Plus) while customers have been spending money on lower margin goods. On Wednesday, Bed Bath & Beyond fell 1.41% to $73.67 (BBBY has a 52 week trading range of $48.75 to $75.84 a share) for a market cap of $17.22 billion but the stock was sinking more than 10% in after hours trading – which could be an overreaction. Bed Bath & Beyond is up 27.1% since the start of the year, up 41.7% over the past year and up 94.1% over the past year – meaning its performed well but it remains to be seen whether it can keep up this performance as Amazon.com enters its turf.
The Bottom Line. Investors might be overreacting with Bed Bath & Beyond (BBBY) as it positions itself to take on new competition while investors will be prepared when Ethan Allen Interiors (ETH) disappoints the next time it reports earnings.
Starting with Ethan Allen Interiors (NYSE: ETH), its a manufacturer and retailer of home furnishings and accessories with a network of approximately 300 Design Centers in the USA and abroad. Apparently, Ethan Allen Interiors said at an investors' conference that traffic was slowing in its stores plus La-Z-Boy (NYSE: LZB) reported disappointing sales. The problem? People are buying homes, especially foreclosed ones, but if the homes are kept empty of furniture because they are being bought for speculative purposes – its not good for furniture stocks. On Wednesday, Ethan Allen Interiors sank 11.48% to $19.66 (ETH has a 52 week trading range of $12.30 to $28.37 a share) for a market cap of $567.45 million plus the stock is down 17.1% since the start of the year, down 0.4% over the past year and down 44.3% over the past five years.
Moving on to Bed Bath & Beyond (NASDAQ: BBBY), it operates 1,180 stores, including 995 Bed Bath & Beyond stores in all 50 states plus Canada, 72 Christmas Tree Shops stores, 68 buybuy BABY stores and 45 stores under the names of Harmon or Harmon Face Values. The liquidation of Linens 'n Things eliminated a big competitor for Bed, Bath & Beyond plus BBBY announced back in May that it will acquire Cost Plus – eliminating another competitor. However and on Wednesday, Bed Bath & Beyond gave a weaker-than-expected profit outlook for the current quarter because its been forced to spend more aggressively now to improve its e-commerce business as Amazon.Com (NASDAQ: AMZN) looks set to enter the home goods space. Specifically, Bed Bath & Beyond is spending money on a new e-commerce distribution center, a new data center and a new website plus there are all the other acquisitions its been doing (e.g. Cost Plus) while customers have been spending money on lower margin goods. On Wednesday, Bed Bath & Beyond fell 1.41% to $73.67 (BBBY has a 52 week trading range of $48.75 to $75.84 a share) for a market cap of $17.22 billion but the stock was sinking more than 10% in after hours trading – which could be an overreaction. Bed Bath & Beyond is up 27.1% since the start of the year, up 41.7% over the past year and up 94.1% over the past year – meaning its performed well but it remains to be seen whether it can keep up this performance as Amazon.com enters its turf.
The Bottom Line. Investors might be overreacting with Bed Bath & Beyond (BBBY) as it positions itself to take on new competition while investors will be prepared when Ethan Allen Interiors (ETH) disappoints the next time it reports earnings.
John Udovich is a paid contributor of the SmallCap Network. John Udovich's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
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| Date: | May 20, 2013 | |
| Price: | Free | |
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