I am certainly not a furniture stock or industry expert, so I am looking for some opinions from those of you who have followed Stanley or the industry for awhile. Clearly, industry sales are still below (far below for some participants) the last peak level. With that said, some industry participants seem to have seen a bit more of a recovery than Stanley has (recognizing the company said its core line was up 10% in this past quarter). How much should one worry that the brand, for whatever reason, simply has lost ground from a market share perspective and may not recover the share or lose further ground? I am guessing that sales excluding those from Young America were in the $16 or 17 million range in this past quarter. The company, I think, indicated SG&A could get to $3.5 million per quarter post restructuring and interest expense is running around $.7 million per quarter, so the company will need about $4.25 million of gross profit in order to break even. Is it reasonable to assume that sales recover enough, say over the next year or so, in order for the company to generate pretax profits after SG&A and interest expense? Thanks, guys.
Take a look at hoft. They have been very successful at what stly is now trying to do now, sourcing furniture abroad and distributing it rather than trying to manufacture it themselves. There is potential.
Thanks. I was actually looking at HOFT recently, and I think you are right. HOFT has the 25% gross margin, SG&A as a percent of sales is in the 17-18% range (if I remember correctly), and free cash flow is not great but at least it is positive. This gets them price to book and EV/Sales mulitples that STLY gladly take.