Credit Suisse Discusses Home Furnishings Stocks, Notes Low Expectations And Negative Investor Sentiments

In a report published Friday, Credit Suisse analyst Seth Sigman commented on why he remains "mixed" on the Home Furnishings segment. "Home Furnishings is somewhat unique relative to our broader Hardline universe, offering low valuation, demand still below prior peak levels, and potential macro tailwinds," Sigman wrote. "Yet we have seen a divergence I this group, with e-commerce positioning and to some extent demographics among the big differences. That has led to varying sales and margin results despite what should be an improving macro backdrop for this sector." Sigman continued that in 2014, the sector benefited from "healthy" top line growth but weaker bottom line results as many firms invested heavily in ecommerce initiatives while promotional activity dragged down margins. The analyst added that he hoped 2015 would provide "some light at the end of the investment tunnel," but a "choppy" start to 2015 sales may be pushing the story out.