Furniture Brands International (FBN) posted 18 cents, vs. 30 cents, second-quarter earnings per share. UBS Financial downgraded the stock to reduce from neutral.
Analyst Margaret Whelan says Furniture Brands reported flat sales, while margins are waning. She thinks the company's defensive strategy to enter retail and compete with customers will only dilute returns even further, as such is ineffective.
She would prefer to see a keen focus on merchandising and competitive manufacturing and service levels. Compounded by a revolving door of senior execs, she notes results continue to underperform better-managed peers.
Whelan cut $1.55 2005 EPS estimate to $1.35, and $1.65 for 2006 to $1.45. She believes it's unlikely that Furniture Brands will command its historic multiple, and therefore cut her $21 target price to $14.