Sunday, July 20, 2014

Color on Retail from Leggett & Platt $LEG


"Leggett & Platt expects to record a $108 million pre-tax, non-cash goodwill impairment charge for the second quarter. This charge reflects the complete write off of the goodwill associated with the Store Fixtures group, which is part of the Commercial Fixturing & Components segment. The EPS impact of the non-cash charge is expected to be 65 cents per share. Apart from this impairment, the company has made no update to the underlying full year EPS guidance issued in April.

As previously disclosed, the Store Fixtures group's 2013 performance fell short of expectations. Performance did not rebound during the second quarter of 2014 as expected, with the deterioration of revenue and profitability most pronounced in May and June. Consequently, it has become apparent that the current market value of the Store Fixtures unit has fallen below its recorded book value. This stems from lower current expectations of future revenue and profitability, reflecting reduced market demand for the shelving, counters, showcases and garment racks the company supplies to major retailers."
A correspondent writes,
"just think about all the stores that are closing. If you are still in business, you are going to take whatever fixtures that can be removed without too much effort and put them in any other stores you might be opening or use for spares. Total retail space is going down. Full stop. These guys are just catching up with reality."
This is an interesting indicator. Here's more about the store fixtures group.

No comments: