Furniture retailer, an IPO in April, gets shellacked on Wall Street.

Furniture retailer, an IPO in April, gets shellacked on Wall Street

The stock of STOR Furnishings International Inc., the City of Industry furniture retailer that is a heavy local advertiser, has been getting hammered on Wall Street on talk of lowered earnings estimates by a key analyst.

STOR has plummeted from $8 a share on July 5 to $5.50 a share in trading last week, a 37 percent tumble in value. STOR had its initial public offering of stock on April 27 of this year, at $8 a share.

The company raised $16.7 million in the offering, which was underwritten by San Francisco-based Robertson, Stephen & Co., and by Bateman Eichler, Hill Richards Inc. of downtown Los Angeles.

STOR operates three large stores in the Los Angeles market, where shoppers can wander among ready-to-assemble home furnishings and housewares. Most wares are in the mid- to lower-price ranges. About half of the goods are of European-style design, similar to that of the Swedish IKEA home furnishings chain. The three stores are leased.

The stores hope to lure buyers with annual incomes of between $25,000 and $75,000, in the 20- to 45-year-old age brackets.

For the year ended March 30, 1990, STOR reported a loss of $4.95 million on revenues of $65.7 million, for a per share loss of $1.23.

An analyst for one of the brokerage houses that underwrote the STOR offering, Robertson, Stephens, last week confirmed she has lowered her estimate of STOR earnings, and that she had disseminated her lowered estimate to institutional clients.

However, the analyst, Janet Joseph Kloppenburg, last week refused to reveal by how much she believes STOR earnings will be reduced. "I am not under a legal obligation to reveal that," she said, in a telephone interview. "STOR will be opening stores at a slower rate than anticipated, and that will reduce earnings. That is all I will say."

Institutional owners and company officials could not be reached for comment.

A spokeswoman for STOR said that company officials would not be available for interviews. Jim Stadtlander, STOR principal operating officer, could not be reached for comment.

In its April prospectus, STOR said it planned to open two new stores in fiscal 1991 (beginning this March), and four such stores in fiscal 1992.

The New York-based investment advisory service Standard & Poor's in April advised investors to stay away from STOR stock, stating that earnings were not predictable, S&P predicted that STOR would lose $1.10 a share this fiscal 1990, and would about break even in fiscal 1991.

Also looming in the STOR picture: IKEA, the Swedish furnishing retailer, plans to open a 238,000-square-foot store in Burbank in October. The IKEA store will be even larger than STOR's stores, which run between 150,000 square feet and 175,000 square feet.

Given the similarities between the two retailers, the new IKEA store may cut into STOR sales. "Although (STOR) cannot predict the effect of IKEA's entry into the Los Angeles market, competition from IKEA could adversely affect the company's sales and gross margins, and could result in the loss of key employees," said STOR, in disclosure statements filed with the Securities and Exchange Commission.

IKEA sued STOR in 1987 for copyright and trade dress infringement, in a case settled in 1988. As part of the settlement, STOR agreed to change some aspects of its stores and to alter its catalogues.