Tile Shop Holdings Inc. Q4 Earnings: Key Takeaways for Investors

"All things tile" retailer Tile Shop Holdings reported financial results for the fourth quarter and full year 2014 on Feb. 17, and in short, it was another underwhelming result. The highlights:

While the results where underwhelming, they weren't exactly terrible, as the company continues to operate in a weak demand environment. Let's take a closer look at some key takeaways from the earnings release.

Market remains very challenging, based on one important metric Many long-term Tile Shop investors are probably just happy to see the company put some of the scandalous events of the past couple of years in the rearview mirror. New CEO Chris Homeister stated the company is:

[A]ctively executing numerous initiatives focused on returning the Company to higher levels of growth and profitability. Although much work remains ahead, we look forward to delivering comparable store sales growth, strong growth in earnings per share.

It's also worth remembering that 2014's comparable sales result -- an unexpected 0.4% decline in sales at locations open at least one year -- follows 2013's 12.4% comps growth. That's a tough act to follow in any industry, much less one that is largely affected by such cyclical trends as home sales:

U.S. Existing Home Sales data by YCharts

Existing-home sales are an important source of new business for the Tile Shop, and, as you can see in the table above, they really fell off beginning late in 2013 and never fully rebounded to 2013's peak. For the full year, existing-home sales in 2014 were down 3%, according to the National Association of Realtors (NAR). This came on the heels of a 2013 when existing-home sales reached the highest levels since before the recession. The NAR also reported that sales in the second half of 2014 were up 8% versus the first half, with the last three months of the year reporting better results than the same period in 2013.

Only time will tell if this national trend provides a lift for Tile Shop in coming months.

Operating and debt costs rising, but look reasonable In the quarter, sales, general, and administrative (SG&A) expense increased $3.4 million, or about 9%. Management says the majority of this increase is related to store openings, and considering the store count increased 20% to 107 stores in the quarter, this makes sense.

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Tile Shop Holdings Inc. Q4 Earnings: Key Takeaways for Investors