Tile Shop Holdings Inc. Q4 Earnings: Will A New Era Spur Growth?

When Tile Shop Holdings reported earnings last October, the company shocked most of us with the surprise announcement that founder Robert Rucker would retire as CEO at the end of 2014. Considering the flooring retailer's tumultuous year to that point, it should be no surprise the stock has been up and down since.

On Jan. 1 2015, Tile Shop's Chief Operating Officer Chris Homeister replaced Rucker as the company's CEO, despite only being with Tile Shop since October 2013.

With the fourth-quarter earnings report just around the corner, what should investors expect? Let's take a look.

New customer growth not likely to impress Since it's the slowest time of year for Tile Shop, much of the economic data we have seen covering the fourth quarter has been relatively muted.Through the first three quarters of 2014, sales grew by 12.9%, but that was completely due to new store openings. Meanwhile, same-store sales -- which only considers sales from stores that have been open for more than one year -- declined by 0.5%.

Due to the poor traffic and sales growth, the company projected fourth quarter same-store sales to range from up 1%, to down 1%, and for new sales growth to be driven by store openings. Meanwhile, earnings per share are expected to come in at $0.24, a large decline from 2013.

Combine these weak projections and the fact that the end of the year is not traditionally a strong quarter for home remodeling projects, and it's hard to think Tile Shop's fourth-quarter sales will impress Wall Street.

Look for new store opening activity, fiscal discipline While some analysts see weakness in Tile Shop's business and a lack of durable competitive advantages, it's important to remember that the industry is also in a malaise right now. Existing home sales -- a reasonably good macroeconomic metric for Tile Shop's business -- were poor again in 2014, though they started to slightly rebound in the second half of the year:

US Existing Home Sales data by YCharts

But even that rebound is still below historical levels. Until existing home sales ramp back up, Tile Shop is likely to continue operating in a challenging environment.

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Tile Shop Holdings Inc. Q4 Earnings: Will A New Era Spur Growth?