Stanley Furniture cuts full-year outlook

ATLANTA (Reuters) - Stanley Furniture Co (STLY.O) reported a 37 percent drop in quarterly profit on Monday, and lowered its 2008 sales and profit forecasts.

The company said consumer demand weakened in the middle of March.

Earnings fell to $1.05 million, or 10 cents a diluted share, for the first quarter ended March 29, from $1.68 million, or 15 cents a share, a year earlier.

Excluding 2 cents a share for charges from a manufacturing consolidation, earnings came to 12 cents in the latest quarter, compared with analysts' expectations of 11 cents, according to Reuters Estimates.

Sales slid about 17 percent to $62.5 million, and were below the $63.2 million that analysts expected.

Sales of discretionary items such as furniture have been hurt as consumers wrestle with rising food and gasoline costs, tighter credit and the U.S. housing market slowdown.

Last week, Ethan Allen Interiors Inc (ETH.N) warned that quarterly earnings would trail Wall Street estimates because of restructuring charges and the weak economy.

Stanley, based in Stanleytown, Virginia, forecast full-year profit of 27 cents to 38 cents a share, excluding a charge of 7 cents for the manufacturing consolidation. That compares with profit of 40 cents to 60 cents a share it expected in January, excluding a 6 cents a share charge.

The company now sees full-year sales of $233 million to $243 million, down from $282.8 million in 2007 and below its forecast of $255 million to $268 million earlier this year.

Stanley Furniture shares were down nearly 13 percent to $9.25 in extended trading after closing at $10.59 on Nasdaq.

(Reporting by Karen Jacobs; editing by Jeffrey Benkoe)