NEW YORK (Reuters) - HNI Corp (HNI.N: Quote, Profile, Research), which makes office furniture and fireplaces, said on Thursday quarterly profit fell about 80 percent, hurt by exposure to the housing slump in its home office and hearth business, sending to their lowest level since 2001.

First-quarter earnings fell to $4 million, or 9 cents per share, from $20.7 million, or 43 cents per share, a year earlier.

"We faced very challenging economic conditions during the quarter," Chief Executive Officer Stan Askren said in a statement. He also said he expects the economy to "continue to be difficult."

Since a 2005 peak of 12.7 percent growth, the office furniture industry has contracted, with growth in 2007 coming in at just 5.5 percent, according to the Business and Institutional Furniture Manufacturer's Association (BIFMA).

"We worry that the moderating trend now evident will continue into 2008, and that industry shipment and order comparisons will turn negative," wrote Raymond James analyst Budd Bugatch in a note to clients.

Bugatch has an "underperform" rating on HNI, which is the only public issue in the industry with significant exposure to small business.

Excluding restructuring and transition costs, HNI reported earnings of $19.2 million, or 21 cents per share.

On that basis, analysts had forecast earnings of 22 cents per share, according to Reuters Estimates.

The Muscatine, Iowa-based company also said first-quarter sales fell 7.5 percent to $563.4 million, just topping analyst estimates of $558.5 million.