retail watch | Jun 27, 2024 |
A midyear report card for home retailers

Halfway through the year, home retailers are all asking themselves the same question: “It’s almost July 1—do I know where my customers are for the next six months?”

For the entire industry, especially furniture brands, 2024 has been lackluster so far, with just about every big public chain reporting declining sales. Most are not very optimistic about business for the remainder of the year, although some think the bottom has been reached and things may start to creep up … slowly.

Big chains like RH, Arhaus, Ethan Allen, and Williams-Sonoma’s Pottery Barn and West Elm all took haircuts over the first half of 2024, as even the high end of home retailing suffered. In the meantime, other retailers with substantial home furnishings categories, like Big Lots, Bed Bath & Beyond, and even the home improvement twins—Home Depot and Lowe’s—fared no better.

You don’t need to be an expert to know what is causing all of this. A paralyzed housing market, sabotaged by scary-high mortgage rates and the lingering effects of budget-busting inflation, are all combining to keep consumers spending on travel, vacations, concerts, and just about anything but redecorating, remodeling and redoing their homes.

Let’s check the scorecard on how the larger public home retailers are doing.

RH: For its just-completed first quarter, sales were off 1.7 percent to $726.9 million, which barely beat Wall Street forecasts. More troubling was the bottom line, which went from a profit last year to a loss of $3.6 million. The company’s stock price is off around 28 percent over the past 12 months, and RH says not to expect much in the way of improvement until at least the first quarter of 2025. That’s a ways off.

Williams-Sonoma: The multibrand player didn’t do much better. Sales for its most recent quarter were down 6 percent, and while that was a smaller dropoff than in previous quarters, its largest brand—Pottery Barn—declined 10.8 percent. West Elm dipped 4.1 percent, much better than its 15.8 percent drop a year ago, but Pottery Barn is moving in the wrong direction. And like RH, Williams-Sonoma isn’t particularly optimistic about the rest of the year, especially in furniture. However, its stock is up about 130 percent versus a year ago, driven at least in part by an upcoming two-for-one stock split.

Arhaus: The smallest of the big furniture retailers, this upscale brand had been defying the odds and outperforming its competitors—up until last quarter. Year-over-year sales were off 3.1 percent, although it did finish in the black for Q1. Its stock is up about 65 percent versus a year ago, reflecting its aggressive expansion plans in a sector where new store openings are relatively rare.

Ethan Allen: The company runs both wholesale and retail operations, but the numbers on both sides of its business model were poor: The former was off 21 percent and the latter down 19 percent. Ethan Allen did remain profitable; however, Wall Street is not showing it much love, with its stock off about 4 percent year over year.

Havertys: With locations primarily in the Southeast, this brand is at the mercy of local economies, causing its sales to decline 18 percent, including comp store sales that dipped 18.5 percent. The company was profitable for the first quarter, but considerably less so than in the previous year. It increased its quarterly dividend, but that wasn’t enough for investors, who have taken the stock down about 19 percent over the past year.

Wayfair: In the e-commerce realm, Wayfair was pretty consistent with its in-store brethren, although its sales drop was the smallest, at just 1 percent for its last quarter. Still, it lost $248 million, which was at least less than the $355 hit it took a year ago. The company’s share price has zigged and zagged all over the past 12 months, but is still down about 13 percent from a year ago. Wayfair opened its first big store in May, in the Chicagoland market, which was an important step for the retailer in becoming more omnichannel.

Those are just the public companies. There are plenty of large home furnishings players, like Rooms To Go, Ikea and Crate & Barrel that are privately owned—but one has to assume that if you got a look at their numbers, they probably wouldn’t be a whole lot different.

In the meantime, we’re seeing the ongoing price home retailers are paying that began with the collapse of Mitchell Gold + Bob Williams almost a year ago and has continued right through to the sudden shutdown of specialty niche player Oka just a few weeks ago.

On his earnings call earlier this month, RH CEO Gary Friedman told analysts that while the worst could be over, the pall hanging over the entire home furnishings industry lingers: “We expect business conditions to remain challenging until interest rates ease and the housing market begins to rebound.” Here’s hoping that comes sooner rather than later.


Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.

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