By Samantha Delouya | CNN
There has been a significant decline in furniture purchases recently, signaling a change in consumer behavior. Luxury furniture brand RH reported a 19% drop in second-quarter revenue, while Hooker Furnishings, a Virginia-based furniture manufacturer that sells goods at Wayfair, Macy’s, and other retailers, experienced a 36% decline in second-quarter revenue.
Investors are showing concern as well, with shares of RH falling 16% and Hooker Furnishings dropping 17%.
This decline in sales is not unique to these two companies. Other furniture retailers, such as Williams-Sonoma, Wayfair, and La-Z-Boy, have also reported revenue declines in recent months.
The decrease in furniture purchases can be attributed to a shift in consumer spending patterns since the pandemic. Brad Thomas, a retail analyst at KeyBanc Capital Markets, explains that when the pandemic hit, people redirected their spending from travel and leisure experiences to physical items, including furniture. However, this trend has started to reverse in 2022 and 2023.
Home improvement retailers, like Home Depot and Target, have also seen a drop in sales due to the soaring housing market. With rising home prices and mortgage rates above 7%, affordability becomes an issue, leaving consumers with less disposable income for furniture purchases.
According to RH’s CEO, Gary Friedman, the challenging luxury housing market and overall economy are expected to persist through fiscal 2023 and potentially into the next year.
This slowdown in furniture sales may also be exacerbated by the decrease in home purchases. Mortgage applications for homebuying have reached a 27-year low, further impacting the demand for home goods. Moving activity is often a catalyst for purchasing furniture, and with elevated mortgage rates and low housing inventory levels, there is less home purchase activity.
The current economic climate has taken a toll on the furniture industry, as seen with the closure of national furniture chain Mitchell Gold + Bob Williams.
However, there is a glimmer of hope. Some retailers have noticed an upward trend in incoming orders compared to the previous year. Hooker Furnishings CEO Jeremy Hoff remains optimistic that furniture purchases will pick up soon.
While economic factors like the end of the federal student loan repayment pause may impact consumer spending, there is still a level of uncertainty. The risk of increased student loan repayment may affect the willingness and ability of consumers to purchase furniture.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
