Let’s dig into the relative performance of Sleep Number (NASDAQ:SNBR) and its peers as we unravel the now-completed Q2 home furniture retailer earnings season.
Furniture retailers understand that ‘home is where the heart is’ but that no home is complete without that comfy sofa to kick back on or a dreamy bed to rest in. These stores focus on providing not only what is practically needed in a house but also aesthetics, style, and charm in the form of tables, lamps, and mirrors. Decades ago, it was thought that furniture would resist e-commerce because of the logistical challenges of shipping large furniture, but now you can buy a mattress online and get it in a box a few days later; so just like other retailers, furniture stores need to adapt to new realities and consumer behaviors.
The 4 home furniture retailer stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 7.2% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, home furniture retailer stocks have been resilient with share prices up 9.4% on average since the latest earnings results.
Best Q2: Sleep Number (NASDAQ:SNBR)
Known for mattresses that can be adjusted with regards to firmness, Sleep Number (NASDAQ:SNBR) manufactures and sells its own brand of bedding products such as mattresses, bed frames, and pillows.Sleep Number reported revenues of $408.4 million, down 11% year on year. This print fell short of analysts’ expectations by 1.9%, but it was still a strong quarter for the company with an impressive beat of analysts’ earnings estimates and a solid beat of analysts’ gross margin estimates.
“The implementation of our transformative initiatives is improving gross margin, operating expenses and free cash flow, as our teams continue to execute sustainable changes across the business. In the second quarter, we delivered gross margin rate expansion and adjusted EBITDA slightly ahead of expectations, despite facing a more challenging industry sales environment than anticipated,” said Shelly Ibach, Chair, President and CEO.
Sleep Number delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Interestingly, the stock is up 38.5% since reporting and currently trades at $16.38.
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Williams-Sonoma (NYSE:WSM)
Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE:WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.Williams-Sonoma reported revenues of $1.79 billion, down 4% year on year, falling short of analysts’ expectations by 1.2%. However, the business still had a strong quarter with an impressive beat of analysts’ gross margin estimates and a decent beat of analysts’ earnings estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $144.70.
Weakest Q2: Arhaus (NASDAQ:ARHS)
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ:ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.Arhaus reported revenues of $309.8 million, flat year on year, falling short of analysts’ expectations by 1.4%. It was a softer quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
As expected, the stock is down 24.4% since the results and currently trades at $10.47.
RH (NYSE:RH)
Formerly known as Restoration Hardware, NYSE:RH (NYSE:RH) is a specialty retailer that exclusively sells its own brand of of high-end furniture and home decor.RH reported revenues of $829.7 million, up 3.6% year on year. This print was in line with analysts’ expectations. Overall, it was a strong quarter as it also produced a decent beat of analysts’ gross margin estimates and a decent beat of analysts’ earnings estimates.
RH delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 23% since reporting and currently trades at $315.63.
This content was originally published on Stock Story
