As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the home furniture retailer industry, including Arhaus (NASDAQ:ARHS) and its peers.
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 strong Q2. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 7.2% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating 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 8.9% on average since the latest earnings results.
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. This print fell short of analysts’ expectations by 1.4%. Overall, it was a mixed quarter for the company with an impressive beat of analysts’ earnings estimates but a miss of analysts’ gross margin estimates.
Unsurprisingly, the stock is down 32.7% since reporting and currently trades at $9.32.
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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, falling short of analysts’ expectations by 1.9%. However, the business still had a strong quarter with an impressive beat of analysts’ earnings estimates and a solid beat of analysts’ gross margin estimates.
The market seems happy with the results as the stock is up 30% since reporting. It currently trades at $15.38.
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, in line with analysts’ expectations. Still, its results were good as it locked in a decent beat of analysts’ gross margin and earnings estimates.
Interestingly, the stock is up 38.2% since the results and currently trades at $354.58.
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. This print lagged analysts' expectations by 1.2%. Taking a step back, it was still a strong quarter as it produced an impressive beat of analysts’ gross margin estimates and a decent beat of analysts’ earnings estimates.
The stock is flat since reporting and currently trades at $144.03.
This content was originally published on Stock Story
