Furniture Stocks Rise as Trump Tariff Delay Gives 'Breathing Room' to Sector — Barrons.com

Wrapping up Q3 earnings, we look at the numbers and key takeaways for the home furnishings stocks, including Lovesac and its peers.

A healthy housing market is good for furniture demand as more consumers are buying, renting, moving, and renovating. On the other hand, periods of economic weakness or high interest rates discourage home sales and can squelch demand. In addition, home furnishing companies must contend with shifting consumer preferences such as the growing propensity to buy goods online, including big things like mattresses and sofas that were once thought to be immune from e-commerce competition.

The 6 home furnishings stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.8% above.

Thankfully, share prices of the companies have been resilient as they are up 6.1% on average since the latest earnings results.

Weakest Q3: Lovesac

Known for its oversized, premium beanbags, Lovesac is a specialty furniture brand selling modular furniture.

Lovesac reported revenues of $150.2 million, flat year on year. This print fell short of analysts’ expectations by 2.5%. Overall, it was a softer quarter for the company with full-year EBITDA guidance missing analysts’ expectations significantly and full-year revenue guidance missing analysts’ expectations.

Shawn Nelson, Chief Executive Officer, stated, “Our focus on secular growth initiatives such as new products and the beginnings of a major evolution in our marketing, enabled slight year-over-year growth in net sales in the third quarter, reflecting market share gains as compared to our category. As we transitioned into our fiscal fourth quarter, we adjusted our marketing strategies and have seen solid growth quarter-to-date, inclusive of the Black Friday and Cyber Monday holiday events. Lovesac is inventing and investing steadily, even through these tough times for our category, while balancing cash flow generation and profitability. Our tall ambitions begin with reaching our goal of three million Lovesac households by 2030: Households that will have ever-more Designed For Life products across ever-more rooms of the house. We are totally focused and committed to this goal that we believe can produce meaningful growth over the next few years—regardless of what happens in the macro environment.”

Interestingly, the stock is up 7.2% since reporting and currently trades at $14.73.

Read our full report on Lovesac here, it’s free for active Edge members.

Best Q3: La-Z-Boy

The prized possession of every mancave, La-Z-Boy is a furniture company specializing in recliners, sofas, and seats.

La-Z-Boy reported revenues of $522.5 million, flat year on year, outperforming analysts’ expectations by 1.2%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.

The market seems happy with the results as the stock is up 25.6% since reporting. It currently trades at $37.27.

Mohawk Industries

Established in 1878, Mohawk Industries is a leading producer of floor-covering products for both residential and commercial applications.

Mohawk Industries reported revenues of $2.76 billion, up 1.4% year on year, exceeding analysts’ expectations by 1.6%. Still, it was a mixed quarter as it posted EPS guidance for next quarter missing analysts’ expectations.

As expected, the stock is down 15.2% since the results and currently trades at $109.30.

Read our full analysis of Mohawk Industries’s results here.

Somnigroup

Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup is a bedding manufacturer known for its innovative memory foam mattresses and sleep products

Somnigroup reported revenues of $2.12 billion, up 63.3% year on year. This result beat analysts’ expectations by 3%. It was a strong quarter as it also produced a solid beat of analysts’ Direct revenue estimates and full-year EPS guidance topping analysts’ expectations.

Somnigroup pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 12.2% since reporting and currently trades at $89.28.

Read our full, actionable report on Somnigroup here, it’s free for active Edge members.

Leggett & Platt

Founded in 1883, Leggett & Platt is a diversified manufacturer of products and components for various industries.

Leggett & Platt reported revenues of $1.04 billion, down 5.9% year on year. This number surpassed analysts’ expectations by 1.1%. Zooming out, it was a mixed quarter as it also produced a decent beat of analysts’ adjusted operating income estimates but a miss of analysts’ Bedding revenue estimates.

Leggett & Platt had the slowest revenue growth and weakest full-year guidance update among its peers. The stock is up 19.7% since reporting and currently trades at $10.99.

Read our full, actionable report on Leggett & Platt here, it’s free for active Edge members.

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Arhaus and the rest of the home furniture retailer stocks fared in Q3.

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 slower Q3. As a group, revenues missed analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was in line.

Luckily, home furniture retailer stocks have performed well with share prices up 21.8% on average since the latest earnings results.

Arhaus

With an aesthetic that features natural materials such as reclaimed wood, Arhaus is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.

Arhaus reported revenues of $344.6 million, up 8% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a satisfactory quarter for the company with a solid beat of analysts’ EBITDA estimates but EBITDA guidance for next quarter missing analysts’ expectations significantly.

Arhaus scored the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 17.4% since reporting and currently trades at $11.46.

Best Q3: Williams-Sonoma

Started in 1956 as a store specializing in French cookware, Williams-Sonoma is a specialty retailer of higher-end kitchenware, home goods, and furniture.

Williams-Sonoma reported revenues of $1.88 billion, up 4.6% year on year, outperforming analysts’ expectations by 0.6%. The business had a strong quarter with an impressive beat of analysts’ gross margin estimates and a decent beat of analysts’ EBITDA estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $181.25.

Weakest Q3: Sleep Number

Known for mattresses that can be adjusted with regards to firmness, Sleep Number manufactures and sells its own brand of bedding products such as mattresses, bed frames, and pillows.

Sleep Number reported revenues of $342.9 million, down 19.6% year on year, falling short of analysts’ expectations by 5.4%. It was a disappointing quarter as it posted full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.

Sleep Number delivered the highest full-year guidance raise but had the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 50.3% since the results and currently trades at $8.27.

Read our full analysis of Sleep Number’s results here.

RH

Formerly known as Restoration Hardware, RH is a specialty retailer that exclusively sells its own brand of high-end furniture and home decor.

RH reported revenues of $883.8 million, up 8.9% year on year. This print met analysts’ expectations. Zooming out, it was a softer quarter as it logged a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.

RH delivered the fastest revenue growth among its peers. The stock is up 19.1% since reporting and currently trades at $181.98.

Read our full, actionable report on RH here, it’s free for active Edge members.

What Happened?

Shares of furniture company Lovesac fell 9.4% in the afternoon session after it reported disappointing third-quarter results and issued a weak outlook for the crucial holiday shopping season. The furniture retailer’s sales were flat year-over-year at $150.2 million, falling short of analyst estimates. The company also posted a wider-than-expected loss of $0.72 per share, as its net loss more than doubled from the same period in the previous year. Profitability worsened, with the operating margin contracting to negative 10.5% from negative 5.2% a year ago, as expenses grew relative to sales. Looking ahead, Lovesac’s revenue forecast for the fourth quarter came in below market expectations, and its full-year guidance for earnings and EBITDA also missed Wall Street's projections.

The shares closed the day at $12.63, down 8.1% from previous close.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lovesac? Access our full analysis report here.

What Is The Market Telling Us

Lovesac’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 20 days ago when the stock gained 6.5% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

Lovesac is down 47.2% since the beginning of the year, and at $12.63 per share, it is trading 66.5% below its 52-week high of $37.68 from December 2024. Investors who bought $1,000 worth of Lovesac’s shares 5 years ago would now be looking at an investment worth $326.31.