Luxury couch crunch: Furniture retailers hit post-pandemic slump
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Consumers have gotten off the couch, shifting their spending to services like travel and entertainment. Now they're buying fewer couches.
Why it matters: The furniture industry is reeling, suddenly far removed from the historic pandemic-fueled boom in sales of furnishings and home improvement items.
Driving the news: 34-year-old luxury furniture chain Mitchell Gold + Bob Williams is shutting down.
- The North Carolina-based company had an estimated $197 million in revenue and 69 stores, according to TD Cowen analyst Max Rakhlenko.
- "I am furious and heartbroken," Mitchell Gold told Furniture Today, saying the company's lender had "pulled the plug."
The big picture: Several major furniture brands are experiencing a sales crunch:
- Pottery Barn's comparable revenue was down 10.6% in the second quarter, compared with a year earlier.
- West Elm's comparable revenue was down 20.8%.
- Wayfair's revenue was down 3.4%.
- Klaussner Furniture Industries — which had about $300 million in annual sales, according to TD Cowen — recently shut down.
What they're saying: "We're in a period where consumers are buying fewer large-ticket furniture pieces than they did a year ago as they shift their spending," Williams-Sonoma CEO Laura Alber said last week on an earnings call.
- Instead of big-ticket items, customers are sprucing up their homes with less-expensive furnishings such as "decorative layers, focusing on table top, glassware, decorative objects and textiles," Tricia Smith, global CEO of Urban Outfitters' Anthropologie Group, said on an earnings call.
Meanwhile, the severe drop-off in home sales has meant fewer new homeowners shopping for furniture.
The impact: Consumers can find deals as retailers look to juice sales.
- Pottery Barn and West Elm — both owned by Williams-Sonoma — as well as Arhaus have increased promotions in recent months, according to TD Cowen charts.
💠Nathan's thought bubble: Retail sales declines are particularly telling in an inflationary environment, when price increases alone should lead the way to sales jumps.
The bottom line: Memories of pandemic-era sales booms are fading.
Go deeper: Americans are spending less
