Furniture/Furnishings Weekly
Last week, we considered our outlook for furniture and furnishings. Today, we look at current indicators. Economic fundamentals largely deteriorated over the past two weeks, but the stocks surged as interest rates eased. Existing home sales dipped to a seasonally adjusted rate of 3.96 million in September, the first reading below 4 million since 2010, shortly after the Great Recession. We view existing home sales as a key indicator of residential furniture demand. Consumer confidence dipped to 102.6, the lowest since 2020. The indicator for expectations for future consumer financial strength dipped to 75.6. The Architecture Billings Index, an indicator for the commercial/contract furniture industry, provided mixed numbers. The October project inquiries index dipped to 48.8 from 53.7 in September. The design contracts index remained steady, if low, at 46.5 versus 46.2 the prior month. Despite the weak macro data, the stocks surged. Every stock in the index was higher, except two. One of them was essentially flat. Moderating readings on inflation last week brought a rally in the bond market and lower rates. A lower discount rate on risk assets lifted all stocks. The stocks getting the biggest lift were those most beaten up over the past month, including Williams-Sonoma (WSM), sleep retailers Sleep Number (SNBR) and Purple Innovations (PRPL), and residential manufacturers Lovesac (LOVE) and Flexsteel (FLXS).
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