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Furniture/Furnishings Weekly

A rough week for smaller-cap stocks without AI exposure. The WTR Commercial/Contract Furniture Index (-6.9%), Residential Manufacturers & Suppliers Index (-1.4%), and Home Goods Retailers Index (-1.3%) underperformed the Dow (+1.2%), S&P 500 (+1.2%), and Mass Retailers Index (+1.9%), all of which benefited from the growing AI hype this week. This performance seems to be partly due to the overall weakness of small caps, with the Russell 2000 clocking in (-1.7%). HOFT’s 1Q25 report suggests continuing weakness in residential furniture. Excluding exited business, sales were down in the mid- to high teens in each of the firm’s three segments, reflecting continued weak demand as consumers confront higher rates and economic uncertainty, while home sales remain pressured. Hooker’s announced fixed-cost reduction initiatives reflect CEO Jeremy Hoff’s belief that “as long as interest rates remain high, we believe the housing industry, and therefore home furnishings demand, will remain subdued.” KIRK’s 1Q24 reported weaker big ticket sales (e.g. furniture) partially offset by growth in home décor. Home décor purchases enable consumers to refresh their spaces at a lower outlay than new furniture. We take this evidence of continued interest in updating the home as a positive longer-term signal of consumer intent despite the weak current environment. Build it and (maybe) they will come? Plans to build a supertall skyscraper in Oklahoma City are moving forward. It’s a head-scratcher. At 1,907 feet (commemorating Oklahoma’s statehood), it would be the tallest in the US. The building is slated for residential/hotel (with no office space) in a city that is overwhelmingly suburban. Could a reclassification to office be the ultimate (covert) goal here as return-to-office gains traction? Is this a bet on work-at-home as the future of urban downtowns? A bet that the center of US economic growth will continue to revolve around Texas? Could this actually be built? The National Retail Federation June Monthly Economic Review says consumers still intend to spend. “Consumers clearly remain willing to spend” even as smaller job and wage gains and high interest rates slow consumer spending growth. According to the Wall Street Journal, super-commuting gained ground during the pandemic. Figure 1 illustrates how commutes of more than 50 miles (each way) became significantly more common following COVID-19. One big reason appears to be the massive increase in hybrid work, which, while down from its peak during the lockdowns, remains an order of magnitude higher than pre-pandemic levels (see Figure 2). Clearly, the very high work-from-home rates seen during the peak of the lockdowns have abated, but we do appear to have moved into a new hybrid-work equilibrium where people only spend part of the work week in the office. Ultimately, this will reshape both home and office furniture requirements. WTR held its inaugural Consumer Products Virtual Investor Conference on June 5 and 6. Presentations are available on demand (link in our full report) and 1x1 availability requests can be sent to .