Furniture retailers have spent years waiting for the housing market to revive demand for sofas, beds, and other big-ticket home purchases.
That rebound remains elusive, but some of the industry’s biggest players are finding growth anyway.
Wayfair reported second-quarter net revenue of $3.5 billion, up 7.5% from a year earlier, while U.S. revenue jumped 8.7%.
Orders increased 6%, active customers rose 3.3%, and the online furniture retailer generated $301 million in free cash flow.
Executives were also quick to point out that this was the company’s strongest U.S. revenue growth of the post-COVID period.
The performance stands out because the broader furniture industry has barely returned to growth.
Meanwhile, Wayfair estimated that the second quarter marked the first period of flat-to-slightly positive year-over-year U.S. category growth since 2021, with demand disproportionately coming from higher-income consumers.
Wayfair’s U.S. business, by comparison, expanded nearly 9%.
The divergence is creating clear winners and losers in the furniture industry, which is facing weak housing turnover, tariff-related costs, and increasingly uneven consumer spending.
Weak housing market remains a drag on furniture sales
Furniture purchases are closely tied to housing activity, and the latest data show the market is still struggling to sustain a recovery.
U.S. existing-home sales fell 1.7% in July from the previous month to a seasonally adjusted annual rate of 4.06 million, according to the National Association of Realtors.
The weak housing market has already spilled into furniture retail.
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As TheStreet previously reported, elevated mortgage rates and home prices have pushed housing turnover near historic lows, leaving fewer consumers shopping for new couches, dining tables, and other big-ticket furnishings.
Wayfair similarly cited “depressed housing turnover” when describing the operating environment on its earnings call.
Yet CEO Niraj Shah said the company has maintained a high-single-digit spread between its U.S. growth and the broader category since last fall.
Bank of America sees that outperformance continuing.
Analyst Michael McGovern said Wayfair’s loyalty program, physical-store expansion, and move upmarket together are driving market-share gains despite a tepid home-furnishings industry.
BofA now expects Wayfair to return to double-digit revenue growth in the fourth quarter.
BofA raised its price target on Wayfair to $140 from $105 and increased its estimated 2027 revenue to $14.8 billion from $14.2 billion.
But Wayfair isn’t the only furniture company finding growth in a difficult market, and results across the industry have been sharply divided.
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Furniture retailers face pressure from tariffs
Tariffs have added another complication for an industry heavily dependent on globally sourced finished goods, components, and materials.
Federal Reserve research found that tariff-related retail price pressure developed gradually through 2025 rather than appearing as a single shock.
Prices for goods imported from China were 8.5% higher year over year by December, with researchers estimating that at least 30% of tariffs imposed between April and December had been passed through to consumers.
The effects are showing up differently across furniture companies.
Luxury home-furnishings retailer RH reported that first-quarter revenue fell 1.7% to $800.3 million.
The company said revenue was reduced by about $45 million due to tariff-related resourcing, which contributed to higher backorder and special-order balances.
Williams-Sonoma, meanwhile, has continued to grow despite the additional costs.
The Pottery Barn and West Elm parent’s comparable brand revenue increased 4.8% in its first quarter, with every brand posting a positive comparable result.
Its inventory also included about $60 million in incremental tariff costs.
BofA’s broader retail research shared with TheStreet shows how much money is at stake.
Williams-Sonoma filed for roughly $198 million in tariff refunds, while RH filed for about $69 million.
Arhaus and Bob’s Discount Furniture had also sought refunds but had not recognized benefits at the time the report was covered.
BofA said retailers are generally using tariff refunds to fund promotions or to offset freight and other supply chain costs.
But the firm warns that margins could face renewed pressure in 2027 once those one-time benefits disappear.
Wayfair occupies a somewhat different position because of its marketplace model.
During its earnings call, Shah said the company had not seen tariff refunds meaningfully alter market prices.
Instead, he said some suppliers were using the additional capital to develop new products and hold more inventory.
He added that Wayfair’s pricing competitiveness remained strong.
Furniture market produces winners and losers
The industry’s pressures are also showing up in workforce reductions and factory closures.
Inter IKEA announced plans in May to cut about 850 jobs, roughly 3% of its workforce, to simplify operations and lower costs while preserving the low-price positioning of the IKEA brand, as TheStreet previously reported.
Ashley Furniture also halted manufacturing at its Mesquite, Texas, facility, affecting 266 workers as the company consolidated production elsewhere.
But other furniture retailers are expanding.
Bob’s Discount Furniture is one of the latest examples.
The value-focused chain in its second-quarter results noted that it has continued to expand its national footprint, which now includes more than 200 showrooms.
The results add another dimension to the divide in furniture retail: companies are finding growth at opposite ends of the consumer market.
At the premium end, Arhaus reported first-quarter revenue growth of just 0.9%, while comparable delivered sales declined 1.7% and comparable written sales fell 5.7%. Net income dropped 54.5%.
Arhaus nevertheless maintained its full-year outlook and continues to expand its showroom footprint.
Wayfair, meanwhile, has experienced a very different trajectory at the affluent end of the market.
Wayfair makes bigger push into luxury and physical stores
Perigold, Wayfair’s luxury home brand, grew more than 35% in the second quarter, while its specialty retail brands grew nearly 20%.
Perigold now generates a little more than $400 million in annual sales and has nearly 400,000 active customers, up almost 20% from a year earlier.
Those customers spend nearly three times as much annually as the typical Wayfair.com shopper, while roughly 40% of Perigold customers each year are completely new to Wayfair’s family of brands.
Wayfair is also increasingly relying on a strategy that may seem unusual for a company built on e-commerce: physical stores.
As TheStreet previously reported, the retailer has been building out a brick-and-mortar network as it tries to combine the convenience of online furniture shopping with the ability to see and test products in person.
Wayfair opened its second large-format store in Atlanta this year after launching its first outside Chicago in 2024, and it has continued to add locations and announce new markets.
Perigold has separately opened stores in Houston and West Palm Beach.
Wayfair said those stores are already achieving average order values higher than the luxury brand’s online business, while design services are helping customers undertake larger projects.
The strategy suggests the furniture industry’s current divide isn’t simply between online and traditional retailers.
Instead, recent results point to a market where companies with a clear value proposition, whether targeting price-conscious households or more resilient affluent shoppers, can take market share even without a broad recovery in furniture demand.
BofA expects Wayfair’s U.S. revenue to grow about 10% in the third quarter and nearly 10% in 2027, while forecasting the company’s overall revenue will approach $14.8 billion next year.
For a furniture industry still waiting for a meaningful recovery in demand, Wayfair’s recent performance suggests the bigger opportunity may be to take business from competitors rather than wait for the market to grow.
