3 Home Furnishing Stocks to Watch Amid Industry Headwinds

Industry Description

The Zacks Retail-Home Furnishings industry comprises retailers offering home furnishing products under various categories. The merchandise assortment includes furniture, garden accessories, framed art, lighting, mirrors, candles, tableware, lamps, picture frames, bathware, accent rugs, artificial floral products, and child and teen furnishing. The industry players also develop, manufacture, market and distribute bedding products. The companies provide home and security products for residential home repair, remodeling, new construction and security applications. They are involved in manufacturing, assembling and selling faucets, accessories, kitchen sinks and waste disposal.

4 Trends Shaping the Future of the Retail-Home Furnishings Industry

Weak Housing Activity & Cautious Consumers Limit Big-Ticket Spending: The companies continue to face significant macroeconomic challenges, primarily stemming from a weak housing market that weighs on consumer spending for big-ticket home furnishings. Housing affordability issues and subdued existing-home sales are limiting housing turnover, an important catalyst for spending on furniture, flooring, decor and remodeling. Broader economic uncertainty and persistent inflation are also encouraging consumers to carefully prioritize household spending. Consequently, large discretionary and finance-dependent home projects remain under pressure, even as smaller projects show greater resilience. A prolonged period of weak housing activity could continue delaying major furnishing and renovation decisions, leaving the industry's broader recovery dependent on improving housing conditions and greater consumer confidence.

Tariffs, Freight & Input-Cost Pressures Challenge Margins: Cost pressures remain another significant industry headwind. Changing tariff policies create uncertainty around imported furniture, flooring and other home-related products, while elevated fuel, energy, transportation and commodity costs are adding pressure across supply chains. Retailers are responding through sourcing adjustments, supply-chain efficiencies, inventory management and selective pricing, but passing higher costs to consumers is difficult when discretionary demand is already soft. Competitive pricing also limits retailers' ability to fully offset inflation. Fierce competition in the home furnishings space is intensifying, with online giants like Amazon and Wayfair, specialty retailers and direct-to-consumer brands pressuring traditional stores. Retailers face mounting pressure from big-box chains, off-price operators emphasizing a value-driven, discovery-focused shopping experience, and digital-native players that continue to invest aggressively in expansion. As a result, balancing attractive consumer prices with margin protection is likely to remain challenging, particularly if elevated freight, fuel and product input costs persist through the remainder of 2026.

Repair, Replacement Demand & Pro Spending Support Growth: Although consumers remain cautious about large discretionary purchases, spending on necessary repair, maintenance, replacement and smaller home-refresh projects continues to provide support. Categories tied to kitchens, baths, appliances and routine home upkeep are benefiting as homeowners prioritize essential projects over major renovations. At the same time, professional customers remain comparatively resilient, supported by ongoing remodeling and maintenance activity. This is encouraging retailers to expand Pro-focused assortments, inventory availability, specialized services and faster fulfillment. These relatively steady demand areas can partially offset weakness in discretionary DIY spending and provide an important growth avenue until the broader housing market strengthens.

Omnichannel, Digital Tools and AI Reshape Home Furnishings Retail: Digital engagement is becoming increasingly important in a category where consumers often research products, compare designs and plan projects online before visiting a store. Retailers are investing in more seamless connections between digital and physical channels, better product visualization, faster fulfillment, inventory visibility and personalized project guidance. AI-powered tools are also emerging to help consumers find products, obtain project information and make purchasing decisions. Features like augmented reality room visualizers, virtual reality showrooms and mobile-first shopping are reshaping the consumer journey. These investments can improve conversion, customer acquisition and loyalty while allowing retailers to offer a more convenient end-to-end shopping experience.

Consumers are increasingly selective, making the combination of design, innovation and value more important. Retailers are expanding differentiated and private-label assortments, introducing products with improved functionality and offering broader price points to appeal to both budget-conscious and premium customers.

Zacks Industry Rank Depicts Bleak Prospects

The Zacks Retail-Home Furnishings industry is a 10-stock group within the broader Zacks Retail-Wholesale sector. The industry currently carries a Zacks Industry Rank #163, which places it in the bottom 34% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a lower earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since June 2026, the industry’s earnings estimates for 2026 and 2027 have decreased to $10.71 per share (from $10.77) and $11.62 per share (from $11.67), respectively.

Despite limited near-term visibility, we highlight a few stocks that investors may consider adding to their portfolios. First, we examine the industry’s shareholder returns and current valuation backdrop.

Industry Lags the Sector & S&P 500

The Zacks Retail-Home Furnishings industry has underperformed the broader Zacks Retail-Wholesale sector and the Zacks S&P 500 Composite over the past year.

Over the past year, the industry has lost 23.6% against the broader sector’s 1.2% growth. The Zacks S&P 500 Composite has gained 21.4% in the same time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings ratio, which is commonly used for valuing retail home furnishing stocks, the industry is currently trading at 19.6 compared with the S&P 500’s 20.43 and the sector’s 22.48.

Over the last five years, the industry has traded as high as 25.26X and as low as 14.28X, with the median being 20.15X, as the chart below shows.

Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500

Industry’s P/E Ratio (Forward 12-Month) Versus Sector

3 Retail-Home Furnishings Stocks to Keep an Eye On

We have highlighted three stocks from the industry that are capitalizing on fundamental strengths and have solid growth prospects.

Alliance Laundry: Based in Ripon, WI, this company manufactures and sells commercial laundry equipment across North America, Europe and Asia. Alliance Laundry is benefiting from the resilient, replacement-driven nature of commercial laundry, supported by essential demand across healthcare, hospitality, industrial and other end markets. Its diversified geographic and customer exposure provides additional stability. Growth in Vended laundry, particularly across emerging markets, is being fueled by urbanization, a growing middle class and the shift toward modern out-of-home laundry. New laundromat openings are also expanding the installed base, supporting a durable replacement cycle. Digital innovation and connected equipment strengthen customer relationships through improved uptime, servicing and operating efficiency. Demand for larger-capacity, energy-efficient machines and continued operational and supply-chain improvements provide further growth opportunities.  

The ALH stock — currently carrying a Zacks Rank #2 (Buy) — has lost 5.4% since it began trading on Oct. 9, 2025. Nonetheless, Alliance Laundry has seen an upward estimate revision for 2026 earnings to $1.33 per share from $1.29 over the past 30 days. The estimated figure for 2026 indicates 30.4% year-over-year growth.  This company surpassed earnings estimates in all three trailing quarters, with the average being 19.7%. It has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price and Consensus: ALH

FGI Industries: Based in East Hanover, NJ, FGI Industries provides bath and kitchen products to customers across North America, Europe and other international markets. FGI Industries is benefiting from its brands, products and channels strategy, which focuses on expanding branded offerings, launching new products and broadening distribution. Shower Systems remain a key growth driver, supported by new product introductions, customer programs and increasing traction for FGI-branded products. Sanitaryware is gaining from normalized customer purchasing and new programs. The planned Houston distribution center should expand FGI’s wholesale reach and contract-brand presence across additional territories. Covered Bridge cabinetry is also expected to regain momentum, while new customer programs provide further growth opportunities. In Europe, expansion into wholesale channels and market-share gains offer another avenue for growth.

The FGI Industries stock — currently carrying a Zacks Rank #3 (Hold) — has gained 90.3% over the past year. For 2026, the Zacks Consensus Estimate for the company’s 2026 bottom line indicates an improvement from a year-ago level of a $3.20 loss per share. This company surpassed earnings estimates in three of the trailing four quarters, with the average being 305.4%. It has a VGM Score of A.

Price and Consensus: FGI

Haverty Furniture: Headquartered in Atlanta, GA, Haverty Furniture is a U.S. specialty retailer of residential furniture and accessories. The company has been gaining from resilient demand from affluent consumers, rising customer traffic and strength across merchandise categories. Its expanding design business and custom-order capabilities are encouraging customers to purchase more items per transaction and choose premium products, providing further upside.  Store expansion into new and existing markets should broaden its customer reach, while refreshed design centers and mattress departments create additional selling opportunities.  Improved digital visibility, targeted marketing and loyalty initiatives are strengthening customer acquisition and retention. AI adoption, employee training, efficient inventory management, supplier relationships and supply-chain execution should further enhance productivity and customer service.

The Haverty Furniture stock — currently carrying a Zacks Rank #3 — has gained 18.6% over the past year. HVT has seen an upward estimate revision for 2026 earnings to $1.69 per share from $1.62 over the past 30 days. For 2026, the Zacks Consensus Estimate for the company’s 2026 earnings per share indicates 48.3% growth from a year-ago level. This company surpassed earnings estimates in three of the trailing four quarters, with the average being 7.4%. It has a VGM Score of A.

Price and Consensus: HVT

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This article originally published on Zacks Investment Research (zacks.com).

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