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Furniture Sales Improve in Q2

MILAN — High interest rates, inflation, rising shipping costs and a housing slowdown across Europe and the U.S. pushed furniture makers into negative growth for 2023 and the first quarter of this year. However, despite the challenges, luxury companies are proving resilient as market experts report improvement in the second quarter of 2024.

On Wednesday, FederlegnoArredo, the Italian federation of woodworking and furniture industries, said in a statement that a sample of companies polled by the federation saw revenues rising 1.5 percent in 2024, as exports rebound and domestic consumption stabilizes.

This current phase of “physiological normalization” is a positive sign and is “testament to the sector’s vitality and its ability to grow despite a complex situation,” FederlegnoArredo added, on the eve of its annual meeting.

According to a monitor report and figures prepared by FederlegnoArredo Study Center released in April, the organization said turnover of the wood furnishing sector in 2023 fell 8.1 percent to 52.6 billion euros. The figures were based on data compiled by Italian statistics bureau Istat. Falling exports and domestic demand were among the key factors hindering growth and that trend continued into the first quarter of this year, in which revenues fell 7.6 percent compared to the same period in 2023. The domestic market fell by 8.7 percent and exports fell 6.2 percent. Exports represent 43 percent of the sector’s total sales.

For the full year 2024, exports of the wood furnishing sector are expected to rise 4.3 percent while the domestic market narrows losses to a drop of 0.4 percent by the end of 2024.

In the U.S., luxury furniture makers brought together by TD Cowen said written order trends are trending flat to slightly up year-to-date with “more momentum in recent months following a difficult start.” In a report released on Wednesday, TD Cowen also noted that demand has been more challenging in 2024 compared to 2023. Hooker Furnishing’s chief creative officer Caroline Hipple and Theodore Alexander USA president Ed Teplitz were among the panelists who participated.

Citing data from real estate brokerage and mortgage origination services Redfin, the report added that demand for second homes in 2023 dropped to a six-year low with mortgages down 40 percent year-over-year. In the U.S., mortgage-rate locks for second homes declined 7.3 percent year-over-year, pointing to ongoing pressure in the market.

Earnings in the first quarter also suffered. Key Italian furniture holding company Dexelance (formerly Italian Design Brands) saw revenues rise 10.4 percent to 72.7 million euros compared to the same period last year, helped in part by the recent acquisition of Axolight and Turri, but its net profit fell to 0.3 million euros compared to 1.4 million euros in 2023. Arhaus, the high-end furniture company founded in Ohio, said its revenues slid to $296.2 million from $304.6 million, while California-based RH said its first quarter net revenues were at $727 million, down from $739.2 million in the same quarter of 2023.

Following the RH results, analysts at Baird said housing pressures are expected to linger into 2025, adding that macro economic and housing conditions are still “choppy.”

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