Zacks Industry Outlook The Home Depot, Williams-Sonoma, Floor & Decor and Tempur Sealy International

For Immediate ReleaseChicago, IL – January 3, 2025 – Today, Zacks Equity Research The Home Depot Inc. HD, Williams-Sonoma, Inc. WSM, Floor & Decor Holdings, Inc. FND and Tempur Sealy International, Inc. TPX.Industry: Home FurnishingLink: https://www.zacks.com/commentary/2390715/4-retail-home-furnishing-stocks-to-watch-in-a-thriving-industryThe Zacks Retail-Home Furnishings industry presents a compelling investment opportunity driven by improving sales trends, product innovation, and strong e-commerce growth. With interest rates expected to remain low, a rebound in home sales is anticipated, which should directly bolster demand for furniture and home furnishings.The growing consumer preference for sustainable and multifunctional designs aligns with evolving urban lifestyles, further fueling sector growth. E-commerce continues to be a game-changer, especially for millennial shoppers, with investments in digital platforms and supply chain optimizations promising to drive revenue growth.Companies like The Home Depot Inc., Williams-Sonoma, Inc., Floor & Decor Holdings, Inc.  and Tempur Sealy International, Inc.  have been leveraging product reinvention, efficient cost management, exclusive collaborations, and innovative marketing strategies stand out as winners, as they capture market share while enhancing the customer experience. While concerns about consumer confidence and stiff competition persist, the industry's adaptability and focus on customer-centric strategies position it for success.Industry DescriptionThe 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 furnishings. 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 IndustryImproved Sales Trend and Expectations on Low Rates: Furniture and home furnishing store sales grew 0.3% in November 2024 compared to the prior month and 0.7% from last year, according to the Census Bureau's Advance Retail Sales Report for November 2024. An anticipated increase in home sales, given the lower rate environment, is expected to boost demand for home furnishings.There is a growing demand for sustainable and multifunctional furniture, reflecting environmental consciousness and urban living needs. Additionally, the rise of e-commerce has made online furniture shopping increasingly popular, especially among millennials. The U.S. home furnishing market is expected to experience growth in 2025, with the expectation of a rebound in home sales and a rise in consumer spending.Strong Digital Platform, Product Reinvention & Marketing Moves: The optimization of the supply chain and an improvement in e-commerce channels are expected to drive the top line. E-commerce will continue to play a major role as people find it more comfortable and safer to shop online. Product innovation plays a pivotal role in market share gain in this industry. Companies aim to come up with products and collaborate with celebrated brands and designers to maintain exclusivity. Also, customer experience is being enhanced by innovative marketing techniques, with an emphasis on digital marketing, better merchandising, store remodeling and loyalty programs.Low Consumer Confidence: In December 2024, U.S. consumer confidence dropped sharply, with the Conference Board's consumer confidence index declining to 104.7 from 112.8 in November. Consumers became more pessimistic about the outlook of the economy amid uncertainty around the Trump administration’s policies. Their views on current business conditions fell, and they expressed more concerns about future labor market conditions, business outlook, and income.Stiff Competition: The home furnishing industry is highly competitive, with interior design trade and specialty stores, antique dealers, national and regional home furnishing retailers as well as department stores giving a hard time. Online retailers focused on home furnishing also pose a threat. Competitive product pricing has been eating into margins.Zacks Industry Rank Indicates Bright ProspectsThe 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 #67, which places it in the top 27% 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 optimistic 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 top 50% of the Zacks-ranked industries is a result of a higher 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 November 2024, the industry’s earnings estimates for 2025 has increased to $11.61 per share from $11.59.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Lags the Sector & S&P 500The Zacks Retail-Home Furnishings industry has underperformed the broader Zacks Retail-Wholesale sector and the Zacks S&P 500 Composite over the past year.The industry has risen 15.6% compared with the broader sector’s 30.8% growth. The Zacks S&P 500 Composite has gained 26.2% over this period.Industry's Current ValuationOn 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 23.67 compared with the S&P 500’s 25.08 and the sector’s 27.4.Over the last five years, the industry has traded as high as 25.03X and as low as 14.07X, with the median being 19.95X.4 Retail-Home Furnishings Stocks to WatchWe have highlighted four stocks from the industry that are capitalizing on fundamental strengths and have solid growth prospects.Williams-Sonoma: This is a San Francisco, CA-based multi-channel specialty retailer. The company has been benefiting from its focus on digital initiatives, higher e-commerce penetration and product introductions. Williams-Sonoma is capitalizing on its strategic emphasis on broadening its product range and establishing a sustainable operational framework.By adopting a digital-first approach without exclusively relying on digital-only channels, the company has gained a competitive edge. Its strong e-commerce platform and successful Business-to-Business segment position it for substantial expansion, overcoming ongoing consumer spending challenges. The company’s portfolio of brands serving a range of categories, aesthetics and life stages are tailwinds.The WSM stock — currently carrying a Zacks Rank #2 (Buy) — has gained 90.4% over the past year. This company surpassed earnings estimates in all the trailing four quarters, the average being 17.8%. The estimated figure for fiscal 2025 indicates 2.6% year-over-year growth. It has a ROE of 51.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Floor & Decor: Headquartered in Atlanta, GA, this company serves as a multi-channel specialty retailer, offering hard surface flooring, related accessories, and commercial surfaces across Georgia and Florida. The company’s continued expansion underscores its growth strategy. In the fiscal third quarter of 2024, Floor & Decor opened 11 new warehouse-format stores, bringing its total to 241 locations.This reflects its commitment to capturing market share, especially as weaker competitors, such as Lumber Liquidators, close stores. Also, its strategic focus on higher-margin product categories, coupled with disciplined cost controls, has been contributing to margin improvement. Again, its connected customer initiatives and robust engagement with professional (Pro) customers have been growth pillars.The FND stock has lost 3.1% over the past year. This company, carrying a Zacks Rank #2, surpassed earnings estimates in all the trailing four quarters, the average being 12.2%. The estimated figure for fiscal 2025 indicates 18% year-over-year growth. It also has a favorable VGM Score of B, with a Growth Score of B, making it a potentially interesting investment opportunity.Home Depot: Based in Atlanta, GA, Home Depot is the world’s largest home improvement specialty retailer (based on sales), with 2,335 retail stores across the globe as of the end of fiscal 2023. Home Depot has continued to demonstrate consistent growth, driven by its strong leadership in the home improvement market and strategic investments in technology, digital innovation, and supply chain optimization under its "One Home Depot" initiative. By catering to both DIY enthusiasts and professional (Pro) contractors, Home Depot has solidified its position as a preferred destination for homeowners and industry experts alike.The HD stock has gained 15% over the past year. This company, carrying a Zacks Rank #3 (Hold), surpassed earnings estimates in all the trailing four quarters, the average being 2.3%. The estimated figure for fiscal 2025 indicates 3.5% year-over-year growth. It also has a favorable VGM Score of B, with a Growth Score of B and a Momentum Score of A.Tempur Sealy: Based in Lexington, KY, Tempur Sealy designs, manufactures, distributes, and retails bedding products in the United States and internationally. Improved operational processes (particularly in markets outside the United States) and a solid contribution from the international segment (driven by successful new product launches) have been driving growth. Continued investment in product innovation, talent, and marketing has fortified Tempur Sealy’s global presence and helped capture market share, especially in international markets.Operational streamlining and cost control initiatives have enabled the company to grow earnings despite industry-wide sales pressures. While the global bedding market remains below historical trends, Tempur Sealy outperformed competitors in sales growth in the third quarter, demonstrating resilience and effective market strategies.The TPX stock has gained 14.2% over the past year. This company, carrying a Zacks Rank #3, surpassed earnings estimates in two of the trailing four quarters, met in one and missed on another, the average being 0.9%. The estimated figure for fiscal 2025 indicates 14.2% year-over-year growth. It also has a favorable VGM Score of B, with a Value Score of B and Growth Score of A.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Home Depot, Inc. (HD): Free Stock Analysis Report Tempur Sealy International, Inc. (TPX): Free Stock Analysis Report Williams-Sonoma, Inc. (WSM): Free Stock Analysis Report Floor & Decor Holdings, Inc. (FND): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks