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From Home Furnishing Business

Smith Leonard Reports June 2025 Furniture Insights

July 7, 2025  by Karen Parrish in Business Strategy, Industry   

According to the executive summary, new orders were down 9% in April 2025 compared to April 2024.  New orders were also down 7% compared to the prior month of March 2025. Accordingly, year to date through April 2025, new orders are now down 4% compared to 2024.

Shipments were down 2% in April 2025 compared to April 2024. Shipments were also down 4% compared to the prior month of March 2025. However, year to date through April 2025, shipments remain flat compared to 2024.

April 2025 backlogs were down 10% compared to April 2024, and down 2% from March 2025. Receivable levels were down 4% from March 2025, and down 1% from April 2024.

Inventories and employee/payroll levels are again materially in line with recent months and the prior year, However, with the gradual decline in employees, it does appear companies are allowing some normal attrition to occur without rushing to find replacements.

According to the Consumer Confidence Report, Conference Board Consumer Confidence Index® deteriorated by 5.4 points in June, falling to 93.0 (1985=100) from 98.4 in May. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 6.4 points to 129.1.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell 4.6 points to 69.0, substantially below the threshold of 80 that typically signals a recession ahead.

“Consumer confidence weakened in June, erasing almost half of May’s sharp gains,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The decline was broad-based across components, with consumers’ assessments of the present situation and their expectations for the future both contributing to the deterioration. Consumers were less positive about current business conditions than May. Their appraisal of current job availability weakened for the sixth consecutive month but remained in positive territory, in line with the still-solid labor market. The three components of the Expectations Index—business conditions, employment prospects, and future income— all weakened. Consumers were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded slightly.”

June’s retreat in confidence was shared by all age groups and almost all income groups. It was also shared across all political affiliations, with the largest decline among Republicans.

Real gross domestic product (GDP) decreased at an annual rate of 0.5% in the first quarter of 2025 (January, February, and March), according to the third estimate released by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4%.

The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending. These movements were partly offset by increases in investment and consumer spending.

Sales at furniture and home furnishings stores in May 2025 were up 1.2% compared to April 2025 on a seasonally-adjusted basis, and up 8.8% from May 2024. Year to date on a non-adjusted basis, sales were up 6.8% (6.2% last month).

THOUGHTS FROM MARK LAFERRIERE, ASSURANCE PARTNER

This month saw Consumer Confidence wane, reversing last month’s gains as the economy continues to deal with a high-level of general uncertainty. Specifically, the related Expectations Index continues to signal a possible recession ahead. And while not necessarily pervasive throughout the entire industry, some segments are likely in a mini-recession already, given how the furniture industry is typically one of the first to feel the impact of such economic effects.

While we wait to get a final determination on tariff levels, Furniture Today reported that 72% of small to medium home furnishings companies say they’ve already experienced a decrease in sales due to tariffs. This seems consistent with the 4% year-to-date average decline in new orders we’re seeing for participants in our survey, as well as the average 2% decline in revenues for a representative group of publicly-traded furniture retailers and manufacturers/distributors based upon their last quarterly filings through April. That being said, there are certainly companies taking advantage of opportunities presented by the shifting landscape to add market share, and we continue to see announcements of new retail openings in the face of the many retail closings.

Also, there are still some positive factors with housing inventory, steady employment, container rates, and the stock market, which has remained remarkably resilient in the face of these challenges. In fact, the DJIA as of 7/1/25 was 44,495, which compares rather favorably to 1/31/25 of 44,544 considering all the uncertainty and stress the market has endured in recent months.

However, the Fed has indicated that it will take a wait and see approach on the potential impact of tariffs on inflation and thus may not make any additional rate cuts through the end of the year, making it more difficult for the industry to capitalize on the increase in housing inventory in the short-term.

With the newly announced 20% Vietnam tariff potentially providing a surprise to anyone expecting 10% or less and the normally leaner summer months ahead, it could be a bumpy ride for a little while as these issues fully settle themselves out and business returns to “normal,” hopefully sooner than later. However, as we’ve said before, the industry has managed through similar issues in the past and will ultimately persevere again.