The Zacks Furniture industry is thriving through digital transformation, with investments in e-commerce, augmented reality (AR), and artificial intelligence (AI) improving customer experiences and operations. Demand for multifunctional furniture is rising, especially among millennials and Gen Z. Companies like Sleep Number Corporation (SNBR Quick QuoteSNBR - Free Report) and Virco Mfg. Corporation (VIRC Quick QuoteVIRC - Free Report) are focusing on innovation, digital marketing and strategic acquisitions to expand their product portfolios and market reach.

Despite economic uncertainties and challenges like inflation, rising costs and sluggish housing demand, the industry's strong focus on technology and market diversification offers a promising outlook. Digital investments and product innovation position companies to stay competitive and capitalize on long-term growth opportunities.

Industry Description

The Zacks Furniture industry comprises manufacturers, designers and marketers of residential and commercial furnishing solutions. Some of the companies provide kitchen and bath cabinets as well as various engineered components and products in the United States, along with international markets. A few industry players also offer specialty rental services, such as modular and portable storage solutions, as well as modular space and portable storage solutions. They are involved in designing and producing a wide variety of engineered components and products for homes, offices and automobiles. The industry players cater to different sectors, namely construction, energy, healthcare, security, government, retail, commercial, education and transportation.

4 Trends Shaping the Furniture Industry's Future

Growth in E-commerce and Digital Transformation: The furniture sector is increasingly embracing digital platforms, with significant investments in e-commerce and technology to enhance customer experiences. Companies are integrating AR and virtual reality (VR) to allow customers to visualize furniture in their spaces before purchasing. Additionally, AI is being utilized for personalized recommendations and inventory management, streamlining operations and improving customer satisfaction. Moreover, as urban living spaces become more compact, there is a growing demand for multifunctional furniture that maximizes utility without compromising on style. Products like convertible sofas, foldable tables and storage-integrated seating are gaining popularity, especially among millennials and Gen Z consumers.

Innovation, Digital Marketing, Acquisitions & Focus on Public Sector: Product innovation plays a decisive factor in gaining market share in this industry. Players are investing in new products to improve the product mix in a competitive landscape and drive top-line growth. Also, millennials represent the largest consumer cohort in the furniture market. More money in the hands of this largest and most active generation of homebuyers should keep demand elevated. Customer experience is getting enhanced by innovative marketing techniques, emphasizing digital marketing, better merchandising, store remodeling and loyalty programs. These companies are utilizing advanced technology to enhance the overall customer experience, optimize their operations and provide innovative solutions. Companies that make strategic investments in digital innovation are poised to navigate challenges successfully and emerge as industry leaders.

The industry players are pursuing acquisitions to broaden their product portfolios and expand their geographic footprint and market share. They are also prioritizing the diversification of their business portfolios, expanding their global footprint and strengthening their positions in resilient sectors such as healthcare and the public sector. The companies are expected to benefit from strong global trends in infrastructure modernization. Focus on public sector infrastructure modernization initiatives across educational, healthcare, and administrative environments will provide stability and long-term growth opportunities for furniture manufacturers, positioning them favorably in an evolving market landscape.

Economic Uncertainties: The furniture industry is sensitive to economic cycles. Downturns can lead to reduced consumer spending on non-essential items. The U.S. furniture industry is facing significant challenges against a backdrop of economic uncertainties. The Federal Reserve has lowered its 2025 economic growth forecast, now projecting 1.4% GDP growth compared to a previous estimate of 2.1%. This revision reflects growing concerns over inflation, with the Fed's inflation forecast rising to 3.1%, partly driven by President Trump’s tariff policies. The Fed has maintained interest rates at 4.25%-4.5%, though it signaled the possibility of rate cuts later this year. Economists have raised concerns that tariffs could exacerbate price inflation, contradicting the administration’s assertion that they will benefit the U.S. economy.

Meanwhile, the housing market remains sluggish as mortgage rates stabilize between 6% and 7%, deterring potential buyers despite rising inventory levels. Elevated home prices, compounded by high financing costs, continue to suppress demand. Broader economic pressures, from inflationary concerns to tariff-related tensions, have dampened consumer confidence, creating a volatile environment for the furniture industry, which is closely tied to housing market trends and consumer spending.

Higher Expenses: The industry players are engaged in active competition to enlarge their market share. In pursuit of this goal, industry players are intensifying their digital presence and refining shipping capabilities, leading to heightened investments. Also, the furniture industry is highly competitive, with home furnishing retailers, department stores and antique dealers having a hard time. The companies need to make incremental investments to address an expanding omnichannel environment, as shoppers tend to look for online options. Growth in online sales may continue to dent traditional furniture retailers’ market share as brands such as Etsy, Things Remembered, Costco and Amazon are finding their way into the market. Alongside these challenges, rising SG&A rates, increased labor and occupancy costs, and elevated expenses related to marketing and stores could place a strain on profit margins.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Furniture industry is an eight-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #72, which places it in the top 30% 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 positive 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.

Before highlighting a few stocks worth considering for your portfolio, let’s first examine the industry’s recent market performance and current valuation landscape.

Industry Lags Sector & S&P 500

The Zacks Furniture industry has underperformed the broader Zacks Consumer Discretionary sector and the Zacks S&P 500 Composite over the past year.

Over this period, the industry has declined 24.2% against the broader sector’s 20.4% rise. The Zacks S&P 500 Composite has risen 10.7% over this period.

One-Year Price Performance

Furniture Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing furniture stocks, the industry is currently trading at 9.11X compared with the S&P 500’s 20.73X and the sector’s 22.13X.

Over the past five years, the industry has traded as high as 16.53X and as low as 8.14X, with the median being 10.72X, 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

2 Furniture Stocks to Buy Now

We have selected two stocks from the Zacks universe of furniture stocks that have impressive growth prospects amid volatility.

Virco: Headquartered in Torrance, CA, this company designs, produces and distributes furniture in the United States and Canada. Virco is benefiting from a combination of operational, strategic and macroeconomic factors that help offset the slowdown in top-line growth. One key advantage is its improving gross margin, which rose to 47.5% in the first quarter, aided by a more favorable sales mix — specifically, a higher proportion of full-service orders and the absence of lower-margin disaster recovery projects seen last year. The company’s U.S.-based manufacturing footprint is another strength, insulating it from tariffs and global supply-chain volatility that have disrupted other sectors. Additionally, Virco's investments in capital equipment and platform processes are expanding its manufacturing flexibility, creating operating leverage and supporting potential expansion into adjacent markets. These initiatives are reinforced by continued investment in workforce training, which enhances the company’s execution capabilities. On the financial side, the company’s prudent use of cash — balancing seasonal inventory needs with shareholder returns through buybacks and dividends — positions it well to respond to cyclical demand shifts and future growth opportunities.

Virco — a Zacks Rank #1 (Strong Buy) stock — has declined 41.1% in the past year. Nonetheless, earnings estimates for 2025 have increased to $1.00 from 79 cents per share over the past 30 days, depicting analysts’ optimism about the company’s prospects. Also, Virco’s earnings topped the consensus mark in two of the last four quarters, with the average negative surprise being 19.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: VIRC

Sleep Number: Based in Minneapolis, MN, this company designs, manufactures, markets, distributes, retails and services sleep solutions. The company has been gaining from a combination of external headwinds and internal restructuring. A significant decline in consumer confidence since February has weighed on demand, leading to a 16% year-over-year drop in net sales in the first quarter. Despite this, the company achieved notable gross margin expansion, given operational efficiencies and a favorable product mix, particularly from its higher-priced Climate Series beds. To counter revenue pressures, Sleep Number is executing a strategic cost-cutting initiative aimed at achieving $80 to $100 million in annualized savings through workforce reductions, marketing realignment and streamlined operations. Marketing efforts are being restructured under new leadership to emphasize efficiency and benefits-focused messaging, reducing reliance on heavy media spending. Additionally, the company is proactively managing the potential $30 million tariff impact through supplier negotiations, pricing strategy and supply chain flexibility. With a new CEO in place, Sleep Number is also undergoing a broader strategic reset to realign the business around core customer needs and position itself for sustainable profitability despite ongoing macroeconomic uncertainty.

Sleep Number — a Zacks Rank #2 (Buy) stock — has dropped 32.1% in the past year. Nonetheless, loss estimates for 2025 have narrowed to 25 cents from 47 cents per share over the past 60 days, depicting analysts’ optimism over the company’s prospects. The Zacks Consensus Estimate for the 2025 bottom line indicates an improvement from the year-ago level of a loss of 90 cents per share. Also, Sleep Number’s earnings topped the consensus mark in two of the last four quarters, with the average negative surprise being 36.8%. It also has a favorable VGM Score of A.

Price and Consensus: SNBR