Image: Bigstock

The Zacks Retail-Home Furnishings industry is showing positive momentum in 2025, supported by stable mortgage rates, improved consumer confidence, and a rebound in housing activity. Digital platforms are driving growth with AR shopping tools, AI-powered personalization, and mobile-first strategies that appeal to Gen Z and millennials. 

Companies like The Home Depot, Inc. (HD - Free Report), Lowe's Companies (LOW - Free Report), Williams-Sonoma, Inc. (WSM - Free Report), and The Lovesac Company (LOVE - Free Report) have been leveraging product reinvention, efficient cost management, exclusive collaborations, and innovative marketing strategies to stand out as winners, as they capture market share while enhancing the customer experience.

Despite economic headwinds and tariff concerns, the industry’s tech-driven evolution signals a favorable long-term outlook. Companies combining digital innovation with strong branding and service integration are well-positioned to outperform in the evolving retail landscape.

The Industry's 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.

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

Online Growth, Tech platforms, Digital Services & Personalization: Continuing acceleration in online furniture shopping, combined with cutting-edge solutions like room visualizers and AR, unlocks strong growth potential. Major platforms, like Wayfair, Amazon, and Williams-Sonoma, are investing heavily in AI driven personalization and immersive user experiences.

Features like augmented reality (AR) room visualizers, virtual reality showrooms, and mobile first shopping are reshaping the consumer journey. Companies leading innovation in these areas are well positioned to capture share as convenience and digital engagement become critical in buying decisions.

Gen Z and millennials value customization. Services such as AI-driven design apps, virtual interior consulting, and bundling (such as packaged room solutions) will help the companies boost margins. For example, Lowe’s acquisition of Artison Design (a home furnishing design/install company) signals that offering full-service packages is lucrative. Furniture retailers can similarly offer in-home assembly, design subscription services, or AR “try-before-you-buy” apps to increase attachment rates and customer loyalty.

Strong Product Reinvention & Marketing Moves: 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, the customer experience is being enhanced by innovative marketing techniques, with an emphasis on digital marketing, better merchandising, store remodeling, and loyalty programs.

Companies are also focusing on strategic omnichannel expansion. Even digitally native retailers are exploring brick-and-mortar formats to enhance brand visibility and customer experience. Wayfair’s first large-format store in Illinois exemplifies this hybrid approach. Meanwhile, premium players continue expanding showrooms that blend physical touchpoints with high-end brand storytelling.

Improved Consumer Confidence, Stabilizing Mortgage Rates, Housing Market Recovery & Builder Partnerships: Though households have continued to worry about tariffs raising prices and hurting the economy, U.S. consumer confidence improved in May 2025 after deteriorating for five straight months. The consumer confidence index increased 12.3 points to 98.0 in May. Consumers' assessments of current business conditions improved in May, along with consumers' outlook for their income prospects, which turned positive.

Meanwhile, mortgage rates have moved within a narrow range for the past few months. Freddie Mac reports that 30-year mortgage rates have remained steady for the week that ended June 12, hovering around 6.84%, closely tracking the narrow range seen over the past few months.

According to Chief Economist Sam Khater, this environment of rate stability, along with increased housing inventory and slowing house price growth, forms a promising backdrop for prospective homebuyers.

Economic Uncertainties: The Federal Reserve has lowered its U.S. economic growth forecast amid uncertainty while raising its inflation projection surrounding President Trump's tariff policies in the March 2025 meeting. The Fed now expects GDP growth of 1.7% in 2025, down from its previous estimate of 2.1% (predicted in December 2024), and inflation to rise to 2.7%, partly due to tariffs.

Interest rates remain unchanged at 4.25%-4.5%, but policymakers signal potential rate cuts later this year. Fed Chair Jerome Powell highlighted "remarkably high" uncertainty, while Trump urged the Fed to cut rates further. Economists warn tariffs could push prices higher, despite Trump's claims that they will benefit the U.S. economy.

While mortgage rates have stabilized, affordability remains a key issue, with 30-year rates still being high at 6%–7%. This continues to deter buyers despite rising inventory. Home prices remain elevated as financing costs suppress demand.

Broader economic uncertainties, ranging from inflation to tariff tensions, further weigh on consumer confidence and cloud the housing market outlook. Also, 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.

The Zacks Industry Rank Depicts Bright Prospects

The Zacks Retail-Home Furnishings industry is a 10-stock group within the broader Zacks Retail-Wholesale sector. The industry carries a Zacks Industry Rank #81, which places it in the top 33% 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 notable 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 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.

The 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.

The industry has lost 0.4% against the broader sector’s 16.1% growth. The Zacks S&P 500 Composite has gained 10.8% over this period.

One-Year Price Performance

Image Source: Zacks Investment Research

The Industry's Recent 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 has been trading at 20.44X compared with the S&P 500’s 22.02X and the sector’s 24.55X.

Over the last five years, the industry has traded as high as 24.96X, as low as 14.07X, and with a median of 20.07X, as the chart below shows.

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

Image Source: Zacks Investment Research

4 Retail-Home Furnishings Stocks to Watch

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

Lovesac

Based in Stamford, CT, this company designs, manufactures, and sells furniture. Lovesac’s innovation, operational efficiency, and strategic channel optimization have been driving growth. New products like the Recliner and EverCouch have expanded their addressable market and enhanced customer engagement, with positive early feedback and solid showroom traction.

The company achieved 4.3% revenue growth in first-quarter 2025 despite industry contraction, highlighting market share gains. Operationally, SG&A leverage improved through cost discipline, while repeat purchases rose 20% year-over-year, supported by a revamped digital experience. Lovesac’s strong balance sheet, reduced China exposure, vendor concessions, and selective price increases position it well to manage tariffs and sustain profitable growth through the remainder of 2025.

Lovesac stock — currently carrying a Zacks Rank #3 (Hold) rating — has dropped 30.7% over the past year. Meanwhile, this company has surpassed earnings estimates in all the trailing four quarters, with the average being 14.4%. Lovesac’s estimated figure for fiscal 2025 indicates 23.2% year-over-year growth. The upside is supported by its solid VGM Score of B.

Price and Consensus: Lovesac

Image Source: Zacks Investment Research

Lowe's

Based in Mooresville, NC, Lowe's operates as a home improvement retailer in the United States. The company has been benefiting from a resilient Pro business, improved online engagement, strategic acquisitions, and technological innovation. Steady growth in its Pro segment, driven by improved loyalty offerings and enhanced service capabilities tailored to professional customers, is a major tailwind.

The company’s strategic acquisition of a leading interior surface provider — Artisan Design Group — is expected to deepen its reach into the home construction and renovation market. Digital strength has been another key driver, with increased online traffic and conversions supported by the rollout of a new third-party marketplace. Technological advancements, including the launch of an AI-powered virtual advisor, has helped to streamline both customer interactions and associate efficiency. Strong momentum in appliances and seasonal categories has also been contributing to overall stability.

Lowe's stock — currently carrying a Zacks Rank #3 (Hold) rating — has gained 0.1% over the past year. Meanwhile, this company has surpassed earnings estimates in all the trailing four quarters, with the average being 3.2%.

Lowe's has seen an upward estimate revision for fiscal 2025 earnings to $12.29 per share from $12.25 over the past 30 days, demonstrating analysts’ optimism over the company’s prospects. The estimated figure for fiscal 2025 indicates 2.4% year-over-year growth. It carries a VGM Score of A.

Price and Consensus: Lowe's

Image Source: Zacks Investment Research

Home Depot

Based in Atlanta, GA, this company is world’s largest home improvement specialty retailer based on net sales. The company has been navigating the macroeconomic pressures with strong execution. Revenue rose 9.4% year-over-year in first-quarter 2025, driven by resilient customer engagement, especially in smaller projects and spring events like Spring Black Friday.

Pro customer comps have outpaced DIY, with strength in core categories such as building materials and concrete. The SRS acquisition has continued to exceed expectations, supporting growth in trade credit and complex Pro capabilities. Digital sales are also on the rise, aided by faster delivery and the rollout of AI-powered tools like Magic Apron. Additionally, inventory levels have been well-positioned, and customer sentiment has remained healthy, supported by rising home equity and job stability.

Home Depot stock — currently carrying a Zacks Rank #3 (Hold) rating — has gained 4.7% over the past year. Meanwhile, this company has surpassed earnings estimates in three of the trailing four quarters and missed on one occasion, with the average being 2.2%.

Home Depot has seen an upward estimate revision for 2025 earnings to $15.04 per share from $15.01 over the past 30 days. The estimated figure for 2025 indicates a decline of 1.3% year-over-year. It carries a VGM Score of A.

Price and Consensus: Home Depot

Image Source: Zacks Investment Research

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 is a tailwind.

Williams-Sonoma stock — currently carrying a Zacks Rank #3 (Hold) rating — has gained 3.8% over the past year. This company has surpassed earnings estimates in all the trailing four quarters, with the average being 8.8%. Williams-Sonoma has seen an upward estimate revision for fiscal 2025 earnings to $8.53 per share from $8.49 over the past 30 days. The estimated figure for fiscal 2025 indicates a 3% year-over-year decline. It has a ROE of 52.7%.

Price and Consensus: Williams-Sonoma

Image Source: Zacks Investment Research

More By This Author: