Home Furnishing Retail Sector on the Rise Despite Low Home Ownership Rate

Home Furnishing Retail Sector on the Rise

While home ownership has fallen to the lowest rate since 1995, retailers like Williams-Sonoma (WSM) look to cash in on renters filling smaller living spaces with posh furniture and accessories to make their apartments feel less temporary.

The seasonally adjusted homeownership rate fell to 65.1% in the second quarter, from 65.2% in Q1 according to the Commerce Department Tuesday. The rate topped out at 69.4% in 2004.

Buying a home used to mean splurging on large dining room tables and kitchenware that could last a lifetime of eating and entertaining. Williams-Sonoma is known for its expensive offerings like Waterford crystal glassware and Mauviel Professional Copper cooking sets for more than $2,000.

Its shares are up 2% in the stock market today. Rivals Pier One Imports (PIR), Bed Bath and Beyond (BBBY) and Restoration Hardware (RH) are rallying too.

While the housing rebound is boosting demand for furnishings, Williams-Sonoma brand stores have been struggling as mobile apartment dwellers are looking for more trendy, affordable and less long-lasting goods.

So the company started expanding its more modern and less expensive Pottery Barn and West Elm stores.

Apartment decor has come a long way from particle board bookshelves from Ikea. West Elm stores offer sofas less than $2,000 and organic bedding sets less than $1,000.

West Elm also has a deal with Etsy, a website that sells handmade or vintage items, offering in stores some products like photography and bamboo flatware from local artists that were once just online.

The stores also feature design labs where customers can learn how to decorate their space, from creating a mood board to helping pick out furniture and accessory colors to learning how to measure their floor space.

The brand has branched out from its hip Brooklyn home to to places like Birmingham, Ala., and St. Louis.

Pier One Imports is also known for its in-style home assortments. Many of the brand’s offerings are imported or created as a collaboration with foreign designers.

Pier One has posted five straight quarters of double-digit EPS growth.

Bed Bath and Beyond, which sells basic kitchen, bedroom and bathroom accessories, has been performing well in recent quarters. The company has reported double-digit revenue growth for the last four quarters.

Restoration Hardware went public in November after being privately held for four years as the recession took its toll on the furniture seller. But the company has posted accelerating revenue growth since being listed on the NYSE.

The Retail-Home Furnishings group is ranked No. 14 out of the 197 industry groups Investor’s Business Daily tracks, up from No. 83 just 13 weeks ago and No. 122 26 weeks ago.

Source: By GILLIAN RICH, INVESTOR'S BUSINESS DAILY Posted 07/31/2013 12:58 PM ET
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