US furniture retailers are seeing a slowdown in sales as Americans who are already struggling to afford homes in today’s market aren’t shelling out for a new dining table or couch.
Last week, high-end furniture retailer RH reported $800 million in revenue in the three months ended July 29 — a 19% drop from last year’s period, when revenues hit $992 million.
The company attributed the dip to the stalling housing market, where mortgage rates are sitting at the highest level since 2001, forcing many homeowners in major US cities to sell at a loss.
“We continue to expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year as mortgage rates continue to trend at 20-year highs,” the company said in its earnings report.
Williams-Sonoma, the San Francisco-based firm behind pricey interior stores Pottery Barn and West Elm, posted its second-quarter earnings late last month, which showed year-over-year decreases across the board.
Aside from net revenues falling 13% from last year, to $1.86 billion, Williams-Sonoma’s profits also fell to $757.56 million — down from $928.81 million in 2022 — while operating income, comparable brand revenue and merchandise inventories also decreased.
In addition, Williams-Sonoma reported a 20% revenue decline for West Elm, and a 10% dip in sales for Pottery Barn.
Virginia-based luxury furniture retailer Hooker Furnishings also reported losses for the quarter, when revenue slid to $97.8 million — down 36% from $152.91 million a year ago.
Net incomes at the manufacturer — which sells its home goods at Wayfair and Macy’s — also took a massive hit year over year, from $5.54 million to a dismal $785,000.
Hooker’s chief executive Jeremy Hoff also attributed the company’s losses to mortgage rates, which have “slowed down housing activity.”
“The continued rise in interest rates has suppressed customer — consumer confidence,” Hoff added during an earnings call with investors following the company’s earnings report.
Perhaps also because of sky-high benchmark 30-year home loans — which climbed to 7.23% from 7.09% last month, per mortgage buyer Freddie Mac — investors also appear insecure about the future of the furniture industry, as shares of RH fell nearly 18%, to $313.23, in the past five days — since the company reported its second-quarter earnings.
A year ago, the average 30-year home loan rate was 5.55%.
Hooker Furnishing’s share price, meanwhile, fell nearly 9%, to $19.16, while Williams-Sonoma’s stock slipped less than 1%, to $142.52, in the same five-day period
Representatives for RH, Williams-Sonoma and Hooker Furnishings did not immediately respond to The Post’s request for comment.
The shift in consumer spending on furniture makes sense, as home buyers face an ongoing affordability crisis and consumer spending is expected to shrink in early 2024 the first quarterly decline since the start of the pandemic, according to Bloomberg’s latest Markets Live Plussurvey.
More than half of 526 respondents, or 56%, believe that personal consumption in the US will turn negative in the new year, while another 21% said the reversal will happen even sooner, in the final quarter of 2023, Bloomberg found.
The outlet blamed the pessimism on high borrowing costs affecting household budgets and COVID-era savings drying out.
Thus, the “nepo baby” discussion has found its way from social media into the real estate market, where recent findings from the brokerage Redfin reveal that a significant portion of young homebuyers used family money to afford a down payment for a home.
According to Redfins survey of more than 500 buyers under 30 years old, 38% had financial assistance from relatives for their down payment.
The situation is significantly a result of the current crisis of housing unaffordability, especially as inflation keeps its grip tight on the American economy.
Donald Trump has suggested Russia’s war in Ukraine could have been “settled very easily” as he criticised Kyiv’s negotiation skills.
In comments after an extraordinary meeting between senior American and Russian officials on Tuesday morning in Saudi Arabia, the US president said of Ukraine: “They’ve had a seat [at the table] for three years and a long time before that.
“This could have been settled very easily. Just a half-baked negotiator could have settled this years ago without, I think, the loss of much land and without the loss of any lives and without the loss of cities that are just laying on their side.”
While touting his own negotiation skills, Mr Trump also said he was “more confident” about a peace deal after Tuesday’s talks, attended by US secretary of state Marco Rubio.
While speaking from Mar-a-Lago in Florida, Mr Trump also said he would not oppose seeing European peacekeeping troops stationed in Ukraine as part of a peace deal with Russia.
He also repeated a proposal that Ukrainian leader Volodymyr Zelenskyy hold elections in Ukraine as a condition of peace.
‘Not a Russian thing’
“We have a situation where we haven’t had elections in Ukraine, where we have martial law, essentially martial law in Ukraine, where the leader in Ukraine, I mean, I hate to say it, but he’s down to 4% approval rating.”
He added: “If Ukraine wants a seat at the table, wouldn’t the people have to say – it has been a long time since they had an election?
“That’s not a Russian thing, that’s something coming from me and coming from many other countries also.”
Mr Trump also told reporters he and Russian leader Vladimir Putin had discussed Ukraine before the full-scale invasion in 2022.
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“President Putin and I would talk about Ukraine, and it was the apple of his eye, I will tell you that,” he said.
“But he never, there was never a chance of him going in. And I told him: ‘You better not go in, don’t go in, don’t go in.’ And he understood that and he understood it fully.”
From Trump to Zelenskyy – it was goodbye
In another place, at another time, it would have been: “You’re fired.”
Donald Trump coined it differently when he was asked about Volodymyr Zelenskyy, but the sentiment was the same.
Asked about suggestions that Russia wanted elections in Ukraine as part of a peace deal, the US president replied: “I hate to say it, but he’s down to a 4% approval… when they want a seat at the table, wouldn’t the people of Ukraine say it’s been a long time since we had an election? That’s not a Russia thing, that’s coming from me and other countries.”
From one president to another, it was goodbye. A farewell to the notion that Trump respects Zelenskyy as an equal player in peace negotiations.
Mr Trump added he will probably meet with Mr Putin before the end of the month.
At Tuesday morning’s talks, US and Russian officials agreed to restore embassy staffing and establish a high-level team to negotiate peace in Ukraine in another sign of the significant American change in diplomatic relations with Moscow.
Mr Rubio said the two countries “need to have vibrant diplomatic missions that are able to function normally”. The US and Russia also agreed to explore closer relations and economic cooperation at the meeting.
“Should this conflict come to an acceptable end, the incredible opportunities that exist to partner with the Russians geopolitically on issues of common interest and frankly, economically, on issues that hopefully will be good for the world and also improve our relations in the long term,” Mr Rubio said.
He added ending Russia’s war in Ukraine would require concessions from all sides.
The comments came as talks between Russian and US officials in Saudi Arabia ended – part of a remarkable US policy reversal after years of former president Joe Biden leading international efforts to isolate Moscow.
‘Very useful’ talks, Lavrov says
Speaking to reporters after the meeting, Russian foreign minister Sergei Lavrov said “the conversation was very useful”.
“We not only listened, but also heard each other,” Mr Lavrov said.
“And I have reason to believe that the American side has started to better understand our position, which we have once again outlined in detail, using specific examples, based on President Putin’s repeated speeches.”
US State Department spokesperson Tammy Bruce said even though Ukraine was not at the table on Tuesday, any actual peace negotiations will include the country.
Meanwhile, President Volodymyr Zelenskyy said his country will not accept any outcome from this week’s talks if Kyiv does not take part. No Ukrainian officials were present at the meeting.
Image: Inside Tuesday’s talks in Saudi Arabia. Pic: Reuters
Ukraine losing ground to Russia
The talks came as Ukraine is slowly but steadily losing ground against more numerous Russian troops in a grinding war that began nearly three years ago.
The Ukrainian air force said Russian troops launched a barrage of 176 drones at Ukraine on Monday night, most of which were destroyed or disabled by jamming.
One Russian drone struck a residential building in Dolynska in the Kirovohrad region, wounding a mother and her two children and prompting an evacuation of 38 apartments, the regional administration reported.
Four more residential buildings were damaged by drone debris in the Cherkasy region of Ukraine, according to local officials.
European allies left scrambling
Ties between Russia and the US had fallen to their lowest level in decades in recent years – a rift that had been widening since Russia annexed Crimea from Ukraine in 2014 and worsened after Moscow’s full-scale invasion in 2022.
At that point, the US, along with European nations, imposed a raft of sanctions on Russia and the allies have repeatedly expanded the measures to damage the Russian economy.
But the recent US diplomatic blitz on the war has sent Mr Zelenskyy and key European allies scrambling to ensure a seat at the table amid concerns that Washington and Moscow could press ahead with a deal that will not be favourable to Ukraine.
On Monday, France called an emergency meeting of European nations, including the UK, to discuss the war.
Saudi Arabia seeks to be diplomatic player
The meeting between the US and Russia on Tuesday at the Diriyah Palace in the Saudi capital of Riyadh also highlights de facto leader Crown Prince Mohammed bin Salman’s efforts to be a major diplomatic player, burnishing a reputation severely tarnished by the 2018 killing of Washington Post journalist Jamal Khashoggi.
Saudi state media described the talks as happening at the prince’s direction. Saudi Arabia has also helped in prisoner negotiations and hosted Mr Zelenskyy for an Arab League summit in 2023.
Mr Zelenskyy had been due to travel to Saudi Arabia this week but rescheduled it to 10 March, suggesting he wanted to avoid his visit being linked to the US-Russia talks since Ukrainian officials were not invited.
That the United States chose to hold talks with Russia about Ukraine without Ukraine sums up the power imbalance that is upending security assumptions for the whole of Europe.
Volodymyr Zelenskyy, the Ukrainian president, has consistently warned that Kyiv must have a seat at the negotiating table for any discussions about ending Vladimir Putin‘s war to have a chance of success. His European allies also want to have a voice.
Mr Zelenskyy, apparently by chance, had been due to embark on a pre-planned trip to the kingdom later that same day.
However, he decided to delay the visit to avoid the appearance of giving any kind of legitimacy to the bilateral encounter between Moscow and Washington.
Unfortunately for Kyiv, beyond noisy protest, it has very limited options when it comes to channelling the disruptive force of the Trump White House in its favour.
More on Donald Trump
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The Ukrainian military remains hugely reliant on US weapons to fight Russia’s invasion and Mr Zelenskyy has made clear he would want an American element in any international security force that might be agreed upon to monitor a ceasefire – even though this is a role the US appears reluctant to fill and the Kremlin has said would be “unacceptable”.
It means Mr Trump has significant leverage over his Ukrainian counterpart which he will surely use to try to force through negotiations even on terms less favourable to Kyiv.
Please use Chrome browser for a more accessible video player
1:43
Ukrainians react to US-Russia talks
The US has already reportedly tried to make Ukraine sign away a large portion of its natural resources to pay for US support – an uncomfortable offer that Mr Zelenskyy has so far declined but an indication of the new transactional approach to US foreign policy.
Mr Trump has repeatedly vowed to end Russia’s war in Ukraine – even claiming during the US election campaign that he would do this within 24 hours.
But he never spelled out how.
The past week, however, has offered an indication of the direction of travel and it does not look good for Ukraine.
From unilaterally picking up the phone to Vladimir Putin to sanctioning such a high-level meeting with the Russians in Riyadh, the only currency that seems to matter to the White House is power and right now both Kyiv and its European partners are looking all too weak.
That the United States chose to hold talks with Russia about Ukraine without Ukraine sums up the power imbalance that is upending security assumptions for the whole of Europe.
Volodymyr Zelenskyy, the Ukrainian president, has consistently warned that Kyiv must have a seat at the negotiating table for any discussions about ending Vladimir Putin‘s war to have a chance of success. His European allies also want to have a voice.
Mr Zelenskyy, apparently by chance, had been due to embark on a pre-planned trip to the kingdom later that same day.
However, he decided to delay the visit to avoid the appearance of giving any kind of legitimacy to the bilateral encounter between Moscow and Washington.
Unfortunately for Kyiv, beyond noisy protest, it has very limited options when it comes to channelling the disruptive force of the Trump White House in its favour.
More on Donald Trump
Related Topics:
Spreaker
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To show you this content, we need your permission to use cookies.
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The Ukrainian military remains hugely reliant on US weapons to fight Russia’s invasion and Mr Zelenskyy has made clear he would want an American element in any international security force that might be agreed upon to monitor a ceasefire – even though this is a role the US appears reluctant to fill and the Kremlin has said would be “unacceptable”.
It means Mr Trump has significant leverage over his Ukrainian counterpart which he will surely use to try to force through negotiations even on terms less favourable to Kyiv.
Please use Chrome browser for a more accessible video player
1:43
Ukrainians react to US-Russia talks
The US has already reportedly tried to make Ukraine sign away a large portion of its natural resources to pay for US support – an uncomfortable offer that Mr Zelenskyy has so far declined but an indication of the new transactional approach to US foreign policy.
Mr Trump has repeatedly vowed to end Russia’s war in Ukraine – even claiming during the US election campaign that he would do this within 24 hours.
But he never spelled out how.
The past week, however, has offered an indication of the direction of travel and it does not look good for Ukraine.
From unilaterally picking up the phone to Vladimir Putin to sanctioning such a high-level meeting with the Russians in Riyadh, the only currency that seems to matter to the White House is power and right now both Kyiv and its European partners are looking all too weak.