Top 100 Furniture Retailers: Top retailers regain share, but growth continues to slow

HIGH POINT — The nation’s largest furniture stores gained back some market share last year from the broad furniture store sector, but it was far from a banner year for the group, which combined for a 2.9% sales increase.

The 2019 furniture, bedding and accessory sales for Furniture Today’s Top 100 U.S. furniture stores totaled an estimated $48.04 billion, up from $46.71 billion for the same companies last year. That 2.9% gain was the 10th consecutive year-over-year increase for the Top 100, but it also was the fourth year in a row the overall growth rate slowed, from the 3.3% increase for the Top 100 in 2018, 4.1% in 2017 and 7.2% in 2016.

On the plus side, the Top 100 turned around the market-share loss it suffered the year before, as the group took an 85% share of all furniture store sales, compared with 78% for the companies on last year’s Top 100 list. All U.S. furniture stores saw furniture, bedding and accessory sales dip 0.2% in 2019 to $56.5 billion. Across all distribution channels, the Top 100 held steady with a 40% share, same as the year before.

Leading the pack

Ashley Furniture HomeStore, the dedicated network of corporate-owned and licensed Ashley stores, is No. 1 again for 14th year in a row. The combined network did an estimated $4.96 billion (up 9.4%) at 722 U.S. stores last year, and it added 64 stores over the course of the year — second only to No. 39 Tempur Sealy International, new to the list this year and up triple digits in net store count.

Ashley rules the Top 100 in another way, too. There are 17 HomeStore licensees that make the list as stand-alone businesses, either solely through their HomeStore operations (No. 47 Broad River Retail, for instance) or through a mix of HomeStores and multi-line stores operating under various retail banners (such as No. 23 City Furniture).

To eliminate double counting of sales and store counts, Furniture Today adjusts the aggregated data for the HomeStore network as well as for any other dedicated or single-source store networks on the list that happen to include licensees listed separately on their own merits (No. 12 La-Z-Boy Furniture Galleries and independent licensees Mathis Brothers and Tipperary Sales).

The Top 10 companies on this year’s list combined for a 4.9% sales increase, outpacing the 2.9% gain for the combined Top 100 and the gains of other subsets (conventional stores and specialty stores) with the exception of the single-source networks, which grew sales 9.1% to $10.05 billion.

On the store front, the Top 10 were responsible for much of the Top 100’s overall store-count decline, shedding 691 total stores.

There is minor shifting going on at the top this year. Williams-Sonoma, last year’s No. 4, moved up to No. 3, trading places with Mattress Firm. And Bob’s Discount Furniture became the new No. 10, swapping spots with Raymour & Flanigan, now No. 11.

Bob’s posted the third greatest net sales growth of any Top 100 company, up by $177.7 million to an estimated $1.61 billion, behind Ashley (up a net $425.4 million) and No. 6 RH (up a net $220 million to $2.36 billion).

Making adjustments

This is Furniture Today’s 37th annual ranking of the nation’s largest furniture stores, a group that has seen a steady though, more recently, slowing recovery since the Great Recession.

Given this year’s nationwide shutdown of furniture stores and other businesses for a month or longer — an unprecedented move tied to the coronavirus pandemic — that gradual recovery is likely to take a breather this year. Public retailers across the country — with the exception of pure-play e-commerce companies — are beginning to report the initial fallout.

Online sales have skyrocketed for many store owners this year since the shutdown, but it’s not enough to make up for the business typically coming from the brick-and-mortar side of the business.

Even before the pandemic-induced damage, there were troubling signs that tough business conditions were only getting tougher for large swaths of retailers on the list, seen in the earlier noted slowdown in annual sales growth, for instance, and the significant shedding of physical locations.

The previous year’s Top 100 trimmed 106 stores from their total, the first net decrease in eight years. This year’s Top 100 cut a net 976 stores, down 7.7% (and the largest drop in the history of the Top 100 ranking), to finish with 11,652 locations. Nineteen of the Top 100 trimmed store counts. And while that’s less than the 45 that added stores in 2019, last year’s Top 100 was more expansion minded, as 56 companies that grew their physical footprint.

Deepest store cuts

Three companies on this year’s list experienced the deepest store cuts, in the triple digits. They were led for the second year in a row by Mattress Firm, the Houston-based bedding specialist owned by Steinhoff International. Mattress Firm filed for Chapter 11 bankruptcy in October 2018, restructured and emerged two months later and has been on a rebound since.

But for the Top 100, Furniture Today estimates its results based on Steinhoff’s fiscal year, (ended Sept. 30), and the bulk of the restructuring related store closings and sales declines filtered into this current Top 100 report.

It should be noted first quarter revenues during Mattress Firm’s current fiscal year first quarter (ended Dec. 31), increased 12%, and same-store sales were up 17%, according to Steinhoff. That’s an indication a renewed partnership with supplier Tempur Sealy International is paying dividends (or at least was helping build momentum before COVID-19 struck).

More bad news came from the long-struggling, Pier 1 Imports, No. 16 on the Top 100. The Fort Worth, Texas-based specialty retailer cut 365 stores from its count, ending with 541 locations. (The other retailer down triple digits store-count-wise was No. 77 Mattress1One, trimming 145 locations and consolidating operations down to the state of Florida.)

Pier 1 filed for Chapter 11 bankruptcy protection toward the end of its fiscal year (ended Feb. 29). It’s unclear how many stores will reopen if it does manage a reorganization, and according to a Bloomberg report, DirectBuy owner CSC Generation has floated a bid to buy the business, but would move forward with a much smaller footprint of less than 100 stores. (CSC declined to comment to Furniture Today at the time this report was produced.)

Building on Top 100 buys

If the acquisition does come to pass, it wouldn’t be the first purchase of a struggling home furnishings brand for CSC Generation. The Merrillville, Ind., based company has cobbled together a strong enough presence of what had been weakened players to show up on the Top 100 for the first time — as No. 72 DirectBuy.

The bulk of its estimated $98 million in furniture, bedding and accessory sales last year came from former Top 100 company Z Gallerie, which CSC acquired out of Chapter 11 bankruptcy in May 2019. All 40 of DirectBuy/CSC U.S. stores are actually Z Galleries units. (It closed its one Houston DirectBuy showroom last year). The majority of the home furnishing revenues also came from Z Gallerie and mostly online, CSC’s CEO Justin Yoshimura has said.

In another home furnishings and digital-first move, DirectBuy’s parent acquired e-commerce company One Kings Lane this spring from Bed Bath & Beyond. As its collection of retail banners expands and transforms, its name on future Top 100 rankings may undergo some transformation, too.

DirectBuy isn’t the only name on this year’s list that looks new but (because of Z Gallerie) is actually built on previous Top 100 companies. No. 39 Tempur Sealy International is listed for the first time, partly on the strength of its company-owned Tempur-Pedic stores, but also thanks to former Top 100 company Sleep Outfitters, which filed for bankruptcy in January 2019 and then was acquired by TSI in April.

A combination of organic growth and growth via acquisition netted the mattress giant an increase of 113 company-owned U.S. stores (the greatest net unit growth of any Top 100 company last year) for a total of 153 stores at yearend. And the nearly 78% increase in its direct U.S. retail business to an estimated $240 million, topped all companies on the list.

No. 40 Herman Miller is yet another Top 100 company here mostly by way of its ownership stake in a former Top 100 company — Design Within Reach — but also through its one Herman Miller flagship studio and three HAY studios.

Also new to the list: No. 73 Empresas Berrios, the family-owned retailer in Puerto Rico with 26 Berrios multi-line stores, including six with attached Ashley HomeStores and two with outlet/liquidations centers operated as separate stores.

Berrios made it into the Top 100 with an estimated $97.7 million in furniture bedding and accessory sales last year, down significantly from 2018 but that was largely because it enjoyed a bump from rebuilding business in 2018 after two hurricanes hit the island the year before.

And Dulles, Va.-based Belfort Furniture returned at No. 100 after a two-year absence on the strength of an 11.2% sales gain to an estimated $43.4 million.

Dropping off the list from last year, were Furniture Enterprises of Alaska and American Home Furniture & Mattress.

Biggest ranking changes

Thirty-eight companies on this year’s list managed to move up at least one spot from their standing last year. The biggest move belonged to Lovesac, the maker and seller of upper-middle modular sofas it calls Sactionals and premium beanbag chairs called Sacs. The company jumped nine spots to No. 42 with a 40.7% sales increase to an estimated $233.4 million. Lovesac’s sales growth rate was second only to Tempur Sealy’s 77.8% increase.

Two HomeStore licensees tied for the next best leap up the Top 100 — No.  47 Broad River Furniture and No. 70 Russell Turner Furniture, each moving up six places as sales increased 17.6% and 19.6%, respectively.

Rancho Cucamonga, Calif.-based Living Spaces was next, climbing five spots to No. 22, with estimated sales of $525 million at 24 stores.

On the downside, Mattress1One slipped the most, the result of significant consolidation. It moved down 23 spots to No. 77 as estimated sales decreased 48.4% to $80 million and its footprint was more than halved.

The majority of Top 100 companies — 62— posted sales increases this past year, but that number has been dropping for the past few years. Last year’s Top 100 featured 67 companies with increases. The number was 71 for the class of 2018 and 78 the year before that.

Thirty-two companies saw sales decreases this time vs. 25 on the prior year’s list, and six were held flat.

In addition to reporting sales and store count changes Furniture Today’s Top 100 report includes information on other performance metrics to help shed more light on a retailers’ actual profitability. However, only a small number of survey respondents typically volunteer the information that would help Furniture Today calculate estimates in these areas — average sales per square foot, average gross margin and average stock turns — and this year was no different.

The good news, though, was this year’s Top 100 saw slight improvements in two of the three categories. Median sales per square foot, based on 35 estimates, came in at $219. That’s up from $210 the year before. Lovesac was tops in the category with estimated sale per square foot of $2,083, although it should be noted its small showrooms largely in malls and lifestyle centers are primarily experiential centers for sales that are ultimately transacted online. No. 8 Sleep Number was next with average sales per square foot of $1,034.

Median gross margin inched up to 50% from 49% the previous year based on 16 company numbers or calculations this time. Sleep Number, a perennial No. 1 in this performance metric, held the top spot again with an estimated average gross margin of 61.9%. No. 91 Tipperary Sales, the Augusta, Ga.-based La-Z-Boy licensee, was next with an estimated average gross margin of 56.4%, followed by No. 92 Naples, Fla.-based Clive Daniel Home (55%).

The Top 100 fell a notch in the stock turns metric with the median dropping to 5 times from 6 times for the prior group. No. 55 Bernie & Phyl’s posted the highest turn rate, an average of 10.7 times, followed by Sleep Number (7.5 times) and No. 89 Miskelly Furniture (7.2 times).

It took No. 100 Belfort Furniture’s estimated $43.4 million in annual furniture, bedding and accessory sales to make the list this year. That’s up from the $39.7 million cutoff last time.