UBS Analyst Michael Lasser on Furniture Stocks and Tariff Impact

Impact of Tariffs on Furniture Stocks

• ⚠️ President Trump's threats of furniture tariffs have caused stocks like RH, Williams Sonoma, and Wayfair to fall.
• 📉 The furniture industry has been facing challenges for years, and tariffs add complexity and uncertainty, which the stocks are currently pricing in.

Exposure to Tariffs by Product Type

• 🇺🇸 Upholstered products such as couches and chairs are largely produced in the United States and are less exposed to tariffs.
• 🌏 "Case goods" like tables and credenzas are more often produced overseas, making them more vulnerable to tariff impacts.

Industry Consolidation and Resilient Companies

• 🧩 Tariffs are expected to force consolidation within the still fragmented furniture and home furnishings retail sector.
• 💡 Larger players are anticipated to navigate these challenges better, leading to a "survival of the fittest" scenario rather than direct M&A.

Top Furniture Stock Picks

• 📈 Wayfair is highlighted as a marketplace model with a wide array of sellers, better positioned to connect consumers with compelling supply and take a "take rate" on transactions.
• 🛏️ Somni Group, the largest bedding manufacturer and retailer in the US, is also considered well-positioned due to most mattresses being produced domestically, insulating it from tariffs.