Furniture stocks face fresh tariff pressure, RH downgraded at William Blair

Investing.com -- New U.S. tariffs on imported kitchen cabinets, bathroom vanities and upholstered furniture are likely to push prices higher across the industry and pressure volumes rather than spur reshoring, William Blair said, cutting rating on RH to Market Perform.

Under Section 232, the White House plans to impose a 25% tariff on those products from October 14, rising to 30% for upholstery and 50% for cabinets and vanities on January 1 for countries that do not reach a deal. The U.K., EU and Japan are exempt.

Most of Southeast Asia would see an incremental tariff hit of about 5% initially, which the brokerage said was manageable, but the January step-up to 10% on upholstery and 30% on cabinets would be harder to absorb.

Companies are expected to build inventory to delay the impact into 2026, with some pull-forward of orders likely aiding fourth-quarter results.

Analysts said furniture makers have limited ability to move production to the United States, pointing to higher costs and labour shortages.

RH itself has acknowledged the difficulty, targeting an increase in domestic sourcing from 10% of total purchases this year to only 14% by end-2025.

RH has about 30% exposure to the new tariffs, split between upholstery and vanities, with roughly half of upholstery already made in the U.S. William Blair estimates its average tariff rate will rise from 19.5% today to 20.75% from mid-October and then 22.5% in January, forcing further price hikes or reduced discounting to protect margins.

The brokerage said most furniture retailers have already lifted prices by high single to low double digits this year to offset earlier reciprocal tariffs, with category inflation running at about 5% in August.

While consumers have largely accepted modest increases, William Blair flagged weakening demand trends in recent months and warned that persistent price rises risk extending the slowdown in big-ticket home purchases.

Related articles

Furniture stocks face fresh tariff pressure, RH downgraded at William Blair

EUR/USD Could Rebound as Bond-Driven US Dollar Strength Looks Overdone

Natural Gas: Consolidation Could Set Stage for Breakout Above $3.20 Barrier

View comments