Holiday Forecasts, a Fed Rate Cut, and Mixed Results for Furniture Sellers

Originally published November 8, 2024. This version was rebuilt from NRF's holiday forecast, the Federal Reserve's statement and Wayfair's third-quarter release for the FIN archive, and the facts are as of that date.

The week after the election, retailers had a moderate holiday forecast, lower interest rates and a fresh look at how the largest online furniture seller was doing.

The short version

• NRF forecast that holiday spending would grow between 2.5% and 3.5% over 2023.
• The Fed lowered the target range by 1/4 percentage point to 4-1/2 to 4-3/4 percent.
• Wayfair reported total net revenue of $2.9 billion, down 2.0% year over year.

Retail sales forecasts

NRF forecast that holiday spending would grow between 2.5% and 3.5% over 2023, or between $979.5 billion and $989 billion in November and December, compared with $955.6 billion a year earlier.

NRF said consumers' capacity to spend would be supported by a strong job market and wage growth. A forecast in that range pointed to steady gains rather than a breakout season.

Furniture was not keeping pace with that outlook. Census data showed furniture and home furnishings store sales down 1.4% in September from August.

The Fed cuts again

On November 7 the Federal Open Market Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent.

Lower short-term rates reduce the cost of carrying inventory and of promotional financing offers, both common in furniture retail.

Financial performance of major players

Wayfair reported third-quarter total net revenue of $2.9 billion, down $60 million or 2.0% year over year. U.S. net revenue fell 2.3% to $2.5 billion, while international revenue held at $372 million in constant currency.

Wayfair posted a net loss of $74 million but adjusted EBITDA of $119 million, showing profitability holding up even as sales slipped.

Looking ahead

The holiday outlook was steady, rates were coming down and the biggest online player was protecting profit in a soft market. For furniture, the hope was that lower rates would eventually unlock housing and big-ticket demand.

Related on FIN

• Furniture Shoppers Are Holding Back
• Furniture Sales Got Revised Down. Consumers Got Gloomier.

Sources

• National Retail Federation, Steady sales growth expected for 2024 holiday season (Oct. 15, 2024)
• Federal Reserve, FOMC statement (Nov. 7, 2024)
• Wayfair Inc., Third quarter 2024 results (SEC exhibit 99.1)
• U.S. Census Bureau, Advance monthly retail sales, September 2024