Digital Makeover & Market Shifts: Which Furniture Stocks Are Worth Watching This Year

The furniture industry is navigating a critical inflection point. While consumer spending remains cautious and housing activity stays subdued, forward-looking manufacturers are betting heavily on technology, product innovation, and operational efficiency to unlock growth. The Zacks Furniture group—a seven-stock cohort in the Consumer Discretionary sector—is positioning itself with renewed vigor, even as the sector grapples with industry trends shaped by e-commerce adoption, labor cost pressures, and shifting consumer preferences.

The Digital Revolution Redefines Furniture Shopping

Perhaps the most transformative shift is the acceleration of e-commerce and digital-first strategies. Furniture retailers are no longer treating online channels as supplementary; they’re now the strategic centerpiece. Companies are embedding augmented reality (AR) and virtual reality (VR) tools that let customers visualize pieces in their own spaces before committing to a purchase—a game-changer for a category where “fit and feel” drive decisions.

Artificial intelligence is quietly reshaping backend operations too. Personalized product recommendations based on browsing behavior and purchase history are boosting conversion rates, while AI-powered inventory management is reducing overstocking and stockouts. This digital-first posture is especially resonating with millennials and Gen Z, demographics that now represent the largest cohort of furniture consumers and are gravitating toward multifunctional designs—convertible sofas, modular storage, foldable tables—that maximize space utility without sacrificing aesthetics.

Innovation, Consolidation & Public Sector Diversification

In a hyper-competitive landscape, product innovation has become table stakes. Manufacturers are refreshing portfolios with contemporary designs, expanding custom upholstery options, and capturing emerging categories like outdoor furniture. The strategic playbook increasingly includes acquisitions and partnerships to broaden product mix and geographic reach, while a growing number of players are deliberately pivoting toward the public sector—schools, hospitals, government buildings—as a stabilizing revenue stream less dependent on housing cycles.

These companies are investing aggressively in omnichannel experiences, refined digital marketing, store remodeling, and loyalty programs. The bet is clear: those that blend innovative products with seamless digital engagement will outcompete traditional brick-and-mortar competitors and online-only disruptors alike.

Headwinds That Linger

The backdrop remains mixed. The recent 25-basis-point Federal Reserve rate cut offers some breathing room, and President Trump’s one-year delay on tariff escalations (keeping duties at 25% rather than jumping higher) provides temporary relief from pricing pressures. However, these are band-aids on deeper wounds: weak housing activity continues to depress big-ticket furniture demand, as consumers postpone rather than cancel purchases. Rising labor costs, occupancy expenses, and elevated marketing outlays are compressing margins across the board, despite efficiencies being wrung from supply chains.

Valuation Paints an Inviting Picture

From a valuation lens, the furniture industry looks relatively attractive. Trading at a forward 12-month P/E of 10.12X compared to the S&P 500’s 23.11X and the Consumer Discretionary sector’s 18.24X, furniture stocks are pricing in considerable pessimism. Over the past five years, the industry’s multiple has ranged from 8.14X to 15.03X (median: 10.48X), suggesting current levels offer a margin of safety. Yet performance has lagged: the industry declined 20.4% over the past year while the S&P 500 climbed 18.2%.

The Zacks Furniture industry carries a Zacks Industry Rank of #79, placing it in the top 32% of Zacks-covered sectors—a signal that the market may be underpricing the industry’s near-term potential.

Three Standout Stocks Navigating Industry Trends

La-Z-Boy (LZB): Retail Footprint & Supply Chain Excellence

La-Z-Boy, the Monroe, MI-based upholstery manufacturer, is executing a disciplined playbook. The company is methodically expanding its company-owned retail presence—highlighted by a recent 15-store acquisition in the Southeast that immediately boosts sales and profits—while exiting non-core operations to sharpen focus on North American upholstery. Written sales trends are strengthening, wholesale performance is ticking higher, and distribution partnerships are broadening the brand’s reach.

Equally impressive is the ongoing modernization of its distribution and home-delivery network, which is cutting costs while enhancing customer accessibility. At a Zacks Rank of #1 (Strong Buy), LZB has seen fiscal 2026 earnings estimates climb to $2.65 per share from $2.46 over the past 60 days—a 7.7% uptick reflecting analyst confidence. Despite a 12.8% stock decline over the past year, the company’s trailing 12-month ROE of 11.2% handily beats the industry median of 4.7%. LZB’s earnings have beaten consensus in 50% of the last four quarters, averaging a 6.4% positive surprise.

Bassett Furniture (BSET): Custom Design & Omnichannel Strength

Bassett, based in Bassett, Virginia, is leveraging a different strength: a largely domestic manufacturing base that provides supply-chain agility and the ability to execute custom design at scale. The company’s product portfolio is refreshing with whole-home collections and expanded custom upholstery, while outdoor furniture is gaining traction. Company-owned retail execution is solid, bolstered by refined marketing campaigns and an improved omnichannel experience. The Bassett Custom Studio concept is deepening engagement and reinforcing the brand’s premium positioning.

Disciplined cost management and selective pricing actions are translating demand into profit growth despite the sluggish housing environment. Rated Zacks Rank #3 (Hold), Bassett has gained 17.9% over the past year. While 2026 earnings estimates remain stable at $1.09 per share, the Zacks Consensus Estimate suggests a 34.6% EPS improvement from the prior year. The company’s three-to-five year expected EPS growth rate stands at a robust 16%, and its earnings have beaten consensus in 50% of recent quarters with an impressive 332.2% average surprise.

MillerKnoll (MLKN): Contract Markets & Global Expansion

MillerKnoll, headquartered in Zeeland, Michigan, plays a different game: interior furnishings for both retail and contract (B2B) segments. Strategic retail expansion is underway alongside accelerating e-commerce, while the contract business is thriving from return-to-office momentum, workspace refresh activity, and strength in healthcare and other resilient end markets. International growth is being fueled by showroom rollouts and deeper dealer networks, while ongoing new product development is garnering interest from architects and designers.

At Zacks Rank #3, MillerKnoll has declined 16.3% over the past year, yet fiscal 2026 earnings estimates have ticked up to $1.93 from $1.87 per share over the past 30 days. The company boasts a three-to-five year expected EPS growth rate of 12% and a VGM Score of A. MillerKnoll’s earnings have beaten consensus in 75% of recent quarters, with a 25.6% average positive surprise.

The Bottom Line

The furniture industry is undergoing a structural transformation driven by digital adoption, operational discipline, and strategic portfolio reshaping. While near-term macro headwinds persist, valuation multiples offer meaningful upside should the housing market stabilize. La-Z-Boy, Bassett, and MillerKnoll each represent distinct strategies for capturing growth in an evolving landscape, making them worthy of investor attention in 2026.