According to a research report from Guotai Haitong Securities Co., Ltd., U.S. furniture retailers are actively restocking, while wholesalers are expected to enter a cycle of passive inventory drawdown by September 2025. If the U.S. continues to cut interest rates, the real estate sector, which is highly sensitive to the interest rate environment, is poised for further recovery. This would lead to continued year-on-year improvement in retailer sales. Furthermore, with inventory-to-sales ratios at historically low levels, a restocking phase is anticipated, which would directly drive an increase in furniture import values and a recovery in orders for midstream manufacturers. The excess profits of leading companies in the export chain typically originate from precise positioning in niche sectors, accumulated expertise in process and cost control, and the ability to offer differentiated products and manage channels effectively. Guotai Haitong's primary views are outlined as follows:
The current stage of the U.S. furniture inventory cycle shows retailers actively restocking and wholesalers undergoing passive destocking. 1) Retailers: From April 2025 to July 2025, the growth rate of sales outpaced the growth rate of inventory, indicating an overall destocking cycle. However, because inventory value was still increasing year-on-year, actual inventory levels were rising, just not as fast as sales, placing them in a phase of passive inventory reduction. From August to September 2025, inventory growth exceeded sales growth and was positive, signaling a shift into an active restocking cycle. 2) Wholesalers: From October 2024 to August 2025, inventory growth was higher than revenue growth, indicating an overall inventory buildup cycle. With inventory value increasing year-on-year at a rate faster than sales, this represented an active inventory accumulation phase. In September 2025, revenue growth is projected to surpass inventory growth, and while the actual inventory value will still increase, this will mark the beginning of a passive destocking cycle.
Inventory performance from furniture brands and channel distributors corroborates the trends observed in retail and wholesale data. Examining the latest inventory-to-sales ratios from furniture brand and channel financial reports reveals that home furnishing brands generally have ratios at historical lows. This aligns with the trend since May 2023, where retailers have predominantly been destocking with minimal restocking. The inventory performance of furniture and building materials distributors is mixed, but overall inventory levels are higher than those of brands. This generally fits the trend observed since September 2024, where wholesalers have engaged more in inventory accumulation than reduction. Additionally, The Home Depot's latest inventory-to-sales ratio has returned to its historical norm. Its willingness to restock further is still constrained by demand. In Q3 2025, its inventory growth exceeded revenue growth, and the inventory-to-sales ratio increased quarter-on-quarter. By the definition of the inventory cycle, the company was in a restocking phase in Q3. Its Q3 2025 inventory-to-sales ratio is already near the level of Q3 2023 and higher than Q4 2023, indicating a return to a historically normal level.
The path to improvement in home furnishing demand begins with a real estate recovery, followed by accelerated sales at retailers, which then triggers restocking. If the U.S. continues to lower interest rates, the real estate market is expected to continue its recovery. This would lead to further year-on-year improvements in retailer sales. Coupled with inventory-to-sales ratios at historical lows, this is likely to initiate a restocking phase, directly boosting furniture import values and warming order books for midstream manufacturers.
Risks include significant fluctuations in raw material prices and changes in the international trade landscape.
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