Bob’s Discount Furniture IPO and expansion plans provide hope for beleaguered home goods category

Bob’s Discount Furniture debuted on the New York Stock exchange on Thursday, and despite barely budging above its opening price, some experts see the offering as a sign of strength in the beleaguered home goods category—especially at the low-end of the price spectrum.

“You always have winners and losers, and in the furniture industry, similar to other sectors, the companies at the value end of the price spectrum tend to do well,” Richard Baum, managing partner of Consumer Growth Partners, an investment and advisory firm specializing in discretionary consumer products, told Retail Brew.

Bob’s is well-positioned at the lower end of the price curve, Baum added, and has done well as other higher-end furniture retailers such as Williams Sonoma and Ethan Allen have struggled coming off of the pandemic-era home goods boom.

Crucially for investors, Baum noted that Bob’s also has growth potential. The company plans to open 500 stores in the existing format by 2035, according to an SEC filing, with a focus on markets where there are existing furniture stores, in order “to optimize capture of qualified customers.” The expansion would more than double the chain’s footprint, which currently stands at more than 200 showrooms across the US.

The filing touted the company’s “curated merchandising strategy,” including a SKU count that is “one-third narrower” than value-oriented competitors and an average order value of approximately $1,400 per transaction.

It also acknowledged that the Covid-19 pandemic was a tailwind for the category, which pulled forward demand and led to a slowdown in subsequent years, made worse by inflation and higher interest rates. The chain emerged from this period in a stronger position than its peers, per the filing.

Looking ahead at future growth prospects, Baum said online sales, and delivery and installation services are growing channels for hardlines. In Bob’s case, the e-commerce channel made up 14% of total net revenue, with a distribution network including five distribution centers and 46 third-party delivery depots located throughout the country.

“We believe e-commerce offers a significant growth opportunity and our strategy includes investment in and expansion of our digital platform and e-commerce sales channel,” the company said in the filing.