(News Bulletin 247) – In an unfavorable context for retailers, the furniture brand should present quarterly sales that are still degraded, according to Bryan Garnier.

With purchasing power eroded by inflation, households are concentrating on purchasing essential products. And therefore ignore so-called discretionary consumer goods such as furniture. A context that has not been business for Maisons du Monde for several quarters.

And the situation is not going to get better anytime soon, predicts an analyst there. “With food inflation continuing to accelerate across Europe (>15%) and a long process of disinflation in the second half of the year, consumer arbitrage is likely to continue and affect retailers of discretionary goods” , says Clément Génelot of Bryan Garnier in a note devoted to the sector of specialized distributors.

Recent trends observed by the analyst “suggest that France and Southern Europe are really suffering”, while Germany manages to hold its own.

Sales of Maisons du Monde are following a rapidly deteriorating trend and he sees no short-term change. “We expect first quarter sales to be down 12%, with a rapidly deteriorating trend which also raises questions about the Maisons du Monde supply, given that the French furniture federation (IPEA) has highlighted a huge performance gap between some French players down by double digits and others up by the same magnitude” warns Clément Génelot.

In this context, the design office has downgraded its opinion on Maisons du Monde to sell against neutral, and is now only targeting 9 euros against 13 euros previously. On the Paris Stock Exchange, Maisons du Monde took the hit and lost another nearly 5% after this analyst downgrade.

An anti-inflation weapon

However, Maisons du Monde is working to reverse the trend to stem the decline in sales in the coming months. The furniture and interior design specialist recently unsheathed its anti-inflation weapon. He announced price reductions of 8% on average on the “most expensive products for home furnishings”.

The brand had launched a similar operation last fall with a first price drop on 60 products. In all, “more than 200 references” have been subject to price reductions, recalls Maisons du Monde.

In addition, Maisons du Monde has set up a split payment solution free of charge in France. With these numerous devices, the company intends to bring its customers back to its stores. But for Clément Génelot, these operations in favor of purchasing power risk putting pressure on the profitability of Maisons du Monde.

“Maisons du Monde is currently investing more in promotions, reducing certain prices on furniture as well as delivery costs in an attempt to relaunch the commercial dynamic” explains the analyst who forecasts “henceforth a slower evolution of the gross margin with a drop of 120 basis points (1.20 point, Editor’s note) in the first half and an EBIT margin down 470 basis points over the period, taking into account a higher operating leverage effect”.

While waiting for better days, Maisons du Monde indicated last March that the first quarter will be “the low point of the year, with a double-digit drop in sales”. “The basis of comparison will become more favorable from May”, date on which Maisons du Monde will specify its objectives. The market will therefore have to wait until May 11 to learn of the effects of inflation on activity at the start of the year for Maisons du Monde.