Heading into 2025, a report by Piper Sandler analysts Peter J. Keith and Alexia Morgan states that a number of brands they are watching with exposure to big-ticket household durables could see sales upside in the first half of 2025.
“As consumers pull forward purchase activity to get ahead of tariff-led price increases, awareness and expectations of upcoming price increases is significantly higher than in 2018, and numerous news reports have highlighted items such as appliances, electronics, furniture, etc. While tariffs are unlikely to create demand in 2025, a 5% shift in buyers from the second half would have a meaningful impact on sales results.”
Here’s what a summary of the Piper Sandler report says:
1. A University of Michigan survey suggests strong consumer awareness of impending tariffs. A quarter of consumers surveyed in December indicated that now is a good time to buy large household durables (i.e. furniture, refrigerators, stoves, TVs, etc.) because “prices will go higher.”
Notably, expectations to buy ahead of price increases is currently at a nearly 40-year high — and even is higher than it was in 2018 for the first round of Trump tariffs.
2. The Tariff Tailwind: media cycle promoting electronics, appliances and furniture purchases ahead of price increases. A wide variety of news sources have published articles since the election advising consumers on what they should purchase before tariffs, and Google search activity on these highlighted items has picked up in recent months post-election. Expectation of upcoming price increases likely intensifies on or after Jan. 20 (when the Trump administration takes office) — which could further accelerate pull-forward demand dynamics.
3. Piper Sandler outlook on tariffs. Piper Sandler Macro Research believes certain tariffs could be announced shortly after the inauguration, including on China, while prospects for a universal tariff on the rest of the world are much less clear and would face legal challenges.
Predicting the outcome of the Trump administration tariffs on China is difficult, but Piper Sandler Macro Research sees three high-level dynamics: 1. Tariffs on Chinese imports will go up significantly. 2. Tariffs will be phased in. 3. The new administration has greater comfort in tariffing consumer goods today (vs. 2018/2019) considering their belief that 2018/2019 tariffs generated significant revenue, didn’t impact strong economic growth and didn’t cause inflation.
4. Housing and goods-to-services shift now neutral. Existing home sales inflected to positive year-over-year growth in October and November 2024 following three years of YOY declines. And the goods-to-services shift that has pressured goods spending for three years has reached a normal historic trend.
5. Piper Sandler’s favorite names for the first half of 2025: Tempur Sealy International (Overweight, $65 PT); Wayfair (Overweight, $58); Yeti (Overweight, $54 PT); Home Improvement (Overweight, $307 PT).
