Bob’s Discount Furniture (NYSE:BOBS) reported second-quarter revenue growth of 8.8% as new store openings and a 2.3% increase in comparable sales offset continued pressure on in-store traffic.
Net revenue rose to $619.6 million in the quarter. The company opened four stores, bringing its total to 218 locations, including its first two stores in South Carolina. Adjusted EBITDA was $60.8 million, representing a 9.8% margin, compared with an 11% margin a year earlier. Adjusted net income was $27.8 million, or $0.20 per diluted share, down from $32.2 million, or $0.29 per share, in the prior-year period.
Comparable Sales Supported by Higher Order Values
Comparable sales increased 2.3% on top of a 10.5% gain in the second quarter of 2025. Barton said the latest increase was primarily driven by higher average order values, improved conversion and customers trading up from the company’s “good” merchandise tier into “better” and “best” offerings.
The company cited particular strength in motion upholstery and dining products. Barton said targeted pricing actions also contributed to the comparable-sales gain, while lower store traffic remained a headwind.
Bob’s said its everyday-low-price model is intended to maintain a 20% to 25% price advantage versus competitors’ listed prices. During the more promotional second-quarter environment, Barton said the company remained about 10% below competitors’ lowest advertised prices on average.
During the question-and-answer session, Barton said brick-and-mortar traffic was down less than the broader industry and had shown some signs of stabilizing in select markets, though he said it was too early to call a bottom. He added that the company is gaining share in traffic and has seen growing participation from higher-income customers.
Customers with household incomes above $100,000 and $150,000 have been increasingly drawn to the retailer’s value proposition, according to Barton. While those customers purchase a somewhat higher mix of better and best merchandise, he said the good category still represents the largest portion of their baskets.
E-Commerce Growth and Omnichannel Investment
E-commerce sales increased nearly 25% year over year and reached 17.3% of total sales, an increase of more than 200 basis points. The company said its omnicart platform, which lets customers move between store and digital shopping channels, supported both conversion and average order value.
Barton said more customers are beginning carts in stores and completing them online, while many furniture shoppers still use online research before visiting stores to see and test products. He said the company’s strategy is to make product assortment, financing and delivery options consistent across channels.
Bob’s is also using artificial intelligence for store scheduling, associate performance tracking and training, product recommendations, and marketing targeting. The company said it combines first-party customer information with third-party data and AI-driven insights to tailor messages to potential customers.
Margins, Tariff Refunds and Cost Pressures
Second-quarter adjusted gross margin declined 100 basis points to 45.4%. Executive Vice President and Chief Financial Officer Carl Lukach said the decline was expected, reflecting the normalization of ocean freight conditions that had benefited the prior year. Favorable merchandise mix, protection-plan margins and modest pricing actions partly offset the pressure.
SG&A expenses represented 37.9% of net revenue, up about 20 basis points from a year earlier. Lukach attributed the increase largely to marketing spending for Southeast expansion, as well as payroll and occupancy costs associated with new stores.
The company recognized $45.1 million in refunds tied to IEEPA tariffs during the quarter. Of that amount, $37.9 million was recorded in gross margin and $1.5 million in interest income, while $5.7 million was recorded in inventory for products not yet sold. Bob’s excluded the profit-and-loss impact of the refunds from adjusted results, describing the event as one-time in nature.
Lukach said the company expects the inventory associated with the $5.7 million refund to be sold in the second half, but the benefit is not included in its full-year outlook. He said the amount could serve as an additional cost-mitigation tool, though the company currently has no plans to use it.
Looking ahead, management expects product-cost pressure in the second half from fuel, ocean freight surcharges and foam. The company said its mitigation plans include vendor collaboration, inventory purchases, supply-chain efficiencies and selective pricing actions. Barton emphasized that price increases are used selectively and that maintaining value leadership is the company’s priority.
Store Growth and Full-Year Outlook Maintained
Bob’s reiterated its 2026 outlook, calling for net revenue of $2.6 billion to $2.625 billion, comparable-sales growth of 1.5% to 2.5%, adjusted net income of $121 million to $129 million, and adjusted EBITDA of $255 million to $265 million.
The company expects roughly 10% unit growth in 2026, or approximately 20 new stores. It has opened nine stores year to date and plans additional openings around Labor Day, including four stores in Tennessee as it enters that state. Bob’s also expects to open another North Carolina location during the second half.
New stores are performing at or above expectations, Barton said, particularly infill stores that require lower marketing investment and generate attractive cash-on-cash returns. The company expects its Georgia distribution center to be completed in early 2027 to support Southeast expansion, while its Midwest regional fulfillment center is now fully operational.
Bob’s maintained its expected 2026 net capital expenditures of $110 million to $115 million, primarily for store openings and infrastructure. It increased expected pre-opening expenses to about $26 million from a prior range of $23 million to $24 million, citing accelerated timing for several early-2027 Southeast openings.
The company said sales trends early in the third quarter are tracking in line with its long-term objective of low-single-digit comparable-sales growth.
About Bob’s Discount Furniture (NYSE:BOBS)
Bob’s Discount Furniture (NYSE: BOBS) is a U.S.-based specialty retailer of residential furniture and home furnishings. The company operates a network of company-owned showrooms alongside an e-commerce platform to sell living room, bedroom and dining furniture, mattresses, home office pieces, and decorative accessories. Its merchandising and marketing emphasize value-oriented pricing and broad selection across mainstream categories.
In addition to merchandise sales, Bob’s Discount Furniture offers services commonly associated with full-service furniture retail, including delivery, white-glove setup in some markets, and consumer financing options.
