Gross margin benchmarks for furniture retail

Ask a group of furniture owners for their gross margin and you may hear several accurate answers to different questions. One starts with the price tag, another with the discounted sale, and another includes the freight bill that arrived after the sofa.

A useful benchmark compares the same subtotal on the same cost basis. Define net sales, landed acquisition cost, delivery treatment, and the period before judging the percentage. Otherwise, changing the target can solve a problem the store does not actually have.

Separate markup, initial margin, and maintained margin

Markup divides the difference between price and cost by cost. Gross margin divides that difference by selling price. The denominator changes the result.

In a worked example, a chair costs $1,000 and sells for $2,000. The $1,000 difference is a 100% markup on cost and a 50% margin on selling price. Doubling cost, often called keystone, is a general retail pricing shortcut; the sources here do not establish it as the normal or sufficient price rule for furniture stores.

Initial margin uses the starting price and cost assumptions. Maintained margin reflects what was actually sold after markdowns, discounts, returns, and the costs included in the calculation. A ticket price can preserve the initial calculation while the realized result moves considerably.

Use the keystone and landed-cost pricing guide to work from the amount the store needs to earn, rather than treating a multiplier as a complete pricing policy.

Read the published figures with their populations attached

Published furniture margins show different business models and accounting definitions. The following figures are context, not a ranked list of targets.

The historical participant figures come from Home Furnishings Business’s retail-metrics report. The public-company result is in its fiscal 2024 earnings release. The anonymous comparison appears in Business of Home’s reporting. These observations support a question about your cost structure. They do not establish that an independent showroom should reach the public company’s percentage, or that a store below a historical peer-group figure is necessarily underpricing.

Check which costs sit above gross profit

A higher reported gross margin can reflect where expenses are classified as well as purchasing power or selling price. Read the definition before attributing the whole difference to better buying.

The public retailer’s 2023 annual report includes inbound freight and certain distribution costs in merchandise cost, while much occupancy and home-delivery cost sits in operating expenses. It explicitly warns that gross profit may not be comparable with businesses that classify some of those costs differently.

For your internal merchandise review, include the acquisition charges needed to bring the goods in under the adopted costing policy. Keep customer delivery visible as a separate service contribution if that is how the store manages it.

A delivery fee can be part of reported revenue, but including the fee without explaining the related cost treatment makes comparison misleading. Define whether your measure is merchandise-only or includes delivery revenue and expense, then use that definition consistently.

See how landed cost changes the same sale

The factory-price calculation can look healthy while the landed calculation leaves much less room for store expenses. Extend the worked example to a sofa selling for $6,000 with a $3,000 factory price.

Assume $750 of import costs and $375 of allocated freight and related charges. Those are scenario amounts, not tariff rates or a current shipping quote. Landed cost becomes $4,125.

The selling price has not changed. The second calculation includes costs the first left out. Comparing the first percentage with another store’s landed margin would create an artificial advantage.

A domestic vendor can have a different acquisition-cost pattern, but domestic does not mean freight-free. Use the actual delivered purchase terms and costs. The landed-cost margin guide shows how those charges reach each order.

Investigate the changes between price and result

Discounts lower net sales without automatically reducing the cost of the goods. A floor-sample markdown, a price match, and an order-level concession can therefore affect maintained margin differently from the price list’s initial margin.

Vendor surcharges and late freight change the acquisition side. Rejected goods, returns, and inventory adjustments need their own records so the cost and sales quantities remain aligned.

Costing methods can also change which cost reaches a sale. The public retailer’s annual report describes a LIFO effect that differed between years; method effects should not be assumed always to move in one direction.

LIFO has tax-reporting conditions under 26 U.S.C. § 472, so coordinate a method choice with your CPA. The FIFO, LIFO, and weighted-average guide explains the operating comparison.

Before changing prices, trace a few orders that moved most. A misplaced charge, an estimate still awaiting its invoice, and a deliberate discount need different responses.

Write your margin definition on the review sheet

Choose a management measure that can be reproduced from the records. For completed furniture sales, a merchandise-only review can use net merchandise revenue and the landed cost associated with those units, with the delivery and accounting cutoff stated.

Keep the same definition when moving from orders to vendors and categories. A group total should combine the underlying dollars, then calculate the margin. Averaging percentages without considering sales value can distort the result.

Use the owner’s dashboard guide to keep that definition visible beside the report. The label should travel with the number when it appears in a meeting note.

Use OrderPilot to trace the acquisition cost

OrderPilot allocates purchasing charges across lines and records landed cost at receiving. Staff can distinguish provisional amounts from final ones and follow corrections when later invoices change the cost. The store can choose FIFO, LIFO, or moving weighted average for cost layers. OrderPilot also keeps Shopify’s Cost per item current; that current value should not be mistaken for the historical allocation behind every sale. Authorized staff can use Analytics › Profit grouped by vendor, category, or store to investigate results. That report deducts commission in its net and margin calculation, so compare its subtotal with the corresponding management measure, not with a pre-commission gross-margin benchmark. With QuickBooks Online connected and cost posting enabled, the supported cost-of-goods entries use the costing records. Reconcile the posting period to the accounting policy and review missing or provisional costs before calling a margin final.

Recheck targets when the assumptions change

Review completed margins monthly as a practical routine, and revisit targets when vendor prices, freight assumptions, discounts, or the service promise change. A quarterly review can bring those findings into buying and pricing decisions. These are suggested management intervals, not published industry standards.

If landed margin is well below the comparison figure, first establish that the definition and records are consistent. Then examine discounting, missing charges, product mix, markdowns, and delivery treatment. Repricing everything before that review can preserve the bookkeeping problem and create a selling problem.

Finally, consider how much inventory the margin requires. A high percentage on a slow-moving range may produce less gross profit for the money tied up than a lower-margin range that sells regularly. Continue with GMROI by vendor to add that part of the decision.

The catalog can offer several versions of a natural oak finish. The owner’s margin sheet should give each number one clear meaning. Bring those definitions to the owner’s dashboard.

Sources

1. Fourth-quarter and full-year 2024 results — Haverty Furniture Companies, SEC exhibit, February 24, 2025.
2. Annual report for fiscal 2023 — Haverty Furniture Companies, SEC Form 10-K, 2023.
3. 26 U.S.C. § 472: Last-in, first-out inventories — U.S. Code, Cornell Legal Information Institute.
4. Retail Metrics for Furniture Retailing — Home Furnishings Business, June 14, 2018; 2017 participant data.
5. Are furniture stores dying, or just changing? — Fred Nicolaus, Business of Home, March 20, 2024.