What happened

Shares of Wayfair (W -0.13%) were climbing today, apparently in sympathy with RH (RH -1.75%) after that company smashed earnings estimates and reported strong demand in its second-quarter earnings report. There was no news out on Wayfair, but the results from RH, a purveyor of high-end home furnishings, was enough to lift other home goods retailers, including Williams-Sonoma and Overstock.com.

Wayfair shares were up 8.8% as of 12:31 p.m. EDT on Thursday, while RH had gained 23.5%.

A home office setup from Wayfair

Image source: Wayfair.

So what

RH, which had slumped during the lockdowns, reported a resurgence in demand during the second quarter. Though revenue was only up slightly, demand (which is based on order value in the quarter) rose 16% at the company as a whole and 24% at the core RH brand. Management also noted sequential improvements through the quarter as core demand rose 7% in May, 32% in June, 34% in July, 47% in August, and 44% in September through the first 10 days of the fiscal month.

RH seems to be a clear beneficiary from the resurgence of the housing market as Americans look to adapt their living circumstances to the pandemic, adding home offices and making their homes more comfortable, and are willing to spend more since they have limited options for discretionary income.

RH management expects that trend to continue, saying, "The booming real estate activity in second-home markets, an accelerated shift of families moving to larger suburban homes, and the uptick in homebuilding should drive increased spending in our market for an extended period of time as the cycle for purchasing and furnishing a home is anything but quick."

Now what

Wayfair's last update for investors covered the period through the end of June, when it said that third-quarter growth was tracking at 70% through the beginning of August, and RH's report seems to show that home furnishing demand has remained strong to date. Though the companies target different markets (RH is a luxury retailer and Wayfair operates exclusively online), the news nonetheless seems like a bullish sign for Wayfair since it also shows that consumers are willing to spend on home furnishings.