Ekornes Home's first-quarter revenue slightly increased to 5 billion, but price wars dragged down the profit center.

April 29, Kuka Home released its Q1 2026 performance report. According to the financial report, the company achieved operating income of 5.033 billion yuan in the first quarter, up 2.42% year-on-year; net profit attributable to the parent company was 496 million yuan, down 4.39% year-on-year. Against the macro backdrop of domestic real estate's large-scale restructuring and overall pressure on home consumption, Kuka Home still maintained its industry-leading position in both revenue and net profit. However, this typical "increased revenue but not profit" performance has stripped away the aura of rapid growth in earlier years, objectively and sharply reflecting the reality and strategic dilemmas faced by leading home furnishing enterprises in the era of stock competition. Specifically, the 2.42% revenue growth is hard-won given the current waning dividend from new housing in the industry. Analyzing its business composition, Kuka Home’s basic revenue is still supported by the manufacturing of upholstered furniture centered on sofas and mattresses. Yet with incremental demand peaking, its weak growth momentum has shifted substantially. In recent years, the home furnishing industry completed the commercial narrative switch from selling single products to selling spaces. Kuka Home's continuously promoted integrated "whole home" strategy plays a crucial buffering role. By integrating the sale of upholstered furniture with custom business, the average order value at stores has remained or even slightly increased, offsetting the decrease in natural customer foot traffic. At the same time, an industry variable not to be ignored is that as the domestic real estate market fully enters the stock phase, government-advocated and locally implemented policies for "home furnishings replacement" have, to some extent, activated demand for second-hand home renovations and partial upgrades. Leading brands, with more comprehensive service networks and recycling chains, have seized first-mover advantage in this wave of stock release, countering the drastic decline in new home completion area. This is the core reason for maintaining the 5 billion single-quarter revenue baseline. Though revenue maintained positive growth, the drop in net profit points to the industry’s irreversible downward trend in overall profit margins. Analyzing the reasons behind profit erosion reveals three main factors: terminal price war, channel structure restructuring, and drag from overseas gross profits. First is the intensified competition at the end market. Since 2024, competition in the home furnishing industry has become fierce. Leading companies have frequently launched highly aggressive low-price packages, such as “39,800 whole-home” and other “trade price for volume” strategies to grab market share and clear underperforming capacity. As an industry leader, Kuka cannot remain unaffected when defending its market share and must offer discounts to terminals to maintain dealer sales. This defensive price reduction directly diluted the comprehensive gross margin of core products. Secondly, deep adjustments in channel structure have pushed up rigid costs. Traffic in traditional large home improvement malls is accelerating its decline, forcing companies like Kuka to shift towards independent large stores, integrated stores in large commercial complexes, and online local life services. This “1+N+X” channel transformation is accompanied in the short term by high costs in store subsidies, online customer acquisition, and digital transformation. Rigid expenditures on selling and management expenses further erode current profits. Lastly, the complexity of overseas business is also a key variable affecting the profit pool. Looking at Kuka Home’s recent financial structure, its overseas business has contributed considerable revenue, but gross margins are generally significantly lower than for domestic business. Global supply chain turmoil, persistently high shipping rates, currency fluctuations, and rising geopolitical trade barriers have placed pressure on OEM business with already thin margins. During the painful period when brand exports have not fully replaced OEM models, overseas business continues to dilute overall profitability. Putting Kuka’s financial data in the context of the entire Chinese home furnishing industry in 2026, despite the decline in net profit, as most small and medium-sized furniture enterprises face survival crises and some second-tier brands suffer double-digit revenue plunges, Kuka Home can still firmly hold its dual leadership positions, demonstrating strong fundamental risk resistance. This further confirms the "Matthew Effect" in the home furnishing industry is intensifying. Leading enterprises, leveraging scale advantages in the supply chain, abundant cash flow, and multi-category matrices, are accelerating the erosion of regional small brands' living space. In fact, as early as the 2024 strategic review, Kuka’s management publicly admitted that the “scale and growth first” era has already passed, replaced by the “efficiency first” era aiming for relative growth. The "increased revenue but not profit" in the Q1 2026 report is precisely a financial mirror of this industry cycle. Overall, Kuka Home's Q1 2026 performance is a typical defensive counterattack that trades profit for space. Given the reality that macro demand is unlikely to achieve a V-shaped rebound in the short term, accepting a rational drop in profit to maintain, or even expand, absolute market share is a pragmatic business choice at this stage. For this industry leader, the challenge in the micro-profit era is how to squeeze out supply chain inefficiencies through refined operations, and achieve the tough transition from product export to brand export in overseas markets. This will test management’s strategic determination far more than simple revenue growth for a long time to come. Risk Warning & Disclaimer The market is risky, and investment requires caution. This article does not constitute personal investment advice, nor does it consider the special investment objectives, financial conditions or needs of individual users. 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