How can I tell if a furniture store’s showroom floor stock is mostly unsold clearance?

Walk the showroom with the owner and ask about each grouping. Which pieces were ordered for the floor, and which were left over after special orders? Look for scuffs, faded fabric, mismatched sets and corners that hold the same sofa every visit. Visit more than once, on different days, and note whether the displays change.

Then match the floor to the paperwork. Ask for the inventory listing with receiving dates, and compare it with sales by item. A healthy floor should look like the sales report. If the best sellers are mostly absent and slow items fill the room, the stock is probably aging. Ask how markdowns were handled last season and whether supplier credits were ever received for display models.

Check how stock is carried in the financial statements. If old pieces sit at full cost while the store quietly sells similar ones at a discount, profit may be overstated. Your accountant can test that. Ask the owner to explain any floor-model write-downs and who decides when a piece comes off the floor.

Key takeaways

• Match floor pieces to sales reports and receiving dates, not to price tags.
• Visit several times and watch whether displays ever change.
• Ask your accountant whether aged stock is carried at a cost the store will never recover.
• Ask who decides when a piece comes off the floor, and how markdowns are recorded.