Archive for July 3rd, 2007
By: Furniture World Magazine
Monthly Results
New Orders: According to our most recent survey of residential furniture manufacturers and distributors, new orders in April were 12 percent higher than new orders in April 2006. While that looks like great news, the 12 percent increase compared to a 13 percent decrease last year comparing April 2006 to April 2005.
We believe these swings were caused by the High Point Market dates. In 2006, the April Market dates were April 27 to May 3. The 2007 April dates were March 26 to April 1. It appears that April 2006 market orders were captured in May 2006 while the April 2007 market orders were recorded in April.
We had a revision to some prior months’ numbers that were previously reported on the year-to-date orders and shipments. The first quarter orders were down 7 percent compared to the first quarter of 2006. With April’s increase, new orders were off only 3 percent but we expect to see a decline in May if our assumptions about Market orders are correct.
Shipments and Backlogs: Shipments in April were 4 percent lower than April 2006 continuing to reflect lower order rates. Shipments were 12 percent below March levels, a somewhat normal occurrence.
Year-to-date, after reflecting the revisions noted above, shipments were 7 percent lower than the first four months of 2006. This result appears to be in line with the reduced orders through March. Similar to last month’s report, shipments year-to-date were lower for 72 percent of the participants. Backlogs were 3 percent higher than last April and 1 percent higher than March 2007.
Receivables and Inventories: Receivables were 5 percent lower in April compared to April 2006 but were even with March levels even with the decline of shipments from March to April. The 5 percent compares reasonably well with the 4 percent decline in shipments April over April, but is a bit concerning when compared to the 7 percent decline year-to-date in shipments. These levels will need to be watched as business at retail remains sluggish.
Inventories were 9 percent lower in April 2007 versus April 2006, compared to 6 percent last month. Inventory levels dropped 1 percent from March.
These levels seem to indicate that, at least at the manufacturer/ distributor level, inventories remain in reasonably good shape. We continue to believe that most companies learned their lessons during the last major slump when inventories were built and had to be discounted to move them back to reasonable levels.
Factory Employees and Payroll: Factory payrolls were 8 percent lower than April 2006 compared to an 11 percent decline in March comparing to March 2006. The number of factory employees were 15 percent lower than April 2006 levels. The 15 percent decline was the same as the decline reported in March.
National
Consumer Confidence: The Conference Board Consumer Confidence Index, which had improved in May, fell to 103.9 from 108.5 in May. The Present Situation Index decreased to 127.9 from 136.1 in May. The Expectations Index fell to 87.9 from 90.1. Says Lynn Franco, Director of The Conference Board Consumer Research Center: “A perceived softening in present-day business and employment conditions are the major reasons behind this month’s pull-back in confidence. In fact, the Present Situation Index now stands at levels not seen since the final quarter of last year.
Looking ahead, consumers remain rather subdued about short-term economic prospects. All in all, the glass remains half empty and half full.”
Gross Domestic Product: According to the Bureau of Economic Analysis, real gross domestic product — the output of goods and services produced by labor and property located in the U.S. — increased at an annual rate of 0.7 percent in the first quarter of 2007. This was the final estimate and compared to a 2.5 percent increase in the fourth quarter of 2006.
The increase in the quarter reflected positive contributions from personal consumption expenditures and state and local government spending, offset partially by negative contributions from private inventory investments, residential fixed investment, federal government spending and an increase in imports.
Housing: According to the National Association of Realtors (NAR), total existing home sales, including single family, townhomes, condos and co-ops fell only 0.3 percent to a seasonally adjusted annual rate of 5.99 million units in May from 6.01 million in April. Sales were 10.3 percent below the 6.68 million-unit level in May 2006.
Single family home sales slipped 0.8 percent to a seasonally adjusted annual rate of 5.20 million. These levels were 10.8 percent lower than the pace a year ago.
The median existing single family home price was $223,000 in May—2.4 percent lower than May 2006.
Total housing inventory rose 5.0 percent at the end of May to 4.43 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.4-month supply in April.
Lawrence Yun, NAR senior economist, said the market softness is understand-able. “I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers,” he said. “Household formation has slowed dramatically since late 2006, implying that many people are doubling-up—there’re adding roommates or moving in with parents.”
According to NAR, the market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices. It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market.
Existing home sales were reported 3.5 percent lower than last year in the Northeast, 6.6 percent lower in the Midwest, 16.3 percent lower in the West and 11.9 percent lower in the Southeast.
Sales of new one-family houses in May 2007 were at a seasonally adjusted annual rate of 915,000 according to the U.S. Census Bureau. This was 1.6 percent below the April rate and 15.8 percent below the May 2006 estimate.
Interestingly enough, new homes sales were up 19.1 percent over last year in the Northeast, but down significantly in all other regions. The median price of new home sales in May was $236,100. The report indicated that there was a supply of 7.1 months at the current sales rate.
Privately-owned housing starts fell 2.1 percent from April according to the U.S. Census Bureau. This was 21.7 percent below the revised May 2006 estimate. Single-family starts were 3.4 percent below April 2007.
Consumer Prices and Retail Sales: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in May before seasonal adjustment and 0.7 percent after seasonal adjustment according to the Bureau of Labor Statistics. The May level was 2.7 percent higher than in May 2006.
The index for energy, increased for the third consecutive month—up 5.4 percent in May. The index for petroleum-based energy rose 9.8 percent. The food index rose 0.3 percent in May.
The index for all items less food and energy advanced 0.1 percent in May following a 0.2 percent increase April.
According to the U.S. Census Bureau, the advance estimates for U.S. retail and food services for May indicated an increase of 1.4 percent over April and 5.0 percent over May 2006. Total sales for the three months ended May were up 4.2 percent over the same period a year ago.
Retail trade sales were up 1.5 percent over April and were 4.9 percent higher than a year ago. Clothing and clothing accessories were up 7.8 percent from May 2006.
Sales at furniture and home furnishings stores were up, on a seasonally adjusted basis, 0.3 percent over April and 3.1 percent over May 2006. Year-to-date, sales at these stores were up 3.8 percent.
Employment: Nonfarm payroll employment increased 157,000 in May and the unemployment rate remained unchanged at 4.5 percent, according to the Bureau of Labor Statistics. Healthcare and food services added jobs, while employment declined in manufacturing. Average hourly earnings rose 6 cents, or 0.3 percent, over April rates.
The number of unemployed persons were unchanged at 6.8 million. The unemployment rate has ranged from 4.4 to 4.6 percent since September 2006.
Orders and Shipments: New orders for manufactured durable goods in April, up five of the last six months, were up 0.8 percent in May according to U.S. Census Bureau. This followed a 5.1 percent increase in March. Shipments increased 1.9 percent following a 1.3 percent increase in March.
Computers and electronic products had the largest increase in shipments. Fabricated metal products had the largest increase in orders.
According to this data, shipments of furniture and related products were off 6.7 percent comparing April to April 2006 and were off 6.1 percent year-to-date. New orders were down 5.3 percent year-to-date.
Summary: While new orders were up nicely in April, as we mentioned before, we think much of the increase was related to the timing of the High Point Market. Most of the industry people we talk to are not seeing much improvement in current business. There are pockets of decent business, but we do not hear much good out of retailers in general. We did hear that Memorial Day sales were generally good, but discounting appeared to be a big factor in those reports.
With housing sales remaining weak, we are concerned that there may not be much forward movement for some time. Our crystal ball continues to be fuzzy, as each quarter that goes by, we keep thinking we are a year away from better times. But those four quarters continue to seem to be a rolling four quarters.
Most of the people we talk with do not expect to see much improvement over the last part of the year. We lost a few more manufacturers and distributors in the last few months. There could be more to come. We understand that there may be factories in Asia that are hurting from too much capacity there, based on current business conditions.
With all that said, there continues to be some good business. As we have said over and over again, furniture is still being sold and a good deal of it. The key is having the right products and customers both at retail and wholesale. Hopefully some of the products that were brought out at the High Point Market will begin to ship and create new opportunities for customers.
This Furniture Insights® newsletter report has been re-published with the permission of Smith Leonard PLLC an independent member of the BDO Seidman Alliance.
Firm Profile: Founded in 1930 by BDO Seidman, LLP, the High Point, North Carolina practice was recently acquired by four individuals who have spent the majority of their 100+ year careers building the existing practice. Beginning January 1, 2007, Smith Leonard PLLC became an independent member of the BDO Seidman Alliance. Partners are Ken Smith, Darlene Leonard, Jon Glazman and Mark Bulmer. Among the firm’s 32 employees are 18 CPAs.
Service Area – Smith Leonard concentrates primarily in the Triad, but also services companies with domestic locations throughout North Carolina, Virginia, South Carolina and Texas. Smith Leonard has an extensive network of international relationships that helps service their clients’ needs throughout the world with locations in Asia, Europe, South America, Mexico and Canada. These companies range in revenue size of $2 million to $300 million.
Practice Concentration – The majority of the client base is composed of manufacturing and distribution companies. Many of its clients are either furniture manufacturers, distributors or suppliers to the furniture industry. Smith Leonard also services companies in retail, transportation, insurance, not-for-profit entities and employee benefit plans. Smith Leonard offers a full range of accounting and consulting services including audits, compilations, reviews, tax planning and compliance. The partners and staff of Smith Leonard also assists clients in mergers, acquisitions, business consulting, cash flow projections, and tax outsourcing. Individual clients benefit from extensive experience in family wealth services including estate tax planning.
The firm continues to produce monthly and annual statistics for the furniture industry. For more information call (336) 883-018 or e-Mail: ksmith@smithleonardcpas.com.
July 3rd, 2007
By Zhan Lisheng (China Daily)
Having won the bid to be the sole furniture supplier for the 2008 Beijing Olympic Games, Hong Kong Royal Furniture Group is in top gear expanding its production capacity and implementing new marketing strategies.
“According to the contract with the organizing committee of the 2008 Beijing Olympic Games, we will supply more than 100,000 pieces of furniture, of the highest standard, for the grand event. We have to gear up,” said Gary Ma, president of the furniture firm.
Headquartered and listed in Hong Kong, the company, with its key production base in the Pearl River Delta cities of Zengcheng and Dongguan in Guangdong, is a leading furniture supplier in China.
He said his firm has recently put into use a new production base in the Pearl River Delta region and will continue its strategy of focusing on innovative design, quality and brand building.
The products designed for the 2008 Beijing Olympic Games will be available in early August.
“We cherish the reputation as the exclusive furniture supplier for the Olympic Games and we will step up our efforts to guarantee timely delivery and quality of our products,” Ma said.
The fact that Royal Furniture’s products are more environmentally friendly than the standard set by the Olympic Games has been a trump card for his firm to beat off the numerous competitors at home and abroad in the nine-month bidding process, he said.
“The success also speaks volumes about the achievements we have made in innovation and brand building in the past few years.”
He said Royal Furniture has been focusing on innovative design, quality products and brand building since its foundation in 1994, citing as an example its strategy to collaborate with Italian designers and home-grown experts from leading universities in furniture design.
“We own a very large number of patented designs with over 120 prototypes,” Ma said.
The strategy to invite Rosamund Kwan, a globally renowned Hong Kong movie star, to become its image ambassador and to open chain stores across the nation has helped the firm build up its brand, he said.
July 3rd, 2007
Larry Thomas — Furniture Today,
Retail policies, common in furniture industry, must be evaluated case by case
WASHINGTON — A divided U.S. Supreme Court ruled Thursday that establishing minimum retail prices — a practice common in the furniture industry but technically illegal since 1911 — doesn’t automatically violate antitrust laws.
In overturning the 1911 ruling by a 5-4 decision, the court said minimum retail pricing policies need to be evaluated on a case-by-case basis to see if they are truly anti-competitive.
“Though each side of the debate can find sources to support its position, it suffices to say here that economics literature is replete with procompetitive justification for a manufacturer’s use of resale price maintenance,” Justice Anthony Kennedy wrote in the majority opinion.
The decision overturned a 1911 ruling that all minimum pricing policies violate the Sherman Antitrust Act.
Despite the 1911 ruling, such policies have been instituted in the furniture industry, especially among producers and distributors of upper-end goods. Examples of resources with minimum pricing policies include full-line producers/importers Bernhardt, Drexel Heritage and Lexington, upholstery producer Ekornes and bedding maker Tempur-Pedic.
The case on which the court ruled involved a women’s apparel store in Texas that sold the Brighton brand of belts and other fashion accessories until the line was pulled by the distributor in 2003 because the store was discounting the products by as much as 20%.
The store sued the distributor, Leegin Creative Leather Products, in federal court, and a jury awarded the retailer $1.2 million, a damage award that was tripled under federal law.
Jeff Castellano, owner of Castleton Furniture in Bloomfield, N.J., said he approved of minimum pricing policies and said they are good for the industry. “We always battled with the North Carolina discounters, and this leveled the playing field,” he said of the pricing policies.
On the other side of the fence, Jake Jabs, president of Englewood, Colo.-based American Furniture Warehouse, said he’s always tried to avoid suppliers with such policies. “I don’t believe in minimum pricing. I think the guys who can run the best operation and sell for less should get the business,” he said.
Jabs, however, recently started carrying Tempur-Pedic, which has a strict minimum pricing policy. He said he played by the producer’s rules to cater to a small percentage of consumers who came into his stores asking specifically for the product.
But Jabs said competitors have found ways to skirt the policy, such as offering $500 for the consumer’s old mattress. That’s the same as a discount, he argued.
Rather than play that game, Jabs said he may drop the line. “I’d love to sell it like everything else we sell — cheaper than everybody else,” he said.
Senior Retail Editor Clint Engel contributed to this story.
July 3rd, 2007
By: Furniture World Magazine
The Western Home Furnishings Association (WHFA) and National Home Furnishings Association (NHFA), sponsors of the Retailer Resource Center (RRC), at World Market Center, Building B, 16th Floor, announced a new awareness branding campaign, The RRC is…Access, Educate, Connect. The effort comes as part of their ongoing commitment to educate the industry about the mission of the RRC and the essential link between WHFA, NHFA and the RRC.
“We’re developing this campaign to ensure that the RRC is clearly linked to two of the industry’s most respected Associations and is known as the extension of WHFA and NHFA at Market. We want retailers to understand why the RRC exists and that just like WHFA and NHFA it is there to support the industry, provide access to valuable resources, educate retailers and to connect people during Markets.
The RRC offers one stop access to the most up-to-date business support tools and industry experts that can help enhance retailers’ day-to-day operations. Over 50 industry service providers, dedicated to the improvement of overall retail operations performance and bottom line are available to discuss needs and future plans.
The RRC educates through complimentary, ground-breaking seminars focused on timely topics and trends designed to keep retailers on the cutting-edge of industry information. Facilitating participation in an active network of people and building mutually beneficial business relationships is another example of the educational resources found in the RRC.
The RRC connects retailers to a community of value where ideas and information are freely exchanged. Industry themed events provide opportunities for face-to-face networking, providing in turn a connection with people, best done in person.
The Retailer Resource Center, now located in its permanent home at the World Market Center in Las Vegas, Building B, 16th Floor, occupies nearly 6,500 square feet of space filled with business services vendors, educational seminars and networking opportunities. The demand has been so great, that the RRC continues to offer Satellite locations during each market. This July, the RRC will have an additional 4,000 square feet at the Sands Expo and Convention Center.
Capitalizing on the more than 60 years of seamless support shown to its WHFA members, the RRC is quickly earning a name of its own for providing home furnishings retailers access, education, and connection to valuable services and programs that assist in the growth, development and prosperity of their business.
“The RRC is…Access, Educate, Connect” is a simple expression that brings the connection between the RRC, WHFA and NHFA to light.” said Sharron Bradley, WHFA executive director. “Our mission for the RRC has always been to offer the same knowledge, people and resources for home furnishings retailers that the WHFA and NHFA are known for,” said Bradley.
In keeping with the Associations’ philosophies, culture and vision, the RRC represents WHFA and NHFA’s commitment to the home furnishings industry, unparalleled service to retailers and exceptional leadership qualities. The RRC is…Access, Educate, Connect.
For more information on the RRC, please contact Cindi Williams, Director of Events, at (800) 422-3778 or visit www.WHFA.org.
About the WHFA and NHFA
The Western Home Furnishings Association (WHFA) is the largest affiliate of the NHFA, representing more than 1,100 independent home furnishings retailers in more than 2,800 stores in 12 western states.
National Home Furnishings Association (NHFA) is the nation’s largest organization devoted specifically to the needs and interests of home furnishings retailers. NHFA’s membership comprises 2800 corporate entities representing 10,000 stores in all 50 states and several foreign countries.
July 3rd, 2007
A freight truck carrying furniture was smouldering for several hours Sunday afternoon after it collided with another truck just east of McGillivray Boulevard on the Perimeter Highway near Winnipeg.
The semi-trailer and a Ford F150 truck collided just before 1 p.m., a fire official said.
“As a result of the collision, a semi-trailer hauling a load of furniture burst into flames,” said Rick Vanderkerkhove, eastern operations manager with the provincial fire commissioner’s office.
Rachael Gossen, who works at a restaurant near the intersection, said she called 911 as patrons saw the incident unfold.
“I just seen a black truck being hit and a semi-truck flying, and then the whole field’s just lit up on fire,” Gossen said.
“Two people jumped out of the semi-truck, I believe, and I don’t know what happened with the truck. The whole restaurant just went up and was like screaming, and we all went to the window and seen what happened.”
July 3rd, 2007
WEST PALM BEACH, Fla. — More than half of the available 500 exhibit spaces are already sold for the first Palm Beach Furniture & Accessory Market, set here for Nov. 9-11, according to show organizer Karel Exposition Management.
The event will take place at the Palm Beach County Convention Center here, and is expected to draw buyers from Dade, Broward and Palm Beach counties.
The trade show is open to retail buyers, interior designers and specialty stores from the furniture industry. Products on display will include furniture, bedding, lighting and decorative accessories.
“Palm Beach is known for style and panache. What a great city for a quality show,” said Larry Karel, president of Karel Exposition Management.
Karel also produces furniture and accessories markets in Los Angeles and Long Beach, Calif.; Edison, N.J.; Fitchburg, Mass.; and his largest show in Orlando, Fla. The Orlando event will take place Aug. 24-26.
July 3rd, 2007
Furniture Today,
Sessions to cover global supply chains, marketing, energy, China
GREENSBORO, N.C. — A diverse trio of experts will speak in a compact eight hours of sessions here Aug. 9-10 at the American Home Furnishings Assn. Suppliers Division conference.
The event is open to all industry executives, with no upcharge for companies that are not members of AHFA.
“Managing the complexity of today’s global supply chain and global marketing environment has overwhelmed many companies in our industry. This event was designed to stimulate strategic thinking and provide company executives with ‘operating intelligence’ to help them improve profitability,” said Buster Mann of Hickory Springs Mfg., who is president of the 225-member Suppliers Division.
The conference will be at the Grandover Resort & Conference Center here. An optional golf outing is slated for noon on Aug. 9, with the conference program beginning at 6 p.m. with a reception and dinner.
Michael Knight, CEO of Third Wave Research, is the dinner speaker. He has worked for more than 20 years in demographic analysis and marketing intelligence for clients including Procter & Gamble and Pfizer, as well as furniture heavyweights Ashley, Thomasville, Boyles and R.C. Willey.
The next day’s program runs from 7 a.m. to 1 p.m. and includes breakfast and lunch.
Michael Economides, a University of Houston professor, business consultant and former chief scientist at the Global Petroleum Research Institute, will speak at 8 a.m. on “Energy Geopolitics.”
George Stalk Jr., a senior vice president and director at the Boston Consulting Group, will speak at 10 a.m. on “The China Riptide: Threat or Opportunity?” He works with clients to integrate the emerging influence of China into their competitive strategies.
Registration is $250 for all companies, and the optional golf outing costs $90 per player including a box lunch.
Meeting registration is available online at www.ahfa.us. After clicking on the AHFA logo, go to EVENTS and scroll down to the Suppliers Division Conference. A group rate of $159 a night is available until July 8 at the Grandover. Call the hotel at (336) 294-1800 for reservations.
For more information, e-mail rcraven@ahfa.us.
July 3rd, 2007
Thomas Russell — Furniture Today,
LAS VEGAS — Case goods importer Modus Furniture has boosted its domestic warehouse capacity with a 250,000-square-foot leased operation in Fontana, Calif.
The facility, which began shipping in March, replaces five warehouse locations totaling some 150,000 square feet the company occupied in the Los Angeles area.
While Modus saw an 800% increase in volume shipped from the L.A. facilities between 2002 and 2005, the setup presented some logistical difficulties. For example, because of the limited space and dock facilities, the company experienced some stacking damages and some delays in getting the goods out the door.
“Once we reached that point, we decided something had to change,” said Jonathan Richey, company operations manager.
Built in 2001, the newly leased facility has a minimum of 32-foot ceilings and 35 dock doors. It also holds about 1,000 containers of finished goods, compared with a total of 300 at the other facilities.
Modus contracts with a third party logistics provider, Furnigistix, which provides labor and other needs to operate the facility.
The facility utilizes an Enterprise Resource Planning system from Apprise Software. It allows the company to track real time data including inventory, billing and order status based on activity in the warehouse and sales and purchasing areas of the company’s headquarters in Los Angeles.
The system also allows customers and company representative to track orders online.
Since implementing the system, Modus has seen a number of improvements, including reduced handling damages and a reduction in the time it takes to move items from the storage to the staging areas of the warehouse.
And thanks to sales and inventory tracking, the facility can ship most orders the next day. Before, it took at least two to three days to ship many goods because they had to be transported from the stocking warehouse to a distribution facility.
Because most of the company’s business is container-direct, the new facility still only handles about 30% of the company’s shipments. The other goods are shipped through two smaller warehouses in Indonesia and China.
Not all SKUs are available through the warehouse, the company said.
Modus officials expect the facility to accommodate its needs for the duration of the five-year lease, through 2011.
Jay Jewett, the company’s general manager, said the facility allows the company to improve its service.
“The product has been there, the designs have been there and the commitment has been there,” Jewett said. “This will make us excel and bring us to the next level in dealing with the majors.”
At this month’s Las Vegas Market, Modus Furniture will show in space B-662.
July 3rd, 2007
The aesthetics of younger, hipper homeowners is bringing minimalist design and the furniture look into the bathroom. “Seventy-five to 80 percent of our country still adheres to a traditional aesthetic, but contemporary style is definitely becoming more popular,” says Jody Rosenberg, national sales manager for Sonia. Specifically, bath furniture manufacturers say stand-alone vanities and accessories now make up 20 to 30 percent of the market and are growing in popularity.
Unlike traditional built-in cabinetry, contemporary bath furniture has a sleeker design and open shelving. To maximize the hidden storage, some designs turn vanities’ false fronts into U-shaped drawers to hold grooming items but still accommodate a sink and plumbing.
July 3rd, 2007