The New Top 25 Benchmark: $100 Million

Wood & Wood Products 11th Annual Survey of the residential furniture industry reveals a newannual sales bottom-line for companies looking to build on a record-breaking 1998.

by John Iwanski

 

Stanley Furniture, No. 13 in this year's survey, has introduced the Coastal Cottage casual bedroom collection.

For the first time ever, all the members of Wood & Wood Products Top 25 residential furniture companies netted at least $100 million in sales. And with a robust year behind it, the industry seems poised to build on a record-breaking 1998, according to W&WP's 11th Annual Survey of the Residential Furniture Industry.

Although companies do not display the overwhelming confidence exhibited in last year's survey, respondents still seem optimistic about closing out the millennium on a high note.

This confidence is also supported by the projections of the American Furniture Manufacturers Assn., which forecasts that industry shipments will increase 4.8 percent in dollar value, up to $24.145 billion in 1999. Though this percentage is down from last year's 6.6 percent increase, it coincides with the projected increase in consumer furniture purchases, as well as a 4 percent increase in the dollar value of wood furniture shipments. The AFMA projects that $11.4 billion in wood furniture will be shipped this year.

Upholstered furniture is expected to make even larger gains, as the AFMA expects a 5.8 percent increase in this market. The association expects more than $10 billion in upholstered furniture to be shipped in 1999.

1998: A Year to Remember

The 25 companies with the highest sales, as identified by W&WP, for the first time all had at least $100 million in shipments. This year's survey also marks the first $2 billion dollar entry into the club, with High Point, NC-based Life Style Furnishings Int'l. shipping $2.007 billion.

The residential furniture industry basked in the glow of a bustling economy in 1998, and companies bottom lines reflected the favorable business conditions. The Top 25 companies combined to ship nearly $12.5 billion in 1998, $100 million more than in 1997. However the Top 10 companies shipped $9.4 billion in 1998 - about three-quarters of the Top 25's total. Those 10 companies sales totaled $2.1 billion more than the Top 10 shipped in 1997.

Fifty-six percent of the companies surveyed reported that 1998 was their best year ever, while 22% reported that 1998 was a very good year and the remaining 22% said that 1998 was an OK year.

Compared with predictions from executives in W&WP's 1998 survey, the industry performed even better than expected. Twenty-nine percent of executives surveyed expected 1998 to be the best year ever, while 57% expected it to be very good and 14% thought 1998 would be ok.

Industry leaders still have an optimistic outlook for 1999, with 56% of executives expecting a very good year and 44% expecting another record best year ever. No respondents say they think 1999 will be just OK.

Issues of Industry Concern

With an unsure economic future, executives seem most concerned with cost control issues for materials and workers, as well as the economy itself. Every executive responding was either somewhat (71%) or very concerned (29%) with the economy, and 29% of executives surveyed say that the price of wood is extremely important to them. Fourteen percent say it is very important and 43% feel the price of wood is somewhat important. Fifty-seven percent of those surveyed also believe that employee recruitment is very important

Government regulations continue to be of importance to companies. Seventy-one percent of those surveyed say they have some concern over finishing regulations, as well as wood dust regulations. Another 14% are very concerned about both issues. In last year's W&WP survey, government regulation was the largest area of industry concern, with 20% extremely concerned and 50% very concerned.

Another area that had diverse responses was price cutting. Twenty-nine percent of the

Ethan Allen Interiors Inc., No. 6 in W&WP's Top 25, has introduced a new line of children's furniture, E.A. Kids. The company also is expanding its Boonville, NY, plant by 60,000 square feet to accommodate projected sales increases.

executives surveyed felt that price cutting by competition in 1998 was very important. However, another 29% felt that the issue had little importance, and 14% said that price cutting had no importance to them at all.

A Look Back Shows Companies Are Moving Ahead

As the year 2000 approaches, the biggest changes in the residential furniture industry continue to be at the top. Ten years ago only Interco Inc. (now Furniture Brands Int'l), prior to selling Ethan Allen, had sales of $1 billion. In 1994, Masco Corp. (now Lifestyle Furnishings Int'l.), with sales of $1.53 billion, was the only member of that exclusive club.

This year, three companies (LifeStyle, Furniture Brands and La-Z-Boy) all topped the billion dollar plateau. Both LifeStyle and Furniture Brands were ranked number one and two in the Top 25 five years ago under different corporate names, Masco Corp. and Interco Inc., respectively. La-Z-Boy ranked eighth in the 1989 survey with sales of $350 million, and moved to third in the 1994 survey, shipping $684 million that year.

Klaussner Furniture, which ranked 12th on the 1989 survey ($185 million) and moved to fifth in the 1994 survey ($544 million), could be the next billion dollar club member. The Asheboro, NC-based company moved to fourth place this year with sales of $804 million.

Dorel Industries, which purchased Ameriwood Furniture (No. 20 in the 1998 survey with sales of $100 million) last year and increased its sales from $384.1 million to $766.6 million, is also knocking on the $1 billion dollar door. The 106% sales increase moved the company from eighth place on last year's list to fifth place in the 1999 survey.

 


 

Top 25 News and Changes

There was a lot of moving and shaking in the Top 25 over the past year. From mergers and acquisitions to plant expansions, the biggest constant seems to be change. Here's a look at some of the recent events occurring with the Top 25 residential furniture manufacturers.



Lifestyle Furnishings International Ltd. (No. 1) formed a mutual business alliance with HomeLife Furniture Stores. The alliance will allow Homelife to be a leading product line in HomeLife's 131 nationwide stores. The company also announced that subsidiary LaBarge Inc. is moving its corporate headquarters from Holland, MI, to High Point, NC.



Furniture Brands International (No. 2) and Outlook International of Hong Kong Ltd. entered an agreement granting Outlook exclusive representation rights for all Furniture Brands' products in the Far East. Outlook will represent no other furniture manufacturers in the countries in which it sells Furniture Brands, and it will oversee all Furniture Brands manufacturing in Far East plants.



Monroe, MI-based La-Z-Boy Inc. (No. 3) has acquired Bauhaus USA Inc. The purchase, which will be reflected in next year's sales, was spurred by the performance of the company and its divisions. Bauhaus, headquartered in Saltillo, MS, reported $85 million in sales in 1998 and expects to clear $100 million this fiscal year manufacturing upholstered furniture and convertible sofas.



Dorel Industries (No. 5) purchased Ameriwood Furniture (No. 20 in last year's survey), helping to double its total sales in 1998. The company also is integrating its Leadra Design home furnishing operations into existing RTA facilities. The Leadra plant will be closed by the end of the company's fiscal year, with Leadra products being produced in the company's remaining RTA plants.



Ethan Allen Interiors Inc. (No. 6) is adding a $7.6 million, 60,000-square-foot expansion to its Boonville, NY, plant. The company also garnered numerous design awards, including two Pinnacle Awards at the International Home Furnishings Market in High Point, NC.



LADD Furniture Inc. (No. 7) announced that subsidiary American of Martinsville will commit $5.2 million toward a new expansion of the company's Martinsville, VA, plant. The company also announced that first quarter net earnings in 1999 rose 52 percent over last year's first quarter totals, from $2.4 million to $3.6 million.



Sauder Woodworking (No. 8) announced plans for a $100 million expansion. The Archbold, OH-based company says the plan will add an extra 1.4 million square feet, allowing the current 1 million square foot distribution center to be converted to manufacturing operations. All areas will be fully operational by July 1, 2000.



Leggett & Platt (No. 9) reported record 1999 first quarter sales, with total company sales (all divisions) totaling $887.6 million, up nearly 12 percent over last year's first quarter results. The company also had $66.1 million in net earnings for the quarter, an increase of 14.2 percent over 1998's first quarter mark.



Bush Industries Inc. (No. 10) was named a finalist in the home office category by the American Society of Furniture Designers for its Office Revolution Collection. The company also was named exporter of the year by the Woodworking Machinery Industry Assn.



Bassett Furniture Industries Inc. (No. 11) is building a $7 million dining room table plant in Virginia. The plant is to employ 60 people when it opens, with employment eventually reaching 135 in the 70,000-square-foot facility.



Lamar, MO-based O'Sullivan Industries (No. 12) entered a definitive merger agreement with a group that includes the company's senior management and the Bruckman, Rosser, Sherrill & Co. Inc. investment group. The O'Sullivan Board of Directors unanimously approved the merger and O'Sullivan is now waiting for shareholder and government approval for the deal.



Stanley Furniture Co. (No. 13) is phasing out its upholstered product line to focus on residential wood furniture sales. The company also committed more than $10 million to expand its bedroom and home-office manufacturing operations at its Stanleytown, VA, and Lexington, NC, plants.



Flexsteel Industries Inc. (No. 14) purchased Dygert Seating, and will continue to produce products under the Dygert name at its Elkhart, IN, and Watkinsville, GA, plants. The company was also named a Sears Partner for Progress by Sears Home Group. The awards are given each year by Sears to its most outstanding suppliers.



Winnipeg, Manitoba, Canada-based Palliser Furniture (No. 15) now offers an upholstery course in conjunction with Winnipeg's Market Driven Training Center. The MDTC, which is a division of Red River College, is teaching the course in conjunction with Palliser to try and meet the needs for more qualified upholsterers.



Hooker Furniture Corp., No. 16 in sales in 1998, planned the purchase and expansion of a central distribution center. The expansion is slated for completion later this year.



Rowe Furniture (No. 17) plans to acquire Storehouse Inc., an Atlanta, GA-based chain of 42 retail furniture stores. The acquisition, which is expected to close by July 31, 1999, will make Storehouse a subsidiary of Rowe, with existing management remaining in place.



Pulaski Furniture (No. 18) reported an 11.3 percent increase in second quarter sales. Sales rose more than $4 million in 1999 over the 1998 totals. The company also announced a dividend of 17 cents per common share for stockholders.



Bernhardt Furniture Co. (No. 21) experienced significant growth in 1998, leading to the company's current major case goods plant expansion slated for completion this year. The company also purchased an additional upholstery plant to increase production.



A proposed merger between Trivest Furniture Corp. and WinsLoew Furniture Inc. (No. 22) is expected, depending on regulatory and shareholder approval. Earl Powel of Trivest Inc., who is also the chairman of WinsLoew's board of directors, controls Trivest Furniture and has raised the per share purchase price to $34.75 per share. The company also acquired Pompeii Furniture Industries of Miami, FL, which manufactures high-end casual furniture.



Krause's Furniture Inc. (No.24) has opened a 12,000-square-foot showroom in Henderson, NV, near Las Vegas. The company now has 92 company-owned stores in 12 states.

 

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