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
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 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
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
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
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.
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