For another year, the economy, labor recruitment and retention, and material costs continue to top the list of concerns by many contract and residential furniture manufacturers, tempering their sales outlook. So although North America continues to be down for some segments, many analysts do project better days ahead.

According to Allied Market Research, the North American furniture market — residential and commercial — generated $249.4 billion in 2020, and is projected to reach $400.06 billion by 2030 (4.9% CAGR 2021-2030). The residential segment holds nearly half of the total market share, while RTA is estimated to register the highest CAGR, 5.6%, from 2021 to 2030. 

Commercial furniture growth continues to be driven by companies investing in furnishing offices for social distancing and flexible or hybrid workplaces. A 2024 study by JLL finds workers in the U.S. and Canada are spending slightly more than three days per week in the office, leading to a re-evaluation of the workplace with regard to office design, furniture, and fixtures to better support employee productivity.

FDMC 300 firms: Cautious optimism
Based on comments by some manufacturers in the FDMC 300, fiscal 2024 has been challenging in terms of sales, but there’s cautious optimism for 2025. 

Following the recent release of its first-quarter fiscal 2024 financials, HNI Corp. (#10) projects full-year and second-quarter 2024 earnings to increase in the year-over-year comparison. “Our teams continue to build upon the strong progress we have made over the past two years. We delivered earnings that were nearly triple the prior-year period, with EPS and operating margin reaching first-quarter levels not seen since 2007,” stated Jeff Lorenger, chairman, president, and CEO.

“Our strong results continued to be fueled by our Workplace Furnishings profit transformation plan and the inclusion of Kimball International, which combined to deliver the highest first quarter Workplace Furnishings profit margin since 2016.”

While consolidated net sales for MillerKnoll’s (#2) third quarter were down 11.4% ($872.3 million) compared to last year, and down 12.5% (to $3.1 billion) for the first nine months, the company said it remains relatively optimistic. “Overall demand patterns across much of our business have continued to be sluggish, driven by elevated interest rates in major markets around the world, ongoing geopolitical concerns, and a lagging housing market in the U.S. Nonetheless, our optimism remains buoyed by a range of internal and external indicators which suggest that with more stable economic conditions, growth will resume in a meaningful way,” MillerKnoll reported.

“In the near-term, we remain focused on adjusting and optimizing our cost structure while protecting investments that will better position us to thrive as market conditions improve. To this end, subsequent to the end of this quarter, we implemented restructuring measures aimed at streamlining our selling, general, and administrative structure to better align with current market conditions and potential opportunities. These measures included a workforce reduction and showroom consolidations, among other initiatives.”

Reporting on Steelcase’s (#4) fourth quarter rebound, President and CEO Sara Armbruster stated, “I’m proud of the earnings improvement our teams delivered again this quarter, capping off a strong fiscal 2024 in which our net income more than doubled from the prior year. Our 8% order growth in the Americas in the fourth quarter was driven by our large corporate customers, and we believe this is reflective of customers investing to create inspiring workplaces as they call for a stronger in-office presence.” 
She added, “Our fiscal 2024 results reflected our efforts to recover the inflationary pressure on costs from the previous two years and drive improved profitability. We delivered a 360 basis point improvement in gross margin, and we more than doubled our earnings per share. As we focus on leading the transformation of the workplace and helping our customers create inspiring workplaces, we’re energized by our order growth from our large corporate customers.”

For 2025, Steelcase said it is targeting organic revenue growth of 1% to 5%. 

Residential firms also mixed
On the residential side, new furniture orders rose 2% in March compared to 2023 figures, marking nine out of 10 months for year-over-year growth, according to the latest issue of Furniture Insights. Year to date through March saw new order rise 5% compared to 2023 figures, according to Mark Laferriere. assurance partner at Smith Leonard, which produces the monthly report.  

Individually, manufacturers report mixed results for fiscal 2024, although their 2025 outlook is relatively optimistic. 
Reporting on Ethan Allen’s (#33) fiscal 2024 third quarter, Farooq Kathwari, chairman, president and CEO commented, “We are pleased with our financial performance and the continued strengthening of our enterprise. We are also seeing incremental consumer interest returning back to the home after being previously diverted to other areas such as travel.”

He added, “We have launched a number of important initiatives including strengthening of our talent, introduction of new products, stronger marketing campaigns, continued investments in our North American manufacturing, which make about 75% of our furniture, and our logistics network providing white glove delivery service to our clients at one cost throughout North America. We also introduced and implemented our important initiative as a leading Interior Design Destination, which elevated a consistent level of presentation across our retail network.” 

Kathwari continued, “While there are current economic challenges and international conflicts, we remain cautiously optimistic.” 
Hooker Furnishings and La-Z-Boy, which closed out fiscal 2024, also provided comments and insights.

“We’re proud of our team’s accomplishments and discipline during a challenging year, as we successfully restructured our HMI business model, improved profitability and strengthened our balance sheet,” said Jeremy Hoff, CEO of Hooker Furnishings Group (#25). “At the same time, we reinforced belief in our strategic growth initiatives by continuing to make the necessary investments to fuel long-term growth and sustainability.”

Looking ahead, Hoff said, “This environment has necessitated the adjustment of our cost footprint to current and expected medium-term demand through a realignment of operations which we expect will lead to a 10% reduction in overall fixed costs, the largest cut in our history, but one necessitated by current industry conditions. Planned actions include consolidating BOBO into Hooker Branded, further reducing our Georgia warehouse footprint, and consolidating certain other operations and additional fixed cost reductions. We’re still finalizing those plans and expect to have more information in the current fiscal quarter. 

“We’re intensely focused on creating an appropriate expense structure, while not jeopardizing the pace and impact of our strategic initiatives, which we believe will have a significant positive impact on Hooker once demand normalizes. We expect to be profitable in the current fiscal year and beyond,” he added.

La-Z-Boy Inc. (#14) also finished fiscal 2024 strong. “We are pleased with our strong finish to the fiscal year as fourth-quarter results exceeded expectations,” said Melinda Whittington, president and CEO. “Wholesale unit volumes improved in the quarter and recovery from weather and related disruptions in January also provided a tailwind. 

“The industry continues to grapple with higher for longer interest rates and housing turnover near 30-year lows negatively impacting store traffic. However, our execution is the strongest it has ever been, including conversion rates at all-time highs and average ticket and design sales trending up for the year. We expect industry fundamentals to remain volatile for the near term but remain confident in our ability to outperform the market and gain share longer term.”

CFO Bob Lucian also said, “Looking forward, in fiscal 2025, we expect the industry to continue to be challenged, down by as much as 5%, with any improved industry trends occurring late in our fiscal year, towards calendar 2025, when expected interest rate cuts filter through the economy and begin to positively impact housing activity. We expect to continue to outperform the industry in fiscal 2025, which should result in modest sales growth year-over-year. Growth will be supported by executing our Century Vision strategy, including the opening of 12 to 15 new La-Z-Boy Furniture Galleries stores, mainly in the second half of the fiscal.”

SEE WHICH COMPANIES MADE THE LIST FDMC 300: 2024 Report View information on all 300 companies listed in the this year's FDMC 300. The 2024 FDMC 300 is sponsored by IMA Schelling Group.

Industry challenges
In addition to employment and economic concerns, other topics of interest to both residential and contract furniture manufacturers include new requirements for the Lacey Act and formaldehyde regulations.

Effective Dec. 1, Lacey Act Phase VII kicks in, which means declarations will be required for an additional 200-plus plant product Harmonized Tariff Schedule (HTS) codes not already covered by Lacey, and that are not 100% composite materials. Although this impacts only companies that import, furniture is among the items being swept into phase VII. 

Another topic to keep watch on is the EPA’s 2024 draft risk evaluation on formaldehyde under the Toxic Substances Control Act (TSCA). Several groups have a stake in this issue, including the American Home Furnishings Alliance, BIFMA, Composite Panel Association, American Chemistry Council, International Wood Products Association, and the National Retail Federation, and have submitted comments on the proposal.

About the FDMC 300
More than 100 contract and residential furniture manufacturers are included in the 2024 FDMC 300, an annual report that tracks North America’s largest wood products manufacturers and ranks them by sales. These manufacturers accounted for an estimated $18.1 billion (contract furnishings) and $16.4 billion (residential furnishings) respectively of the overall $75.5 billion reported by the group in the April report. 

Updates of the FDMC 300 firms and the industry segments are posted throughout the year. For information on how to be included, contact [email protected].

The 2024 FDMC 300 is sponsored by IMA Schelling Group.