Photo By Smith Leonard
HIGH POINT, N.C. - New orders for residential furniture continued their double-digit gains, rising 34% in February compared to 2020. This marks nine straight months of year-over-year double-digit increases, as reported by Smith Leonard in the latest issue of Furniture Insights. The increase in new orders was reported by 94% of the residential furniture manufacturers and distributors participating in the monthly survey.
"The February results will likely be the last of the real comparisons as in March we will compare to the beginning of the COVID shutdown period. It will likely be June or later before we start seeing meaningful comparisons and even then, the surge in orders that we have seen since June, will probably make even more difficult comparisons," noted Ken Smith, managing partner at Smith Leonard.
Year-to-date, new orders were up 31% compared to the same two months in 2020. Year to date, new orders were up for 88% of the participants.
Shipments were up 18% compared to February 2020 figures for approximately 81% of survey respondents, and up 13% year to date for 66% of the survey participants, according to the April Furniture Insights.
Backlogs continued to increase, up 5% in February compared to January, and ahead 184% over February 2020.
"The backlog levels continue to create problems at retail as customers are not happy having to wait on product," Smith said. "Part of the backlog issue has been created in both upholstery and case goods. The lack of availability of foam for upholstery has been the primary cause as well as the lack of labor supply. Case goods have been affected by factory issues in Asia as well as all sorts of issues with the flow of goods on the water."
Receivable levels increased in February, up 9% compared to 2020 figures, and up 1% over January. "February shipments were up 2% from January and up 18% over February 2020 so it appears that receivables are in good shape," Smith said.
Inventories were up 4% in February compared to January and were 15% higher than a year ago. "This increase is certainly in line with the increase in orders and would probably be even higher if the flow of goods were better and more employees could be found for the manufacturers."
Sales at furniture and home furnishings stores were up 46.8% from March 2020 – the start of the COVID-19 pandemic – and up 20.4% for the year to date.
"We have had several conversations with industry executives that almost always end up with frustrations of how good business is in terms of orders coming and yet how difficult it is to either not be able to get foam or workers, or deal with significant price increases when prices were quoted before the material cost increases came into effect. Or orders are great but cannot get product out of Asia. Or the cost of containers, if you can get them, have quadrupled or more," Smith said.
"It seems that no one would have thought that, for once, business in the furniture industry could be this good with consumer demand this high, yet so many problems have developed to make it hard to appreciate how good business is.It will be interesting to see how business develops over the summer as restrictions are released and consumers are free to travel and move about more. Will the focus on the home change, or will we see this focus remain for the next year or two or more?"
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