Photo By Smith Leonard
HIGH POINT, N.C. - Although August new orders for residential furniture dropped 14% compared to a year ago, it may not be as alarming as first appears, reports Smith Leonard in the latest issue of Furniture Insights.
"At first glance, alarm bells rang, but then we looked to see what August 2020 results showed. Oh, a 51% increase over August 2019. So, then we looked at August 2021 compared to August 2019 and we saw that orders were up 30% over that period," noted Ken Smith, managing partner at Smith Leonard.
"Year to date, new orders were up 29% and up 35% over the same period of 2019. Based on those results, we turned off the alarm." Orders year to date were up for 91% of the residential furniture manufacturers and distributors participating in the monthly survey.
Shipments were up 10% in August compared to 2020 figures, for approximately 71% of the participants according to the October Furniture Insights. Compared to 2019 figures, they rose 14%.
Year-to-date shipments were up 34% for an estimated 91% of the survey participants.
Backlogs however continued to grow in August, up 3% over July figures, and up 81% over August 2020; the 2020 backlogs were also up significantly, 102% over August 2019. "Clearly, this continues to be a significant problem for the industry," Smith said. "The wait times are definitely a problem and a point of frustration, up and down the lines.
Receivables were up 21% over August 2020. Although this figure was "a little high" given the 10% monthly increase in shipments, Smith noted it was in line when compared to the 34% increase in year-to-date figures. "Customers are keeping their invoices up to date, as those that are falling behind, fall further behind in getting their orders."
August inventories were up 43% over 2020 figures, but down from the 51% increase reported last month. "As we have noted before, the key to the game today is having inventory. Unfortunately, the key is having the right inventory and that is not always the case these days," Smith said.
Sales at furniture and home furnishings stores were up 13.4% over September 2020 and up 32% year to date. Compared to other markets, furniture and home furnishings stores had the fourth highest rise for the year-to-date, after clothing and clothing accessories stores (58.2%), gasoline stations (33%), and sporting goods, hobby, musical instruments, and book stores (32.9%), the report noted.
"We just finished off another High Point Market and we would say that overall, the results were positive, especially since there was some trepidation coming in," Smith said. "The mood seemed very good in spite of all the delivery issues. Most seemed to have an attitude of focusing on making the best of a market season that is admittedly challenging. Orders were written, lots of designers were here, the big folks came early, and it was business as usual, though maybe not by the numbers all would have wanted. Noticeably absent but expected was the lack of the typical international visitor representation."
Not surprisingly, an informal survey at High Point found the top concerns by manufacturers continue to cycle around: issues with COVID; lack of employees, both domestic and foreign; foam/material shortages; and freight issues. "The other question that we asked of most everyone was if we had told you two years ago that business in the industry would be this good, how many would have realized that there would be this many problems. But we always came back to, it is a lot better than 2008 when we didn’t know who would survive," Smith noted.
He continued, "There were questions as to how much longer this good business will last. The answers we got were probably through 2021, some said through 2022, some through 2023 while others said it will fall off quickly. If anyone figures it out, please let us know. We will be happy to share."
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