Photo By Smith Leonard
HIGH POINT, N.C. - New furniture orders dropped 5% in November compared to the same period a year ago, marking the third time in four months there's been a year-over-year decline, said Smith Leonard in the latest Furniture Insights survey of residential furniture manufacturers and distributors.
"The 'choppy' descriptions we have used before continued as, in spite of being down 5% overall, only a little more than one-half the participants reported lower orders," said Ken Smith, managing partner at Smith Leonard.
November's decline brought the 2019 year-to-date totals down 2% compared to 2018, with 68% of participants reporting lower order rates.
The January 2020 Furniture Insights report also shows November shipments dipped 3% compared to 2018 figures, with just under one-half reporting lower shipments, the accounting and consulting firm reported. Backlogs were up 1% over November 2018, but down from the 2% increase reported last month and the 6% increase reported in September. "Obviously, with the slower order rates, backlogs have been brought down significantly," Smith said.
Receivable levels were about even with November 2018, and 2% over October 2019 figures. "Receivable levels overall appear to be in good shape and as we have been doing planning with many of our clients back in November and December, we have not heard much about significant accounts that may need write-offs or reserves. So that is good news," Smith noted.
"Inventory levels are still too high at 7% above November 2018, but those higher levels continue to decline," Smith added. "October levels were 11% higher than October 2018. With so much inventory being imported, it is just hard to bring the levels down quickly, considering the long lead times, for both finished goods and certain raw materials."
"We could almost just copy over our thoughts from last month," Smith said. "More soft business for many in the survey but quite a mix in results. We do not see consistency in any one sector."
On an adjusted basis, sales at furniture and home furnishings stores were up 3.2% in December compared to the same period a year prior. Sales at these stores finished the year up 0.7% compared to 2018.
"We continue to hear that internet sales are taking away from brick and mortar stores, yet we know that many of the furniture manufacturers and distributors are selling over the internet, so it is not like there is no furniture business being done through those outlets," Smith noted.
"Admittedly, it is hard to tell what the retail statistics story tells us. Yet we do see from our survey that business overall is just not that strong for most."
The recent outbreak of the coronavirus outbreak could also have an impact on residential furniture sales, Smith said. “This could create significant disruption in supply chains,” he added. “We hope the spread of the virus slows down soon.”
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