HIGH POINT, N.C. - As expected, the COVID-19 pandemic impacted new residential furniture orders, which dropped 29% in March compared to the same period a year ago, and 23% from February. "As we suspected last month, the results for March would not be very pretty and the actual results were not," said Ken Smith, managing partner at Smith Leonard in the latest Furniture Insights survey of manufacturers and distributors.
Year-to-date new orders declined 8% over 2019, the analyst and consulting firm noted. About 87% of the respondents reported decreased orders in March.
The May 2020 Furniture Insights report shows March shipments fell 11% compared to 2019 figures. The March decline caused year-to-date shipments to drop 4% for the year with 59% reporting declining shipments, Smith Leonard reported. "The decline in shipments was not as severe as the decline in orders as participants were working off backlogs so shipments were sustained in some cases, though backlogs also were down due to cancellations as well," Smith said.
Backlogs fell 16% from February and were down 8% compared to March 2019. Receivable levels in March were down 5% compared to 2019 figures. "Receivable levels seemed pretty much in line at least with year-to-date shipments. The decline in orders and shipments that occurred so quickly did not allow for adjustments to inventory levels as inventory levels remained steady with February," Smith said in the report.
Inventory levels were almost even with February 2020 and up 1% over March 2019. "We expect that the late March shutdowns did not allow for adjustments to inventory levels," he added.
Advance reports for retail sales in April noted a 16.4% drop from March and a decline of 21.6% from 2019 figures, with sales at furniture and home furnishings stores down 66.5% compared to April 2019.
"As we noted last month, it is hard to really know what to say about the economy, the furniture industry and most anything else in this environment," Smith noted. "As we write this month’s edition, we are starting to open up the economy state by state, but there are so many differences of opinion as to how and how fast to do it."
He added, "We do not have April results yet, but we did a straw poll with a small number of manufacturers and distributors early this month. We did not weight it but just as what percentage orders were down in April. The results showed over a 70% decline in orders with expectations for May in the 50% decline range.
"Obviously, none of us have seen anything like we are going through at least since the Depression."
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