HIGH POINT, N.C. - New residential furniture orders were up 7% in September compared to the year prior, a nice turnaround after the drop in August. The latest Furniture Insights survey of residential furniture manufacturers and distributors from Smith Leonard indicates 64% of survey participants reported increased orders for the period.
However, despite the rise in September, year-to-date new orders are down 1% for 70% of the participants.
The November 2019 Furniture Insights report also shows September shipments rose 6% compared to 2018 figures and were up 7% from August. "The September results were better than we expected overall, but certainly not for all. Even with the September increase, the year to date decrease of 1% in new orders seems to reflect the kind of year it has been," said Ken Smith, managing partner at Smith Leonard.
Year to date shipments are even with last year, the accounting and consulting firm reported. "As with orders, the choppy order rates have affected shipments, so participants continue to be up and down with no consistency to the business conditions," Smith noted. With orders in dollars exceeding shipment dollars, September backlogs increased 7% over August figures and were 5% higher than September a year ago.
Receivable levels were level with September 2018 figures. "With shipments up 6% over last year, we would have expected some increase, but with year to date shipments flat, the receivable levels make sense. It was good to see them back in line after a couple of months of unusual increases reported," Smith said.
September inventories rose 12% compared to last year's figures and were even with August levels. "In August, inventories were 14% higher than August 2018 so at least the inventories have leveled off, in spite of appearing to be a bit high based on current business conditions," he added.
On an adjusted basis, sales at furniture and home furnishings stores were up 0.9% over October 2018, and up slightly, 0.1%, for the year to date, according to the Furniture Insights report. "We continue to think that the overall economy is good and all the economic factors that support the industry are in good shape," Smith said.
"We almost always go back to the fact that most furniture purchases are deferrable. Most of our furniture at home does not have to be replaced immediately, so usually housing moves are the reason to buy on a more immediate needs basis. So with overall housing results decent but not great, that leaves consumers more in the need for replacement items which can be deferred."
Now, he added, "is a time to look for new ideas and products to help you with market share. Those ideas then convert to retailers and designers being able to show consumers more things they 'have to have' or 'want to have' enough to make them want to buy."
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