July 18,
2022 by HFBusiness Staff in Business Strategy, Industry 
While HFB’s Forty Under 40 Awards are a wonderful way to honor the home furnishings industry’s young and rising stars, it also provides a peek into what is happening with these young industry professionals as they make their mark. This year’s honorees are from all over the country, and they hold a variety of positions representing different segments of the industry. But the one thing they all have in common is a passion for home furnishings, the work they do and the drive to be an important part of the future of the industry. They are the rising stars who are shining bright and leading change.
The Forty Under 40 honorees you will meet here embody the words ‘rising to the challenge’ as there have been many. We can learn from these innovative thinkers as we nurture and mentor them so they can reach their full potential.
To the Class of 2022 we say, congratulations! We pass the torch to you as you lead during these changing times. To you, our readers, we hope you enjoy getting to know the Class of 2022.
JENI ALBERT, 27
Marketing Manager, Dunk & Bright Furniture
Since starting with Dunk & Bright Furniture in 2020—shortly after the COVID-19 mandated shutdown—Jeni managed to increase the company’s marketing efforts, while reducing its advertising budget by 300 basis points, which resulted in record sales in 2021. Her marketing prowess and strong business acumen is evident through the traffic figures and heavy-hitting promotions she devised to get customers excited to shop at the store. She single-handedly coordinates all the company’s marketing efforts, including search, social, TV, direct mail, OTT, SMS marketing, email marketing and web design. Not only is she savvy when it comes to digital marketing but she is also a talented graphic designer.
Jeni believes in giving back and has participated in neighborhood clean-up initiatives to better the community. She also supported a recovery effort for her family’s business after a fire destroyed their offices.
YASEMIN TEKE ARSLAN, 35
CEO and Founder, Leone di Fiume
Yasemin Teke Arslan is the CEO and founder of a luxury hand-blown glass and candle company that transforms glass into unique home accessories. She implements the vision and strategic direction of the brand. Since 2019, she has grown the company to include a retail store in Istanbul, expanded the brand’s distribution and entered the U.S. market. Under her leadership the company has expanded its product line to include whiskey decanters and glasses, as well as decorative bowls. Tapping into her keen business acumen, Teke Arslan opened new business opportunities with 10 retail stores internationally, including a well-known highend specialty store. Her success is a direct result of her work ethic, motivational abilities and leadership style.
Supporting environmentally conscious business practices, Teke Arslan launched the candle product line and worked to assure all pieces would be filled with 100% natural soy and vegan wax. Each candle includes cotton wicks and scents sourced from an environmentally responsible fragrance house. Even the packaging is biodegradable. Leone di Fiume and its parent company consistently donate to the Red Cross. This year, the company donated $30,000 in support of Ukraine humanitarian aid to assist those affected by the war with Russia.
HUNTER CHILDRESS, 29
Director of International Sales,
A.R.T. Furniture
Hunter Childress oversees the development and brand initiatives of A.R.T.’s international business by establishing retail partnerships, empowering local territory managers, and elevating brand recognition on a global scale. By reimagining the strategic direction of the channel, Childress expanded A.R.T.’s global reach to 50+ countries. He frequently collaborates with the A.R.T. product development team to create designs that support the unique needs of international markets and guides the operations team to overcome the distinct logistical requirements of the countries in which A.R.T. operates. He challenges his team to strive for the next level of excellence, producing high-achieving habits and outcomes. His work ethic, intuition, and curiosity are what drives his success.
Childress is actively involved in his local church and volunteers with a children’s ministry weekly. He is passionate about adoption and foster care services and actively supports the Woven Papyrus Adoption Project as well as The Family Room – a resource that equips foster families for new child placements.
RACHAEL CLARK, 29
Digital Experience and E-Commerce Manager, Old Brick Furniture Company, Inc.
Working in the industry since she graduated collage, Rachael Clark is a tireless worker with a mind for the future of digital retail and customer experience. She is described as one of the brightest young minds in the industry today. Spearheading all marketing and digital initiatives for Old Brick Furniture, Clark led the successful roll-out of a new web site for the store and built a very capable team that manages the site seven days a week. Since her arrival in October of 2020 e-commerce orders increased by 650%. Clark and her team also manage the stores’ social media sites, the creation of all in-store signage and the marketing calendar for nine locations.
Clark is a Be The Match volunteer and helps blood cancer and blood disease patients find matching donors for a blood stem cell transplant. She is a member of the National Bone Marrow Donors Association. Clark also leads Old Brick’s corporate donation program.
JULIA CRITELLI, 24
Manager, Critelli Furniture
As a fourth-generation member of Critelli Furniture, Julia has an impressive approach to business that is methodical, yet creative. She has helped bring the company into a new era by embracing technology and overhauling various aspects of the 100+ year old business. She is smart and savvy and has built a wonderful working relationship with her team. During the pandemic, Julia not only opened a new and more modern showroom, but she showed true leadership while helping to guide employees during lock downs. She also assured that the company stayed in touch with its customers and remained relevant during uncertain times.
The Critelli family supports many philanthropic endeavors and is very involved with the arts community in their town. Julia also leads the intern team at Critelli’s and nurtures the relationship with the local design college.
JESSICA DEVANEY, 29
General Manager, Hudson’s Furniture Showroom, Inc.
Jessica DeVaney is responsible for every aspect of Hudson Furniture’s Ocala, Florida showroom. She hires, onboards, trains, coaches, mentors, and holds her sales team accountable for meeting their goals. She also manages over $600,000 in inventory. DeVaney has shown an incredible amount of leadership growth in the last two years. Her store’s volume has increased by double digits in both written and delivered sales all while producing over 13% net income consistently. Last year, written sales volume increased 37% over 2020, delivered volume increased 47% and design segment volume increased by 72%. She has been able to keep the store fully staffed at a time when others are having difficulty hiring. DeVaney has also built a strong design culture within the store and consistently reaches top goals during promotional sales such as Wine & Design Day. To help others in the business community, DeVaney organized a local networking event for small business owners in the Ocala area.
PETER DRESSLER, 34
Manager of Product Management, STORIS
Peter Dressler is the product manager for STORIS’ e-commerce and data analytics product families. He determines the direction of these technologies and guides their entire software development lifecycle including new feature determination, prioritization, design, development, delivery, and success metrics. He works closely with other product managers to coordinate feature determination and design to ensure the company’s goal of a unified software solution is met. Dressler is a problem solver who is highly motivated to find new ways to evolve STORIS’ technology. He has an innate drive to do things better than before, which has proven to be a successful strategy to moving a technology stack towards the future. His role in the development of the eSTORIS e-commerce platform, eBridge Commerce solution, and STORIS APIs has been vital for the company’s retail customers to enable them to execute seamless e-commerce strategies.
Dressler is an active supporter of caresfoundation.org for Congenital Adrenal Hyperplasia, an organization that strives for advance quality health care through support, education, and research. An animal lover, Dressler has often rescued kittens and cats in need and nurses them back to health.
BLAKE FORD, 39
Senior Sales Associate, Silver Line Sleep
With more than a decade of experience in the bedding industry, Blake Ford oversees Spring Air International’s licensee Silverline Sleep’s sales operation. He has spearheaded some of the largest companywide efforts, including the development and rollout of a product line for a large, multistate retailer with more than 150 stores, bringing together multiple Spring Air factories across the country to service its distribution centers and support their sales teams. He also assisted with the creation and development of Spring Air’s supporter line and worked closely with the Spring Air team in support of the refresh of its luxury brand’s first redesign in seven years, culminating in a rollout to hundreds of stores nationwide.
Ford was a National Merit Scholar who graduated from the University of Texas and continues to be involved with programs for the college. He also volunteers for a voting rights group and partners with some of Spring Air’s major retail customers to create programs that offer free mattresses to consumers during the holidays.
OLIVIA GODFREY, 28
Director of Graphic Design, Malouf
Malouf’s creative capabilities are managed in-house and overseen by Olivia Godfrey. She leads a team of 13 web and print designers responsible for creating visual branding for Malouf Home as well as sister brands Salt Flat and Weekender. Her commitment to quality, creativity and storytelling has helped to win business from multiple retailers. Godfrey fills the gap between strategy and creative production to help her team understand the company’s approach. She led the charge for a shift from product sub-brands to all Malouf branded products that tell one cohesive story. A natural leader, Godfrey fosters an environment that encourages professional development. During her time with Malouf, the department has grown from two to 13 causing her to facilitate multiple restructures to better position her team for the future. She and her team have received 16 nationally recognized awards.
Godfrey volunteers for the Malouf Foundation establishing the brand’s identity and designing visual elements. She works with the youth in her church and actively supports local charities. She also volunteers her time as a guest presenter for the Hashimoto Communication Arts Lecture Series at Utah State University.
JULIANNE GOODWIN, 29
Advertising Manager, B.F. Myers Furniture
In charge of traditional, digital and social marketing efforts Julianne Goodwin grew up in the retail furniture business and understands what it takes to be successful in today’s landscape. She is involved in many aspects of the business including merchandising, floor design, public relations and sales. She spearheaded the advancement of the company’s social media advertising and instituted a program that has helped the brand maintain steady growth. She also brought new vision to the overall operating procedures while maintaining the foundation of long-standing company policies. In addition, Goodwin has successfully established herself as the face of the company on television as well as in other marketing efforts.
Even though Goodwin works over 40-hours each week and is the mother of a two-year-old—with a second child on the way— she still finds time to be involved in helping B.F. Meyers establish and promote its partnership with Habitat for Humanity. She also works to support the community through various other organizations. Goodwin serves on the Leadership Goodlettsville committee to help promote the city of Goodlettsville, Tennessee, which is near and dear to her heart.
DESTINI HINES, 29
Contractor Onboarding Specialist, Diakon Logistics
Destini Hines is a dynamic young professional with drive and passion for her work. She is a contractor onboarding specialist for full-service third-party logistics provider Diakon and is responsible for managing delivery associate relations, retention and new opportunities. During a very difficult driver shortage, Hines has improved driver retention and created new ways for delivery teams to increase efficiency, performance and earnings potential. She has also helped create and lead a new division of the company, Daikon on Demand, which matches delivery teams with retailers across the country for immediate delivery support without long-term commitments. This has proven to be a huge success for retailers as well as delivery teams looking for supplemental short-term work.
Hines is actively involved in the communities in which she lives and works and takes great pride in helping others. Committed to her family, she balances a demanding work schedule without sacrificing her family’s needs.
GRACIE HOFFMAN, 24
National Key Account Manager, Codarus
Gracie Hoffman began her career with Codarus five years ago, while still in college. She worked as an intern at the Laguna Design Center, where soon after she was offered a full-time position as a Codarus sales associate. Hoffman was then promoted to senior sales associate including managing and in part merchandising the showroom. Her ability to sustain and nurture solid relationships with key clients earned her the role of key account manager last year. Hoffman has a degree in interior design. Her love of interiors, coupled with her showroom sales experience has provided her with a broad understanding of the industry. Over the years, she has established strong relationships with some of Southern California’s top designers as well as attained an in-depth knowledge of Codarus’ partners and their product lines.
Hoffman is an animal lover and donates textiles and rug swatches to the local animal shelter. She also coordinates with Habitat for Humanity on product that Codarus donates from its Orange County showroom.
VILLE KARESTO, 38
Chief Sales Officer, Luonto Furniture
Ville Karesto has worked for Luonto Furniture for over 20 years. Starting with the manufacturer of sleeper sofas at age 17, he began unloading furniture containers in its Finland headquarters then moved to the U.S. in 2016 to manage the sales team. As chief sales officer, he has played a pivotal role in the company’s exponential growth. With U.S. headquarters now in Charleston, South Carolina, Luonto exports to over 20 countries across roughly 800 retail locations and is available in most major cities in the U.S. and Canada with over 240 retail locations. Considering himself a passionate furniture specialist, he values the connections he makes with his clients. In addition to running the sales department and supervising sales strategies and targets, Karesto manages highvolume marketing promotions and helps with product development.
Whether it is a Top 10 retailer, independent ethnic store or an interior designer, Karesto treats everyone equally with warmth, care and positive energy. He is one of those individuals that exudes commitment to his customers. When you meet him once, you won’t forget him.
CARA LAHTI, 26
Laurentide Product Manager, FurnitureDealer.net
Cara Lahti began her career with FurnitureDealer.net as a client solutions strategist before being promoted to product manager. She oversees Laurentide, the company’s assistance tool that helps customers get in contact with retailers and receive help through their shopping journey. Lahti manages everything from client relationships to working with the tech team to develop new features. During the pandemic, she led the organization and successful implementation of a virtual user conference. Having completed the FurnitureDealer.net Leaders in Training program, Lahti will be helping to lead the program for future classes. She has been a vital part of the management team, taking on new responsibilities while training new team members to make sure her team is fulfilling their duties.
Lahti is an active member of her church and local community. Her passion for dance drives her to volunteer her time with underprivileged kids who share the same passion. She is a member and volunteer for WithIt, a non-profit organization dedicated to mentoring, education and leadership development for women in the home furnishings industry.
LUKE LARSEN, 32
Lead Vendor Relations Manager, BrandSource/AVB Marketing
A consummate team player, Luke Larsen is described as a “salt of the earth, humble midwestern guy” who has a great future in the home furnishings industry. As the team lead for vendor relations managers, he is responsible for enhancing AVB’s relationship with 250+ furniture brands. He has demonstrated a keen understanding of all aspects of the furniture business, especially the digital side. During his tenure, Larsen established a best-in-class digital catalog with 250+ brands, coached and onboarded new vendor relations managers. He is known for always putting the retailer first.
Larsen is a family man who regularly helps older members of his community with their groundskeeping needs. He also regularly donates blood to help save the lives of people in need.
JUSTIN LEHMAN, 39
Director of Technology, Partner, Interiors Home
As director of technology, Justin Lehman oversees and manages all aspects of the software, electronic hardware and web systems for Interiors Home as well as the training required for the staff to ensure proper implementation. He is also a shareholder in the company and assists the president/CEO in strategic decision making. Lehman was responsible for the research and selection of the company’s new enterprise software and hardware systems and oversaw the training and implementation at all levels of the organization. He put Microsoft Surface laptops in the hands of all retail/design associates and through education and skill assessments ensured that they meet the competencies and utilization goals. Due to his background in banking, Lehman was able to provide insight, document analysis and term negotiation for the company’s decision to switch to a new bank.
AMBER LEVITZ, 38
Vice President, New Product and Corporate Display
Amber Levitz exemplifies leadership qualities that have helped grow her family’s business to become a Top 100 furniture company. Although she has varied merchandising responsibilities, she is fully in charge of new product direction and display plans for all seven of the companies stores, including Sam Levitz, Sam’s Outlet and Ashley Home Stores in the company’s southern Arizona market. Amber has played a significant role in the development of three cutting edge Ashley stores. Her ability to initiate new store design ideas have been recognized by other store owners and incorporated into their stores. She has also played a lead role in successfully keeping the company’s three brands connected through social media.
Levitz is a member of the Home Furnishings Association and the CXO Leadership Group. She brings a youthful, forwardthinking approach to the 70-yearold company. She is well respected in the industry and is recognized for her talents by many. Described as fun-loving, she possesses numerous qualities that make her easy to work with. Levitz has made significant contributions that have led to the company being the largest contributor to its local Humane Society to help end suffering for all animals.
KATIE LIETZ, 32
Director of Marketing, Advertising Concepts of America (ACA)
As director of marketing with ACA, Katie Lietz is responsible for overseeing projects and campaigns for over 100 furniture retailers across the U.S and Canada - including many Top 100 retailers. She meets with store owners and their marketing teams daily to discuss goals and budgets and plan effective ways to reach target demographics. She also works on video assets for manufacturers and their clients, informing them about new and upcoming products. Solution-oriented and a team player, Lietz worked with companies during the pandemic to create virtual showroom tours. A savvy social media user, she tests new ideas and trends on Instagram and shares her knowledge of the ever-changing algorithms with clients to keep them up to date and always ahead of the trend.
Active in her community, Lietz volunteers at the Coastal Conservation Association (CCA) Florida to fundraise, clean up beaches and help rescue turtle hatchlings. She works with Empty Bowls, a national grassroots event that raises funds for hunger relief. She also provided help during the Hurricane Harvey Relief Effort by organizing two U-Haul trucks full of essential items after the hurricane hit Texas.
ANIKO MAHAN, 29
Director of Operations, Malouf Foundation
As the director of operations for the Malouf Foundation, the charitable arm of Malouf dedicated to confronting child sexual exploitation through education, healing, and justice, Aniko Mahan manages all foundation events like Golf for Freedom, Art for CAPSA and the Human Trafficking Policy and Education Summit. Additionally, Mahan helps supervise the foundation’s high-level initiatives, including OnWatch, Rooms Restored and the Family Justice Center. An invaluable part of the Malouf Foundation team, she has been instrumental in the ideation, execution, and expansion of events and initiatives. Mahan is currently managing all event logistics for the foundation’s inaugural Human Trafficking Policy and Education Summit to help individuals and organizations discover new solutions to combating trafficking. In 2020, the Malouf Foundation raised over $110,000 (the highest amount ever raised) to support child advocacy centers nationwide.
As an outdoor enthusiast and avid skier, she actively volunteers for an outdoor nonprofit group called Nordic United of Cache Valley. She has fostered over 15 dogs through the Cache Humane Society and other shelters.
RYAN MAHONEY, 37
Senior Vice President of Furniture Leasing, International Market Centers
Starting with International Market Centers (IMC) when he was 23 years old, Ryan Mahoney was selling advertising and helping manufacturers and service provider’s build their brands. In 2015, he advanced to his current position where he manages a team of leasing agents and assures occupancy in showrooms. He nurtures relationships that offer value as he assists exhibitors in defining and attaining their market goals. Mahoney’s credo is “always do the right thing,” which is why he is trusted and respected by so many. His presence at all IMC campuses contributes to its position of strength and credibility, which in turn has driven new opportunities. At the same time, he has developed inventive pricing structures to achieve corporate goals. He was responsible for spearheading the campaign to win the bid for the International Casual Furniture Association exhibition, which ultimately resulted in the event being relocated to the AmericasMart in Atlanta.
Mahoney is extremely generous with his time and has worked tirelessly with the City of Hope’s home furnishings team to raise awareness of the lifesaving work they do and to raise funds to help with ongoing support for the organization.
HENRY MCREE, 40
Account Executive, Wm T Burnett & Co Nonwovens
Henry McRee made the move from North Carolina to the West Coast 15 years ago to serve as an account executive for Wm T Burnett & Co Nonwovens. As account executive and key account manager he has built a solid customer base and knows all the players in the market, from competitors to suppliers. Before joining Wm T Burnett & Co Nonwovens, he was a teaching fellow in the department of economics as a master’s candidate. He ultimately chose to pursue a MBA in finance, which has served him well in his career. McRee is a member of the Consumer Product Safety Council.
McRee is an active member of his church as well as in his local community. He is the chairperson for the board of finance at his local church in Scottsdale, Arizona. Volunteering his time since college, he was president of the Order of Omega and the scholarship chair for three years.
GRANT MILLIKAN, 35
Director of Inside Sales and Lead Purchasing Agent for the Furniture Division at C&L Supply
A master of many trades Grant Millikan manages the customer service team at C&L Supply, but he also works closely with inbound and outbound logistics partners and helps to manage key accounts. He is the lead purchasing agent for the furniture division and is an astute buyer who oversees furniture merchandising for four distribution centers. Millikan creates the company catalog as well as all inhouse promotions and ads. Since joining the company in 2010, Millikan has helped grow the furniture division by over 300%, thanks to his attention to detail, knowledge of the furniture industry and willingness to take on difficult projects and see them to completion.
Millikan demonstrates an extraordinary commitment to the furniture industry and is described as a role model within the industry as well as in his local community. He serves as president of the Vinita Rotary Club as well as a member of the board and helped execute several philanthropic initiatives. He has also partnered with local businesses to provide Christmas sacks for nursing home residents and participates in a program that drills wells for rural communities in Central America.
PATRICIA NIELSEN, 26
Vice President, The Furniture Gallery
At 26, Patricia Nielsen has taken to managing the Furniture Gallery’s Augusta, Maine location like a fish takes to water. She eases through whatever needs to be done without hesitation. On any given day, she can be found in the warehouse setting up racks and loading trucks or waiting on customers, placing orders and making sure the store operations are running smoothly. If a customer wants to speak to an owner or manager, Nielsen handles the task with the skills of a consummate professional. She possesses excellent communication skills, fresh new ideas and the knowledge to implement them. She is also the face of The Furniture Gallery in the company’s television commercials.
With a master’s degree in business administration and a bachelor’s degree in small business management, Nielsen possess the skills needed to continue to be successful. She is a member of the Sigma Nu Tau Entrepreneurship Honor Society. Nielsen donates her time to Habitat for Humanity and has also volunteered at homeless shelters to help those who are less fortunate.
ANTONIO PAXTLE, 34
Store Manager, Hometrends – Ashley Stores of Central Nebraska
Antonio Paxtle has been working for Hometrends and Ashley Stores of Central Nebraska since he was 19. He started on the sales team and progressed to sales manager before assuming his role as store manager. In his current role, Paxtle has led his store to a 91% increase in volume over seven years. He has coached many top performers and created a culture of winning, growth and service to the community. He leads the company’s internal Hometrends Leadership Academy, an 18 month, invite only curriculum to identify, grow and develop the next generation of leaders in the company. He is responsible for coordinating speakers, break-out sessions and post-session surveys for the initiative. He also led his team successfully through an enterprise resource planning (ERP) change during pandemic-related shutdowns.
Paxtle and his team have participated in many on-site and off-site volunteer activities for Habitat for Humanity, Hope to Dream, the Chamber of Commerce, American Red Cross, Alzheimer’s Association and Race for Grace. He also led efforts to help families affected by historic flooding in 2019 that displaced hundreds of families by donating furniture and mattresses.
JANE PETERSON, 34
Human Resources Manager, Steinhafels
Jane Peterson is a highly regarded leader at Steinhafels. Her passion and dedication have been recognized and celebrated throughout the organization. Her primary responsibility is to provide guidance to associates of all levels. She performs above par to demonstrate her genuine care for the associate experience at Steinhafels. Tackling challenging tasks head on, Peterson is solutions oriented.
When Steinhafels stores were allowed to reopen in May 2020, one of the company’s biggest challenges was hiring staff. With determination and tenacity Peterson was able to onboard associates for stores and distribution centers in Wisconsin and Illinois hiring qualified delivery driver teams and forklift operators. She created a sales internship program that has enhanced recruiting efforts, and designed, implemented and streamlined management training programs that have enhanced the knowledge and skill of Steinhafels’ managers. As a mother of two young children, Peterson is very involved in her children’s activities and is active in her church and local community.
JONATHAN PEYKAR, 39
President of Hospitality Division, Nourison
Nourison is a leading floor covering and home accents manufacturer that was founded in 1980 and is now employing its third generation of family members. When the company committed to becoming a leading supplier to the worldwide hospitality market, Jonathan (Johnny) Peykar methodically assembled a group of the industry’s leading management, administration, design, planning and estimating, manufacturing and sales talent to help grow the business. His efforts paid off as Nourison Hospitality has consistently increased its revenue by 30%, year after year. He has set a new standard of luxury and style in the world of premium quality floor covers and continues to manage every aspect of the day-to-day operations. Working with Johnny makes the process even easier, according to his clients who say he is always available to help move things along and obtain whatever information is needed to assure successful projects.
With a charitable heart, Johnny supports the City of Hope, Boston Children’s Hospital and Shriner’s Hospital. He also donates his time in support of many other charities.
COLE PHILIPS, 30
Manager, Affordable Portable
Cole Philips is a personable leader with a strong work ethic and demonstrated ability to oversee the daily operations of Affordable Portables furniture store. He handles a tremendous amount of responsibility and balances it with his strong organizational skills and wonderful sense of humor. He is driven to succeed and possesses people skills that make working with him a joy. Philips’ duties include ordering furniture, managing customer orders and organizing deliveries and service calls. With honesty and integrity, he interacts with clients in a way that provides outstanding customer support and solves challenges that may arise to everyone’s satisfaction.
Philips’ commitment to his community is as strong as his commitment to work. He has donated his time to homeless organizations and has worked with the Make-AWish Foundation. His primary philanthropic focus is for Planting Seeds International, an organization in Guatemala that provides preschool and adult education.
KYLE ROBERTSON, 36
Vice President, Product, Malouf
When he joined Malouf over eight years ago, Kyle Robertson assumed all product development responsibilities. Since then, he built a team that now consists of 25 people. He is responsible for 55+ vendor relationships across 18 countries overseeing sourcing, merchandising, product design and quality assurance for 13,000+ SKUs—including sister brands Salt Flat and Weekender. In support of Malouf’s commitment to sustainable practices, Robertson is responsible for the supplier and supply chain conduct in relation to corporate social responsibility and environmental, social and governance. He is a valued member of the senior leadership team where he helps shape the direction of the company for long-term sustainability and success.
When Malouf donated over 40,000 bedding items during the pandemic, Robertson helped champion the cause and assisted with logistics for the donations. He also supports the Malouf Foundation’s awareness and fundraising events. He volunteers as a Sunday School teacher for the youth in his church. Robertson is also fluent in Mandarin Chinese.
DIANA SAMUELS, 37
Director of Operations, Harounian Rugs International
As the director of operations, Diana Samuels is responsible for overseeing buying, product and product development while managing company resources. She uses her keen organizational talents to develop, maintain and improve operational plans at Harounian Rugs. Samuels began her career in the medical field as a sonographer before switching over to the home furnishings industry in 2014. During her eight years at Harounian, she has upheld the high standards of producing an ever-changing group of creations specifically designed to complement today’s home fashion trends, while ensuring the best value. Driven by results, Samuels has flourished in her demanding role, executing multiple skills and her broad range of knowledge in all aspects of the company.
Samuels is actively involved in the communities in which she lives and works and takes pride in helping others.
STEVE SCHWINN, 37
Owner/President, Ironhorse Home
Steve Schwinn runs two of the three stores in the IronHorse family business and with his help it has grown exponentially and now occupies a 15,000 square feet showroom. He values his customers and takes the time to understand their needs, which is what makes him so successful. A hard worker Schwinn not only contributes to his business, but to his community and the furniture industry at large. He is a trustee for the Contemporary Design Group (CDG), a national association of independent home furnishings retailers specializing in modern and contemporary design. Schwinn was asked to join the board after just a few years of membersip due to his business acumen. He brings refreshing insight and an out-of-the-box perspective to his position.
Schwinn is supportive of the local artist community and hosts them with openings and displays at the store. He also supports the local community food bank. In addition, he owns a home in Nicaragua and when there supports the local medical clinic.
ZACHARY THOMAS SHILEN, 29
Vice President of Sales, Leather Italia USA
Zachary Shilen has shown tremendous leadership in his role as vice president of sales at Leather Italia. He is an enthusiastic and optimistic sales professional with a proven track record of stewardship to the organizations’ sales function. Infused with energy, Shilen brings a fresh perspective to his job, his team and the company and represents everything it means to be a young, up-and-coming, industry leader. He aspires to contribute to the success of the company through a dedicated, tenacious effort and process driven focus. Through his efforts, he has increased the sales force and the company’s customer base over 100% since 2016. An active member of his local community, Shilen led efforts to collect sanitary products for individuals in need during the COVID pandemic. He has also led multiple food drives to collect donations for the Red Cross and helps collect toys and gifts from the community for the annual free Christmas Shop for kids during the holidays.
ROBERT SPILMAN III, 31
General Manager, Lane Venture, Bassett Outdoor
When Robert Spilman joined Lane Venture in 2018, he made an immediate impact. As national sales manager, he restructured the salesforce and attracted new talent to the brand. After being promoted to general manager, he oversaw the introduction of new product lines, the acquisition of a new domestic facility in Alabama, and achieved exponential sales growth. Spilman, who represents the fifth generation of his family with Bassett Industries, has played an essential role in restoring the Lane Venture brand reputation and path to profitability, including a 40% year- over-year sales increase. He helped increase domestic manufacturing capacity through the strategic acquisition of a domestic manufacturing facility and assured growth was accomplished using environmentally sustainable means. In 2021 Lane Venture recycled 48 tons of materials, while the Alabama facility repurposed over 21,000 pounds of aluminum.
Embedded in his community, Spilman is a youth leader at his church and a trustee for the Linville Foundation, which raises funds to encourage and support students in their pursuit of higher education. He is also involved in several other local charitable organizations.
ABBY STIEGLITZ, AGE 36
Lead Merchandiser, Klopfenstein HomeRooms Furniture
As the lead merchandiser and designer at Klopfenstein HomeRooms Furniture, Abby Stieglitz is responsible for five highvolume stores. She has contributed greatly to the company’s success, ensuring that all visual merchandising across each store’s showroom is styled as planned. With focused creativity, Stieglitz manages design layouts of merchandising displays, while understanding the company’s customer segments and how product and shopping preferences in each store varies by customer type. Wearing many hats, she relies on organization and efficiency to oversee purchasing as well as for hiring the merchandise and design staff. Positive, creative and enthusiastic, she thinks quickly on her feet and adapts easily to change. Stieglitz has volunteered her time to orchestrate the design, funding and set-up of all the furnishings for a new and state-ofthe-art Rescue Mission, an 80+ bed facility in downtown Fort Wayne, Indiana. As a mentor of her church’s youth group and nursery, she loves to help those in need while feeling blessed by the talents and energy she has been given.
ALBERT G. TAHAN, 33
VP Merchandising, Joe Tahan’s Furniture and Mattresses
As the vice president of merchandising, Al Tahan has managed overall strategy and execution of product assortment, marketing, pricing and in-store placement for Joe Tahan’s Furniture and Mattresses. Alongside his twin brother Joe, Al is involved in all aspects of the business including customer service, advertising, buying, warehousing, e-commerce and more. As a third-generation leader, he has risen through the ranks from warehouse work to sales to executive management. Overseeing a fourth new store and new distribution center, Tahan works tirelessly to improve the company for all its associates.
Tahan actively supports the United Way and campaigns for breast cancer awareness in his local community by raising funds instore and through local fundraisers. A fitness enthusiast, Al has created and held body competitions. He is a selfless leader, working in both the community and business to lead the way for future growth.
JOSEPH H. TAHAN, 33
VP Customer Service, Joe Tahan’s Furniture and Mattresses
Joe Tahan and his twin brother Al have grown up in the family business. Rising through the ranks from warehouse work to sales to executive management, Joe has worked from the bottom up. As vice president of customer service, he has helped develop the company’s customer service strategy and manages the overall performance of employees and processes to achieve the highest level of customer satisfaction. In addition to customer service, Joe is involved in merchandising, advertising, buying, warehousing and e-commerce. He is a major contributor to the company’s growth, overseeing a fourth store and a new distribution center. Tahan supports several charitable organizations and volunteers his time to help others. He has created breast cancer awareness campaigns, raising funds in-store and within the local community. As a strong believer in health and fitness, he helps to lead body building competitions.
SAM VLESSING, 30
Founder and CEO, CommerceBear
Sam Vlessing is a fourth-generation furniture industry veteran. Building his first sofa at the age of 13, he spent years working for the family’s business before founding CommerceBear. As the chief executive officer, Vlessing is responsible for business strategy, direction, and overall performance of the company. This includes corporate and board governance, capitalization of the organization, shareholder/stakeholder relations and leadership team alignment. He is also responsible for ultimate attainment of revenue and sales targets as well as company-wide objectives and key results. Over time, Vlessing has led the business in a new direction pivoting from selling direct to working with furniture manufactures to help them sell their products online through retailers such as Wayfair, Amazon, Overstock, etc. Through his perseverance and tenacity, CommerceBear is successfully positioned as a leader in the furniture technology space.
An active member of the Toronto community, Vlessing is an advisory board member at Canada Emergency Medical Manufacturers (CEMM). The CEMM supplied emergency medical equipment to the Government of Ontario, City of Toronto, University Health Network, and many more municipalities across the country during the COVID-19 pandemic.
LAUREN WARD, 34
Creative Director, Massoud Furniture
In the creative world it is hard to find someone that is both a right and left-brain thinker, but Lauren Ward is exactly that. She is analytical and methodical as well as creative and artistic, which has served her and Massoud Furniture very well. Ward started with the company in 2017 and immediately gained the confidence of her team members as well as customers and prospective accounts. Since then, Massoud has grown by 60% with new product introductions doubling in placement as compared to the previous five-year period. Her talent, organizational abilities, collaborative mindset and fresh approach assures that all creative elements are properly aligned with the company’s vision and brand standards, which contributes to the success of the sales and merchandising departments. Ward is a member of Preservation Dallas, a nonprofit dedicated to the preservation and revitalization of historic buildings and neighborhoods in Dallas, a volunteer at East Lake Pet Orphanage and takes the lead on visual merchandising for furniture and decor at Second Chance Treasures, the vintage resale shop that benefits homeless pets.
FALYN WEINERT, 38
Director of Merchandising, Matter Brothers Furniture
Falyn Weinert’s primary responsibility is to develop and oversee Matter Brothers Furniture merchandising strategy including product selection and showroom display. Tapping into her retail background in apparel and home furnishings, she has elevated the store’s product assortment and stocking position through data-driven decisions resulting in better overall performance for the retailer that will help scale the business for future growth. Using innovative product lineups to create lifestyle vignettes that inspire consumers, Weinert and her team are creating a cohesive and immersive shopping experience that has inspired consumers to shift from purchasing individual pieces to entire rooms including core pieces, textiles and accessories. With a fresh perspective, she has also helped improve the workplace culture instilling a team mentality that has resonated across the company. A mother of two boys, Weinert serves as decor chair for an annual gala at her local Catholic school that helps offset tuition fees making private education more affordable for families. She also volunteers as a den leader with the local Cub Scout Troop.
ERIN WEIR, 39
Co-founder and Vice President, Gail Doby Coaching & Consulting
Erin Weir is referred to as the “glue” that keeps Gail Doby Coaching & Consulting together. She manages the leadership team to assure company goals are met while meeting the needs of clients. An innovative leader, Weir has used her love for and knowledge of interior design and her analytical and creative skills to help established interior designers achieve their goals and grow their businesses. She is committed to success and in doing so finds success. Weir has helped clients achieve 10 times their revenue and net profit. She has cocreated professional design business seminars, organized major events, managed partnerships and directed marketing, PR and social media initiatives. She is an inspiring leader who leads by positive example. In her spare time, Weir serves as a classroom volunteer at her local elementary school, where she created and co-chaired a Blue Jeans & Bow Ties Auction. She enjoys helping those less fortunate, especially during the holidays by participating in a Thanksgiving Box Collection and community Thanksgiving dinner. Weir also volunteers her time to help raise funds for the Colorado Professional Firefighters Association.
SUSIE WURSTER, 34
Vice President, Elements International
Susie Wurster has been an integral part of Elements International’s rapid growth. She is responsible for all marketing efforts for Elements, Style-Line and Elements Sleep, and manages the print and digital catalogs, marketing collateral, image assets, and product content. She is also responsible for the maintenance, visual design and set-up for Elements 45,000-square-foot High Point showroom. In fact, one of her biggest achievements has been the acquisition of the company’s Main Street showroom. She was engaged in all aspects of the transaction from the building inspections and remodeling to price negotiations and closing. Without Wurster, the deal would not have happened. She is a remarkable young leader who has performed at a very high level.
For many years Wurster has led Elements’ Adopt a Family program, which helps provide less fortunate families with food, necessities, gifts and holiday cheer around Christmas. She takes on this task with compassion and a genuine desire to help others. Wurster also serves as a trustee for the Mesquite Chamber of Commerce and supports a variety of charities and ministries.
In 2017, Steven Allegrezza was 32 years-old and working in merchandising and new business development for Magnussen Home. Since then he has excelled to a new position with an industry association and is once again brought before you as a repeat honoree.
STEVEN ALLEGREZZA, 37 Managing Director, International Home Furnishings Representatives Association
As the managing director of the International Home Furnishings Representatives Association (IHFRA) Steve Allegrezza oversees both the physical and virtual office and oversees the development of digital strategy through events, podcasts and member training. Under his leadership, IHFRA overcame the obstacles related to the pandemic by revamping the website and drawing members in through the implementation of key webinars. During Allegrezza’s tenure, the company has seen a 20% growth in membership. He represents IHFRA by serving on High Point Market’s First Tuesday board. Originally from a computer and e-commerce background with roles at Apple, Magnussen and Manwah, he uses his critical thinking skills as a calm yet effective problem solver.
Allegrezza is an active member of his church and local community. He donates his time teaching Sunday School classes and working with group of challenged eighth graders. He also shares his love of hockey by coaching a youth hockey team.
May 17,
2022 by HFBusiness Staff in Business Strategy, Industry
The breakdown of the cost components will always equal the selling price influenced by competition. Interestingly, these distribution channels savings shifts ultimately transfer to the consumer in terms of consumer prices. The typical way of measuring is the consumer price index (CPI). Table A presents the historical furniture CPI compared to all consumer products. The furniture industry has not been able to retain the profit contribution that has resulted from these distribution shifts. This leads to the following thought process, “In 1970 I paid $300 for my sofa and $3,400 for my new high-performance Mustang. Now the price has increased for my sofa to $599, but the Mustang now demands $45,000.”
Currently, as the industry emerged from the pandemic, the pure manufacturer segment is on the negative side of performance as can be seen in Table B. While the external factors of the pandemic contributed to the traditional furniture retailer increasing dollar sales by 32.1% in 2021 from both product and transportation costs resulted in a significant volume variance and 105.6% increase in net operating income. While not being able to satisfy demand, creating a backlog of one to three months, the opportunities to increase gross margin by 2%-3% all of which went to the bottom line. The question remains, what does the future hold, both short term and long term, for the traditional retailer?
As the Furniture industry grew over the last 10 years, furniture stores struggled in vain to keep their share of industry growth, bowing to the pressures from online retailers, discount supercenters, and warehouse price clubs to name a few. Then came the COVID pandemic and the furniture industry (and traditional furniture stores in particular) were one of many retail segments to profit from the dramatic upheaval and growth in consumer demand.
Beginning mid-2020 through 2021 the surge in demand brought not only increased sales, but with it the illusive growth in prices that has held the industry back for decades. Between 2012 and 2020, prices for all consumer items grew 13.5%. Meanwhile, furniture prices fell 3.3% during the same period. Then in 2021, prices grew 7% for all consumer items but a significant 17% for furniture products. But prices stabilized in the first months of this year, increasing around 3% for both all consumer items and furniture.
Between 2013 and 2021 (Table A), the industry more than doubled (107%) to $157.8 billion sales in furniture and bedding. Meanwhile, total U.S. furniture store revenues increased 53% to $78.1 billion, about half the growth of the total industry. 2021 was the first year in decades that furniture store sales outpaced the total industry, 25.6% compared to 21.8%. The traditional retailers participating in the retail metrics in this article are as a group performing above the furniture store 2021 growth of 25.6%, increasing revenues 32.1% (Figure 2). See Figure 1. Methodology. The high annual growth experienced by furniture stores in 2021 is against a backdrop of pandemic-impacted lower performance in 2020, especially in the second quarter of the year. In other words, it looks great by comparison, although no one is questioning the ramp up in demand. After sales revved up in the second half of 2020, the 2021 first quarter growth slowed as is the historical seasonal trend. And although, 2021 quarterly U.S. furniture store sales continued to grow over the same quarter of the previous pandemicyear, growth went negative in the third and fourth quarters last year compared to the prior quarter in the year. Meanwhile, our retail metrics participants continued to grow sales over 2020, although at a much slower pace (Figure 3).
Retail Metrics of Participating Traditional Furniture Stores The financials of the traditional furniture retailers participating in the retail metrics tell a story of high 2021 gross profit of 50.3% and double-digit net income of 12.6%. However, this growth was not just driven by improved business performance, but rather increased volumes from higher prices.
The unknown is if these increased sales are caused by the consumer acceptance of the higher prices or the retailer’s confidence to ask for them. The question now is, will the retailer pull back as competition heats up? Price growth has been practically nonexistent for years and no one questions that furniture stores deserve the increases. And the retailer is fully aware that as volume goes down, profits will go down also. Reality began to set in the fourth quarter last year as revenues slowed to 4.3% growth over Q3. Expenses, especially salary increases across the board in sales, delivery, warehouse, service and administration, grew 3X that amount or more over Q3. Net operating income was down -17.8% 2021 Q3 to Q4.
Key Performance Indicators 2021 (Figure 5)
KPIs at their broadest levels, showed dramatic improvement in all areas for the year. The performance indicators registered improvements not seen since HFB began publishing the annual Retail Metrics in 2017. Gross profit was up to 50.4% for the year growing after the first quarter. But the quarterly progress, while still producing double-digit net income, shows a slowing of sales and rising expenses. Retailers will need to buckle their seat belts, so to speak. Performance highlights:
Sales Expense was considerably lower at 22.28% for the year, but should continue to go up as commissions are paid on the backlog. Salaries continued to accelerate throughout the year. General and Administrative Expense (G&A) fell in the second and third quarters, but jumped in the fourth quarter as administrative costs jumped. It is important to note that G&A dollars, which are predominately fixed costs regardless of sales, have not declined in volume growth, just as a percentage of revenue.
Net Operating Income, grew to 15.44% of revenue in the third quarter but fell significantly to 12.17% in the fourth quarter as salaries and expenses rose. The details of each of these indicators are discussed in detail in the graphics that follow.
Above the Line Performance (Table B) Merchandise Returns have been limited, perhaps because the consumer was initially less likely to return an item given the wait-time to order another. However, by the fourth quarter, with warehouse spaces filling up and order cancellations increasing, it became more difficult for some companies to log merchandise returns and the bookkeeping was simply swept under the rug.
Merchandise Protection Sales steadily increased throughout last year. Normally protection sales commissions are paid on delivered sales. However, with retail sales associates selling with almost two months of backlog, retailers acquiesced and began paying merchandise protection sales commissions on written sales. Delivery Income as a percent of sales fell slightly in the fourth quarter. Table B details the above the line performance. Cost of Goods Sold (% of Revenue) (Table C)
COGS declined in 2021 as retailers put higher prices/margins on goods. It remains to be seen whether furniture stores, especially larger retail chains, will have the nerve to hold prices and not start discounting.
Gross Profit on Sales as a percent of revenue is an offshoot of higher prices and stayed consistently above 50% in each quarter (Table D).
Selling Expense (% of Revenue) (Table E)
Advertising/Public Relations. In the three years prior to the pandemic, advertising/ public relations expense hovered just under 6% of total revenue. In 2021 with prices escalating and demand high, advertising expense dropped to under 4% of total revenue for the year with total dollars spent growing 19.5% (Table E). Broadcast/air advertising is still the biggest player in the group controlling 57% of advertising dollars. But broadcast/air spending as a percent of total revenues fell to 2.2% in 2021 compared to 2.5% in 2020. And as a sign of the retailer mindset in 2021, broadcast/air advertising spending continued to fall throughout the year from 2.5% of revenues in Q1 down to 1.98% in Q4. Although internet advertising still represents less than 1% of revenues, the category grew 33.5% in dollars spent in 2021. Spending on internet advertising, as a percent of sales, grew quarter to quarter throughout the year (Table E).
Sales Expense is predominately a variable expense mostly tied to sales volume. It is the only broad expense category that increased as a percent of sales in 2021, from 9.82% of revenues to 9.95% (Table E.) Sales expense was also the only major segment where dollar growth of 33.9%, exceeded sales growth of 32.1% (Table E).
The two major sales expense categories include sales commissions (79% of sales expense dollars) and to a lesser degree sales manager salaries (15% of sales expense dollars). Last year sales commissions grew 36.4% in dollars to 7.6% of revenues and sales managers salaries another 30.7% in dollars to 1.5% of revenues (Table E).
Warehouse/Delivery/Services Expense.
The total merchandise handling expense as a percent of revenues fell in 2021 in all warehouse, delivery, and services categories from 8.09% of revenues in 2020 to 7.56% in 2021 (Table E). However, in the vast majority of cases, the Q4 percent of revenues of each expense item was higher than Q1. The wages and/or contract costs for all handling expense represent about 80% of the dollar volume in the combined categories. Wages and/or contract costs for warehouse, delivery and services categories fell from 6.4% of sales in 2020 to 6.1% in 2021, but grew 25.4% in dollars.
General & Administrative
Expenses (% of Revenue) (Table F)
G & A Expenses is the largest group of fixed expenses. These accounts are those that keep the doors open, the lights on, and the place running. The category represented 14.92% of revenues in 2021, down significantly from 17.31% in percent of revenue in 2020. In the fourth quarter, G & A expenses, as a percent of revenue, climbed to 15.8% primarily as administrative expenses rose late in the year (Table F).
Information Systems. While representing less than 1% of revenues, computer specialists, equipment and software are vital components to running a business. Costs as a percent of revenues remained relatively stable throughout 2021 (Table F). Occupancy Expense. All segments of the Occupancy category -- Rent/Lease, Utilities, Real Estate/Property Taxes and Building Maintenance and Repairs fell as a percent of revenue in 2021, which goes straight to the bottom line. Coming off the pandemic, rents and lease agreement had not yet been renegotiated as all commercial real estate continued to be in a state of flux. Building maintenance and repairs increased the most in actual dollars, up 18.5% over 2020 (Table F).
Administration Expense. As a whole, administration expenses fell in 2021 compared to 2020, 9.21% to 8.33% (Table F). But this decline only lasted through the third quarter, then jumped significantly in the Q4, up from 7.45% in Q3 to 9.59% in Q4. The biggest jumps for the year were in salaries at 11.3% growth over 2020 dollars and insurance, up 22.3% (employee) and 48.6% (company insurance). Human Resources. At less than 1% of revenues, HR expenditures fell slightly as a percent of revenue in 2021 (Table F). Net Credit Expense (Table G) Credit expense (net of credit income) fell slightly as a percent of revenue in 2021 to 2.64%, continuing to decline each quarter (Table G).
Net Income (Table H) Double-digit net income reached its peak in the third quarter at 15.57% before falling to 11.70% in 2020 as revenues fell to 4.3% growth in dollars over Q3, while expenses far exceeded that increase.
PERFORMANCE BY RETAILER SALES RANGE
The traditional furniture retailers participating in this Retail Metrics article have been subdivided by annual sales ranges to offer a perspective on how the small, medium, and larger retailers managed expenses last year. The three ranges include retailers with revenues less than $25 million, $25 to $75 million, and $75 million and over. The first group represents high performing smaller retailers as well as Mom and Pop stores who have been also to survive in the economic climate of the last few years. The second group ($25 to $75 million) are single high performing stores or in some cases smaller chains. The final group ($75 million and over) are larger multi-store retailers. Figure 6 provides the detailed financial performance.
Key Performance Indicators (% of Revenue) (Figure 7)
Not surprisingly, the larger retailers $75 million and over in sales had the highest new operating income as a percent of revenues at 13.4% followed closely by mid-sized retailers ($25 to $75 million in sales) at 13.3%, and the smaller group under $25 million at 12.0%. Each of the KPIs in Figure 7 are discussed in more detail below. Above the Line (% of Revenue) (Table I)
Mid-sized retailers either had significantly more returns, or as a group they did better than their larger and smaller furniture stores logging them in (Table I).
Gross Profit on Sales
(% of Revenue) (Table K)
Smaller retailers had the highest gross profit at 51.87%, primarily due to reporting the lowest merchandise costs. Gross profit for mid-sized retailers was the lowest of the groups at 49.5%. This is primarily due to the merchandise returns discussed above along with higher freight costs, compared to the smaller and larger groups. The larger retailers finished between the two smaller groups at 50.42% gross profit on sales in 2021.
Selling Expenses (% of Revenue)
Smaller firms had by far the highest Selling Expense (24.85% of revenues) in every category – advertising, sales expense, warehouse/delivery/service and store sales expense impacting their lower net profit. Mid-sized retailers fared the best with Selling Expense of 19.53% of revenue. Larger firms were at 22.67%.
General & Administrative Expenses (% of Revenue)
(Table M) Mid-sized retailers as a group had by far the highest occupancy costs at 7.37% of revenues, compared to 5.70% for smaller firms under $25 million in sales and 4.93% for larger firms $75 million (Table M).
Net Credit Expense (Net of Credit Income) (% of Revenue)
For larger firms over $75 million in sales, credit expense exceeded credit income (Table N). Net Income Before Interest and Taxes (% of Revenue) While smaller firms under $25 million had the lowest net income at 11.83% compared to 13.93% for retailers $25 to $75 million and 12.01% for larger firms $75 million and over, no matter the size, these companies rode the wave of high consumer demand, higher prices, and double-digit profits in 2021.
Comparing Distribution Channels and a Look to the Future
While pandemic-fueled top-line growth has been nothing short of sensational for most publicly traded furniture manufacturers and retailers, the bottom line has been a different story – especially for manufacturers.
The costs of raw materials, notably foam and lumber, have been going up faster than producers can implement price increases in their system. In some instances, producers have reported getting price increases after an order has been placed at a lower price. That has caused some dicey discussions between manufacturers and retail customers who were quoted a price for their order based on the producer’s “old” raw materials costs.
“For the past five quarters, we have sought to combat ceaseless raw material and ocean freight increases with wholesale price increases of our own,” Bassett Chairman and CEO Robert Spilman said in a recent earnings announcement. “Unfortunately, our spiraling costs coupled with late shipments from our suppliers have eroded our wholesale margins as we continue to produce goods today with higher material costs than they had when the finished goods were sold months ago.” Spilman and other executives say freight increases are not limited to the cost of shipping containers – although those costs have more than quadrupled since the pandemic began. They say the higher costs also are coming from the ports, freight forwarders, domestic trucking companies and railroads, to name just a few. “All of them, to varying extents have … probably taken advantage of the current environment and started implementing either new charges or raising prices on existing charges,” Derek Schmidt, Flexsteel’s chief financial officer, said during a recent conference call with securities analysts.
The majority of Flexsteel’s products are imported, and Schmidt said the company rapidly built-up inventories throughout 2021 so their dealers wouldn’t run out of stock.
During the first quarter of Flexsteel’s fiscal year ending June 30, for example, he said the company brought in an average of 880 containers per month. That has been slashed to 250 to 300 containers per month in the first half of 2022. That will dramatically reduce freight costs, but still keep inventory levels sufficient to service dealers, Schmidt said.
“We feel that we can slow things up and still maintain really, really good service levels, he added. “We are also aligning ourselves with what we believe are the strongest, most capable freight forwarders who can effectively manage this.” Flexsteel’s numbers for the quarter ended March 31 suggest the strategy is working. After recording a net loss of $7.55 million in the previous quarter, the company swung to a profit of $5.32 million, and gross margin rebounded to 15.7 percent from 6.7 percent in the quarter ended Dec. 31. In both quarters, sales rose nearly 19%.
But Flexsteel President and CEO Jerry Dittmer noted the company still is not out of the logistics maze, noting that the most recent quarter’s operating income of $5.81 million was about 8.5% below the figure recorded in the quarter ended March 31, 2021.
“Although supply chain conditions, including logistics, remain tumultuous, our team has deployed multiple strategies to navigate cost pressures and effectively service customers despite the turbulence. In the second quarter, ancillary costs associated with ocean container logistics adversely impacted our earnings results, but we reduced those costs by over $10 million in the third quarter through sustainable process improvement and stronger alignment with preferred logistics partners,” Dittmer said. Competitors Bassett and La-Z-Boy are experiencing the same supply chain issues, of course, but because those companies own dedicated retail stores and are less reliant on imports than Flexsteel, their bottom lines have remained in the black.
For the quarter ended Jan. 22, La-Z-Boy recorded a 22 percent increase in sales to $571.6 million, while net income of $29.1 million was essentially even with the comparable quarter. Consolidated operating margin fell to 6.9 percent from 7.3% in the comparable period.
“While delivering an improved top line, the quarter was marked by greater-than-expected supply chain volatility, which had significant near-term impact on the efficiency of our manufacturing capacity ramp plans, dampening delivered sales growth and profit margins. A shortage of component parts, record levels of COVID absenteeism in January, and the challenge of hiring and training new employees at manufacturing facilities all contributed to the issues we faced as the quarter progressed,” said Melinda Whittington, president and CEO.
But Whittington also believes the supply chain issues are not long-term headaches, and says the company is continuing to make strategic investments to increase market share and drive long-term profitable growth. “Our number one priority is to improve the agility of our supply chain in this high-demand environment to increase production more quickly and efficiently,” she said. Bassett, meanwhile, saw sales rise 15.9% to $117.9 million in the quarter ended Feb. 26, and operating income rebounded with a 16.5% gain to $6.48 million, or 5.5% of sales. In the comparable quarter, operating income of $5.56 million also represented 5.5% of sales. Net income, meanwhile, jumped nearly 39% to $5.57 million or 57 cents per share. The most recent quarter reversed several quarters of declining operating income, but Spilman cautioned that supply chain issues and cost pressures have not gone away. “The aforementioned vulnerability that we have experienced regarding cost pressure remains frustrating. As we wind down our backlog over the upcoming months, the relationship between our invoice price and our production costs will more closely align,” he said, noting that the company recently implemented its sixth wholesale price increase for its upholstery lineup in the past 15 months.
The brightest spot in Bassett’s most recent quarter, however, was its companyowned retail stores. Profits tripled to $3.5 million as the stores achieved higher gross margins and were able to increase the volume of deliveries as the company’s factories whittled down their backlogs. Another legacy public company, Hooker Furnishings, is riding out the supply chain issues and increased costs in a different way. Its top line has taken a major hit in recent months because its Home Meridian division simply can’t get enough product. Home Meridian’s factories in Vietnam and Malaysia were shut down for months in the summer and fall, and they’re still having trouble catching up. The dilemma also has hurt sales in the company’s Hooker Branded segment, whose product line also is imported. Hooker’s consolidated sales fell 13.2% in the quarter ended Jan. 30, as a doubledigit sales gain in its Domestic Upholstery unit was more than offset by a 23.7% sales decline at Home Meridian and an 11.8% drop in sales at Hooker Branded.
“While we anticipate that production of imported goods will reach 100% capacity sometime during the first quarter of fiscal 2023, as we forecasted last quarter, we won’t feel the full impact of higher production until the second quarter,” said Jeremy Hoff, CEO.
Going forward, Hoff said the Domestic Upholstery and Hooker Branded segments will be “less challenged than Home Meridian” because about 70% of Home Meridian’s sales are container-direct at lower price points, which are more negatively impacted by freight costs that have tripled in the past year. However, he believes Home Meridian’s warehouse business is poised to improve because of the company’s new distribution center in Savannah, Ga.
“Incoming orders and backlogs continue to be strong in most divisions,” said Hoff. “We are concerned about ongoing global logistics constraints and economic headwinds affecting the consumer that could impact short-term demand, such as inflation, high gas prices and the war in Ukraine.”
Vertically integrated Ethan Allen, on the other hand, is weathering the supply chain storm with double-digit top- and bottom-line increases. Farooq Kathwari, the company’s long-time chairman, president and CEO, said in a recent earnings statement that the company’s verticality, coupled with mostly North American production, provides the leverage to offset many of the cost headaches.
“We were able to achieve strong margins despite an environment with escalating commodity and freight costs, product shortages, price increases and shipping delays. We are working to expand our North American manufacturing, whereby 75% of our products are made,” Kathwari said in a statement announcing earnings for the quarter ended Dec. 31. In the quarter, Ethan Allen’s retail sales leaped 24% to $179.6 million, while wholesale sales were up 14.2% to $115.9 million.
Pure-play retailer Arhaus, the furniture industry’s newest public company, is still experiencing enormous sales gains – based on the limited financial information available thus far – while the bottom line has suffered only minimally from the supply chain disruptions. Sales for the quarter ended Dec. 31 leaped 46.3% to $238.2 million its 77 brick and mortar stores and e-commerce platform performed impressively. Net income for the quarter was $8.34 million, up from just $442,000 in the same quarter in 2020. For the 2021 calendar year, sales jumped 57% 62.1% to $796.9 million and net income was up seven-fold from 2020. “2021 was a monumental year for Arhaus,” said John Reed, co-founder and CEO of Arhaus. “In addition to our record financial performance, we achieved significant operational accomplishments this past year including the opening of a nearly 500,000 square-foot distribution center and upholstery production facility in North Carolina, the start of a 230,000 square-foot expansion of our distribution and corporate office facility in Ohio, the launch of a new website to enhance our client experience and analytic capabilities, and our transition to a public company.” Arhaus went public last November, and another relative newcomer to the world of publicly traded furniture stocks is Lovesac, which sells its casual ready-to-assemble modular sofas and sectionals sofas direct to consumers and through retail stores. Lovesac’s top-line and bottom-line growth, in fact, resembled Arhaus in 2021. Sales for the quarter ended Jan. 31 rose 51.3% to $196.2 million, while net income was up 50.4% to $32.6 million. And for the year ended Jan. 31, sales jumped 55.3% to $498.2 million and net income was up more than 200% to $45.9 million.
In the most recent quarter, the company said sales jumped 59.8% at its retail showrooms, which include mobile concierges and kiosks, while internet sales rose 22.8%. In addition, comparable-store sales from its retail showrooms leaped 72.6%.
“Lovesac’s continued strong financial performance in the face of a myriad of macro and industry shifts affirms the power of our unique business model and products,” said Shawn Nelson, CEO. “Importantly, the key distinguishing attributes of this model, which include operational flexibility, highly engaged customers, innovation and a proven omni-channel approach, will only grow stronger over time as our progress along the product adoption curve steepens and word of mouth continues to gain strength. This curve will benefit further from deep stock positions that allow us to deliver and execute for our customers in a more timely manner, leading to further share gains and solidified customer loyalty.”
Also recording healthy revenue growth in recent months – not to mention some of the biggest operating margins in the home furnishings industry – is RH, the retailer formerly known as Restoration Hardware. Revenue for the fourth quarter of 2021 grew 11% – a small increase historically but jumped 32% to $3.76 billion for the 2021 calendar year. Gross margins were 50.5% for the fourth quarter and 49.4% for the year, while operating margins were a staggering 24.1% and 24.7%, respectively.
RH continues to set a new standard for financial performance in the home furnishings industry and our results now reflect those of the luxury sector as adjusted operating margin reached 25.6% in 2021, up 1,130 basis points versus 2019, reflecting the strongest two-year growth in our sector,” CEO Gary Friedman bragged in a recent letter to shareholders. “Our performance demonstrates the desirability of our elevated and exclusive product range, the connective power of our evolving ecosystem, the profitability of our fully integrated business model and the significant strategic separation created by our inspiring physical spaces.”
