Furniture Insights: New Orders Keep Rising

April 29, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on April 30, 2010

New retailer orders for residential furniture rose 13 percent in February 2010 compared with the same month last year, according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.

While order activity still has a ways to go in recouping business--new orders in February 2009 were 22 percent lower than February 2008--this marked the fourth month in a row that orders were up over the previous year's same month comparison. October was flat, November up 10 percent, December up 12 percent and January up 4 percent.

Shipments in February were 4 percent higher than February 2009. January shipments were 6 percent higher than January 2009, resulting in the year-to-date shipments up 5 percent over the same two months of last year. This was the third month in a row that shipments were up
over the same period a year ago.
 
As a result of orders exceeding shipments, backlogs increased 12 percent over January. Backlogs are now up 34 percent over February of 2009, up from 26 percent last month.
 
Receivables were down 3 percent from last February in spite of the increase in shipments. Receivables were even with January with shipments up 11 percent.

"Some of this may relate to timing, as we would expect receivable levels to begin to increase as shipments increase," Smith Leonard Managing Partner Ken Smith said in the report. "Overall, receivables continue to be in good shape at this point."

Inventories in February were 19 percent lower than February 2009 versus a decrease of 21 percent last month compared  with January 2009. February 2009 inventory levels were 6 percent lower than February 2008.

"As with the last few months, it appears that inventories are much more in line with current volume levels," Smith said.

The number of factory and warehouse employees fell 3 percent from January levels and were down 5 percent from February a year ago. Factory and warehouse payrolls were even with February 2009, but were 7 percent higher than January 2010.

"We have heard that some of the momentum from February may have been lost a bit in March, but certainly we have not heard this from
everyone," Smith said in his summary. "There has been some speculation that some of the uptick has been related to retailers doing some restocking, but there have also been comments from retailers that business was picking up.

"Based on all we heard at the High Point Market, it does appear that business is getting better at retail. Maybe not where it once was or even where we would like for it to be, but at least improving. Most we talked with at Market felt that it was the best market in several. As with retail, while not where everyone wants it to be, but it was clearly a good market for most. We will see when final
orders come in over the next few weeks, but from what we heard, even order writing was good for many during market."

The only major negative Smith heard at Market related to financing.

"As business begins to pick up, we are concerned as to how manufacturers, distributors and retailers will be able to finance their growth. But that is a much better problem to have than what we have been through. ... Many companies have stopped the red ink from losses. As they continue to show improvements, we expect the banks and other financial institutions will eventually come back to the industry. Some who have not treated people very well, will be remembered."