Smith Leonard: Furniture Orders, Shipments Rise in April

June 29, 2010  by in UnCategorized   

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

New orders for furniture rose 12 percent in April compared with the same month in 2009, when orders fell 27 percent from 2008 levels. Shipments rose 6 percent comparing in April over the prior-year month, when they were off 21 percent from April 2008.

That's according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.

Year-to-date, new orders are now up 10 percent over the first four months of last year, and shipments are up t percent.

Smith Leonard Managing Partner Ken Smith noted that this year's April results may have been impacted by the timing of market. The April 2009 High Point Market dates were April 25 to April 30, while the 2010 dates were April 17 to April 22.

"This may have some impact on the timing of orders received," Smith said in the report. "Any real differences should even out when the May results are in."

Backlogs in April fell 1 percent from March but were up 44 percent over last April.

"Again, timing of the April Market may have had some impact on the April to April results," Smith said. "We continue to expect shipments to catch up with orders over the next few months."

Receivables fell 4 percent from last April and were down 3 percent from March levels, in spite of a 14 percent decline in shipments from March to April.

"As retailers begin to need to finance new business, some may need to ride vendors a bit longer," Smith said.

Inventories increased 2 percent over March but remained 13 percent lower than April 2009 levels. Inventories in April 2009 were 12 percent lower than April 2008.

"It appears that most of the participants have reduced inventories to more appropriate levels considering current volume levels," Smith said.
 
The number of factory and warehouse employees were flat with March 2010 and was also even with the number in April 2009 when they were down 21 percent from a year ago. This result seems to also indicate that business has bottomed out, at least for now, and is hopefully starting an upward trend.

Payrolls were 9 percent higher than a year ago but off 14 percent from March. The number of working days was higher in March versus April which likely had some impact on the 14 percent decline.
 
In summary, Smith noted that positive news continued in April for residential furniture manufacturers and distributors.

"While comparisons to 2009 do not tell the whole story, (since 2009 was not only a tough year and it followed a tough year in 2008 as well) it does appear that we have at least hit bottom," he said. "Of course, that all assumes we do not have the double dip that some are worried about with the economy as a whole. Many of the economic models out there do not suggest a double dip, yet we do not know what the impact of the global issues we are experiencing will have. For the time being, we feel that we are getting some momentum back."

Smith added that Smith Leonard just completed its annual survey of operating statistics.

"The results were not very pretty this year, though it did appear that many participants made some hard adjustments during the year that improved their profitability or at least reduced their losses," he said. "Most companies have infrastructures in place that require sufficient volume to cover fixed costs. There had certainly been some good people cut from good companies in the last couple of years. We hope that the business improvement continues or we could lose more companies than we already have."

Consumer confidence, which dipped this month, remains critical.

"We need consumer confidence back," Smith said. "And we need housing to continue to pick up. While we expect housing to fall off a bit after the tax credits, it does appear that housing prices in most areas have also bottomed out. That is a good thing."