Furniture Insights: New Orders Flat in February

May 1, 2011  by in UnCategorized   

By Home Furnishings Business in economic news on May 2, 2011

Retailer furniture orders were flat in February compared with the same month last year, according to the Furniture Insights survey of residential furniture vendors.

In February 2010, new orders were 13 percent higher than February 2009 so the February comparison was to a reasonably
good month last year. New orders rose 22 percent higher from January. Year-to-date, new orders were even with the first two months of last year when orders were up 9 percent over the first two months of 2009.

February shipments fell 2 percent from February 2010, but rose 7 percent from January levels. Year-to-date, shipments were even with the first two months of 2010, when they were up 5 percent over the same two months of 2009. Almost half

Backlogs increased 12 percent over January with orders exceeding shipments in dollar terms. Backlogs were 5 percent
lower than February 2010, compared with a 6 percent decline in the January to January results.

February 2011 receivables were even compared with February 2010, in line with the year-to-date shipments. Inventory levels were 15 percent higher than last February, compared with a 12 percent increase reported last month.

"The good news is that inventories actually fell 3 percent from January," said Ken Smith, managing partner of the High Point accounting and consulting firm Smith Leonard, which produces Furniture Insights. "The increase over last year continues to reflect the fact that as business picked up in the early part of last year, inventories were a bit too lean. So in anticipation of improved business, inventories were beefed up (particularly by importers). Then in the latter part of the year, business fell off again for many, so inventories were too high.
 
Furniture factory and warehouse employment was down 2 percent from February, and stayed even with January. Payrolls were up 2 percent over February 2010 reflecting higher orders for February. Year-to-date, payrolls were 2 percent higher than last year at this time, when they were 3 percent lower than the first two months of 2009.

"While new orders and shipment results were not as positive as we would like to see, considering we were comparing to some decent results last year, the results were not all that bad," Smith said in summary. "Also, considering how bad the weather has been so far this year, the results really would not seem to be bad at all. We heard at Market that some retailers in the Northeast actually were not able to open some days for the first time in recent memory. Even when some were open, that kind of weather is not conducive to furniture shopping.

"On a bright note, the recent High Point Market appeared to be one of the best in quite some time. While order writing is not what it used to be, we heard several reports that order writing was the highest since 2007. While registrations were reported to be down, most of the exhibitors we talked to at Market were pleased with attendance. The new Market dates also seem to be working well as attendance seems a bit more spread out now. While that may not create the excitement of a real opening day, we hear that people like having more time with their customers. "

Encouraging retail results in March should hopefully give legs to a better "mood" at market; and Smith noted that a report from NAR on existing-home sales had what appears to be really good news for home furnishings.

"As we noted earlier, the report said the typical monthly mortgage payment for the purchase of a median-priced existing-home is only 13 percent of gross household income, the lowest since records began in 1970," he said. "This should mean that there are more disposable dollars for consumers to spend. While some is probably saved and clearly some is for gas and other staples, hopefully some will be left over for furniture."