April Orders Down 13%

June 28, 2012  by in UnCategorized   

By Home Furnishings Business in economic news on June 29, 2012

New orders for furniture fell 13 percent in April compared with April 2011, according to the latest Furniture Insights survey.

Orders dropped 24 percent from March levels. High Point accounting and consulting firm Smith Leonard conducts the monthly survey of residential furniture manufacturers and distributors. Year-to-date orders are now just 3 percent ahead of last year at this point, versus 8 percent reported through March.

Smith Leonard Managing Partner Ken Smith attributed April's decrease in orders to at least two factors.

"The first and likely largest was the timing of High Point Market dates," he said. "In 2011, the Market dates were April 2 through April 7. This year the dates were April 21 through April 26th. So last year€™s April results likely included at least some orders written after Market, while this year€™s would likely include mostly orders only written at Market. April 2011 orders were up 16 percent over April 2010, somewhat else affected by the early Market dates.

"The second factor for the decline was some softening of business. Most of the Market talk was that business had slowed at retail in April (some mid-March) which was starting to impact orders in April. We assume May results may also be skewed somewhat when comparing May to May 2011 but we will see. At least by the end of May, we will be able to better compare year-to-date orders on a more comparable basis."

April 2012 shipments rose 7 percent over April a year ago as more shipments were made out of backlogs.

"Shipments were down from March but that is also somewhat normal, affected to some degree by Markets as dealers wait to order new things until they see Market products," Smith noted

Year-to-date shipments through April were up 10 percent, down from 11 percent last month.

Due to shipments exceeding backlogs for the month, backlogs fell 5 percent from March but remained 3 percent ahead of last year, despite the decline in orders.

Despite the increase in shipments, receivable levels remained even with April 2011 levels and fell 1 percent from March. We continue to be pleased with the control over receivables.

Inventories rose 6 percent from April 2011 levels, up slightly from the March over the March increase of 5 percent.

"Once we get orders sorted out next month, we think we will see that inventories remain in line with current business conditions," Smith said.

Factory and warehouse employment remained even with March levels and was up 6 percent over April 2011, the same as the March results. Payrolls were up 8 percent over last April but down 18 percent from March, perhaps due to the number of payrolls in each month. Year-to-date, payrolls remained 10 percent above the first four months of 2011, in line with the increase in shipments.

In summary, Smith pointed out that the change of Market dates can markedly change results of orders when comparing with the prior year.

"With last year€™s April Market dates being April 2 to the 7th and this year€™s dates being April 21 to the 26th, most likely very few post Market orders are reflected in the current year results," he said. "Year-to-date, new orders were up only 3 percent through April but that again was affected by Market order timing. We expect that by the time we report year-to- date through May, things will have smoothed out and we will have a better picture.

"Shipments on the other hand remained very positive with an April over April 2011 increase of 7 percent and year-to- date increase of 10 percent. This compared to a 3 percent increase year-to-date comparing 2011 to 2010. We do believe though that business at retail seemed to slow somewhat either in mid-March or early April. We heard much of that at Market and since then business at retail has seemed a bit sluggish."

He added that, according to the U.S. Census Bureau reports, sales at furniture and home furnishings stores were up 8.7 percent in May compared with May 2011 and up 9.4 percent year-to-date, the second highest increase among 13 categories covered in the report.

"Of course, last year at this time, sales were up at furniture and home furnishings stores only 0.4 percent and were near the bottom of the 13 categories," Smith said. "Based on our conversations with others in the industry, the furniture industry seems to be moving along about like the economy in general. Business is not as good as we would like, but it really doesn€™t seem too bad either.

"We really are not too sure what to expect the rest of the year. Some economists seem to be all doom and gloom, yet others are more positive. Consumers are also not sure what to do. Housing prices seem to be recovering somewhat, yet jobs are not being created at strong levels. And of course the election rhetoric will certainly not help consumer attitudes. But American people seem to bounce back over time. Let€™s hope that time starts to come sooner than later."