Smith Leonard: '11 Shipments up 3.84%

July 9, 2012  by in UnCategorized   

By Home Furnishings Business in economic news on July 10, 2012

Residential furniture shipments rose 3.84 percent in 2011, according to a summary of business from High Point accounting and consulting firm Smith Leonard.

Shipments slowed compared with 2010, when they were 5.95 percent higher than shipments in 2009, which were down 15.79 percent from 2008. 2008 shipments were down 11.38 percent from 2007.

Last year's 3.84 percent increase was slightly lower than the monthly statistics reported in Smith Leonard's Furniture Insights(http://www.smithleonardcpas.com/news-and-events/newsletters/furniture-insights/), which has some different participants. (Insights reported a 5 percent increase in shipments for 2011 versus 2010 and a 7 percent increase in 2010 compared to 2009.)

The overall cumulative decline in shipments since 2005 was 32 percent through 2009, prior to the 2010 increase according to our surveys.

The upholstery group reported an increase in shipments of 6.43 percent after an increase of 5.7 percent in 2010. Case goods participants€™ shipments declined 1.32 percent in 2011 after a 7.18 percent increase in 2010.

According to the monthly survey, shipments in 2011 were up in every month compared with the same month of the prior year except for July when they were down 1 percent from July 2010. Also in 2010, shipments were up every month but November, when they were even with November 2009. This compared to decreases in every month in 2009 until December 2009 when there was a 3 percent increase. December 2009 was the first month since June of 2006 that the survey showed an increase in orders.

The trend has continued to show improvement in 2012 with new orders up 8 percent for the first three months. Shipments were up 11 percent for the first three months compared to 2011.

"Based on our conversations with various people in the industry, the results have been uneven through most of June, as we cannot seem to get a lot of traction," Smith Leonard Managing Partner Ken Smith wrote in the new report. "Business seems to pick up for a while, then fall off again, but this was the exact same thing we said last year at this time.

"The overall economy just cannot seem to get going. Gas prices have lowered but the employment picture does not seem to show much improvement (with few jobs being created), the European economy is shaky in some countries, the stock market gains (losses) have become very bumpy and the U.S. economy is not growing at a fast enough clip. These things, along with others, are keeping consumer confidence down after a few increases last year."

While housing results have improved, new construction is increasing and prices are stabilizing, Smith noted that foreclosures remain a problem, and mortgages are hard to get.

"A significant impact on furniture sales has been, not only the number of foreclosures, but also many home buyers, who are making payments, also obtained mortgages that are very expensive compared to monthly household income," he wrote. "Also, consumers are continuing to do all they can do to reduce debt. This is not leaving much disposable income to spend on furniture. Yet, recent government reports indicate that sales of furniture and home furnishings are picking up from poor results in the past few years.

"One good thing in the long run for furniture sales is that larger down payments, and tighter lending, will keep monthly payments at much more reasonable levels compared to monthly incomes. This should leave a bit more disposable income which can be used for furniture. It will take some time for this to work its way into the system, so we may not see much impact in the near term."