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Furniture Insights: Feb. Orders Off 3%

By Home Furnishings Business in economic news on May 1, 2013

February new orders for furniture fell 3 percent compared with the same month last year, according to the latest Furniture Insights survey.

Orders through 2013's first two months remained 2 percent ahead of last year, according to the monthly survey of residential furniture manufacturers and distributors conducted by High Point accounting and consulting firm Smith Leonard.

The results were not unexpected.

"We had heard through much of February and March that business had slowed somewhat," said Smith Leonard Managing Partner Ken Smith. "January's 7 percent increase had followed declines in November and December so it is likely that there may have been some timing issues with the January results. While overall there was a slight decline, the individual results were very mixed as approximately 58 percent of the participants reported increased orders for the month, but those increases were not enough to offset the declines in pure dollars."

February shipments in 2013 were off 2 percent from February 2012 but up 3 percent from January 2013. Year-to-date, shipments rose 4 percent over the first two months of 2012. Some 61 percent of the participants reported increased shipments for the first two months.
Backlogs fell slightly (1 percent) from last year, but increased 5 percent over January as the dollar volume of orders exceeded the dollar value of shipments.
Receivables were up 2 percent over February 2012 and were even with January.

"February shipments rose 3 percent over January, so it appears that receivable levels continue to be in good shape," Smith said.
Inventories rose 7 percent over last year but that increase was down from a 9 percent increase reported last month. Inventories fell 7 percent from January levels.

"We had mentioned last month that these levels need to be watched," Smith said. "It appears that the levels are declining along with the softness in business."
Factory and warehouse employment rose 3 percent over February 2012, the same increase as the prior month. Employees was 1 percent above January levels.
Factory and warehouse payrolls rose 1 percent over last February and 4 percent from January, when payrolls were 5 percent higher than January 2012. Year-to-date, factory and warehouse payrolls rose 3 percent over the first two months of last year.

"Some of this is likely the result of some pay raises that were given last year, the first ones in some time," Smith noted.

In summary, Smith believes the residential furniture industry will benefit from the improved housing situation.

"New construction will take a bit longer to see the results, as the homes have to be built and then sold before any furniture will be bought, but we believe existing home sales will help the industry until the new homes can have some more effect," he said. "We had pretty much heard in conversations prior to Market that business was 'somewhat all over the place.' When we described it as maybe like a kids roller coaster, most tended to agree. While some were outside the norm, it just seemed that business was good one day, soft the next, maybe non-existent one day, then good again the next. The key has been trying to string together a good week or two."

That led to fairly low expectations coming into the recent High Point Market, but Smith reported a strong show.

"We know all exhibitors are excited with new product when they come to town, but too many times when it is all over, the excitement goes away," he said. "Well, certainly not this Market. At least not in the circles we covered. We haven't seen this much enthusiasm in quite some time, even late in the Market. We talked to quite a few exhibitors on Monday and Tuesday and all were extremely pleased."

He heard comments such as "Best Market in 5 years" and "Best Market since 2006 and 2007."

"We even heard one say 'Best Market ever,' though we imagine he had forgotten or didn't know what really good markets used to be like," Smith said. "Let's keep our fingers crossed that this momentum carries forward. We know that many dealers wanted to freshen their floors. Hopefully as the housing sales demand more furniture, the new product will entice even more sales."

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