ISPA Forecasts Dollar Value of Mattress Shipments to Outpace Unit Growth in 2010

March 4, 2010  by in UnCategorized   

By Home Furnishings Business in Bedding on March 5, 2010

The International Sleep Products Association predicted mattress units shipped in 2010 would increase 4.5 percent over 2009 numbers; and that dollar value of those shipments would grow 7.5 percent.

ISPA estimated that mattress shipments fell 8 percent in units and 10 percent in dollar value. ISPA expects to recoup all that decline, however, during 2011, when the association predicts unit growth of 6.3 percent over 2010 and dollar value of mattress shipments to rise 10 percent.

Jerry Epperson, managing director of Mann, Armistead & Epperson Ltd. in Richmond, Va., and a member of ISPA's forecast panel, said he believes this year's forecast could be on the conservative side, pointing to some positive factors affecting the mattress sector.

For example, major retailers such as Rooms to Go, Sleepy's, Bob's Discount Furniture, El Dorado, The Dump, Raymour & Flanigan, Art Van, R.C. Willey and Ashley HomeStores have announced significant new expansion plans.

"These are not only new stores, but relocations and expansions of existing stores," Epperson said Wednesday during a discussion of the forecast at the ISPA Expo in Charlotte, N.C. "We're also moving back up in price points."

Retailers also showed some black ink in the fourth quarter of 2009.

"And on very small sales gains, a lot of these companies are showing huge profit increases" relative to top-line gains, Epperson noted.

The employment situation remains a concern: "More than 100,000 new people are entering the work force from Generation Y, and older workers are working longer instead of retiring," Epperson said. "That's on top of high unemployment, and many of the unemployed are permanently so. We're talking about people who weren't laid off, but worked at factories and business that are closed."

Private equity firms are sitting on around $500 billion in capital and want to put that money to work, good news for the mattress sector and furniture as well, Epperson said: "There are 32 private equity groups holding (interests) in furniture or mattress companies right now."

Bedding specialty stores eating up a growing share of mattress sales pose a threat to traditional furniture retailers.

"If the furniture stores lose the mattress business, we might lose more furniture stores," Epperson said. At furniture retailers selling bedding, "mattresses represent 10 percent to 11 percent of sales and almost 35 percent of profits."

Epperson said more than 90 percent of the mattresses sold in the U.S. market are made domestically, and that could play well for the mattress sector at retail since container space poses a problem for furniture, especially case goods, made offshore.

"The problem will be that furniture stores relying on container business are running into shortages," he said. "February was surprisingly good at retail, and if you can't sell wood furniture because of shortages, what can you sell? ... That might be good for the mattress business."