July Furniture Orders Down 17%; Shipments Off 10%

October 1, 2008  by in UnCategorized   

By Home Furnishings Business in on October 2008 New orders from retailers for residential furniture were down 17 percent in July compared to the same month last year, while factory shipments were off 10 percent. That’s according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.

The July decline in orders pushed the year-to-date orders to a 10 percent drop for the first seven months, up from a 9 percent decline through June and 8 percent through May.

For the month of July, approximately 77 percent of the participants reported declines in orders. Year-to-date, some 83

percent of the participants have reported lower orders compared to the same period last year.

Shipments in July were 19 percent below June. The decline from June is somewhat normal due to most companies taking vacation time around the July 4 holiday. Year-to-date, shipments are off over 8 percent. Year-to-date shipments were lower than the same period from last year for 83 percent of the participants, up from 81 percent last month.

Backlogs in July were 15 percent lower than last year at the same time, but fell only 1 percent from June levels.

Receivables were 7 percent lower than July 2007 levels, somewhat in line with the year-to-date sales decline of 8 percent,

but a bit lower than the 10 percent reduction in sales for the month.

“We continue to see news of more closings or bankruptcies at retail, so receivables need to be watched closely,” Smith Leonard Managing Partner Ken Smith said in a report on the survey.

Inventories were 4 percent lower than July 2007, the same result as June. Inventories did climb 2 percent from June levels. “Inventories will also need to be monitored closely considering the decline in orders,” Smith said.

The number of factory employees in July 2008 were 10 percent lower than July 2007 levels–the same as last month. The number of employees fell 1 percent from June levels.

Factory payrolls in July also were off 10 percent from July 2007. Factory payrolls were 21 percent lower than June payrolls,

but that is somewhat normal due to the July 4 holiday week.

“We almost decided not to write anything this month about the national scene as so much has happened since the information

was available for August data,” Smith said in his summary. “Yet, we decided to include the data at least for historical purposes. September 2008 will go down in history as a one of the worst from a financial institution standpoint. The U.S.

Treasury committed $200 billion to rescue Fannie Mae and Freddie Mac. They also committed to a $50 billion guaranty

program for money market mutual funds. The Federal Reserve committed to an $85 billion loan to AIG and the FDIC arranged for the bailout of Washington Mutual and the sale of Wachovia to Citigroup. ... Then the government suggested a $700 billion bailout legislation, which at the time of this writing, has not passed Congress.”

Smith also referred to stock market swings in the wake of the House of Representatives’ initial failure to pass bailout legislation, and gasoline shortages that have consumers “spooked.”

“The results for July were not good, and we do not expect August results to be much better based on most of the conversations we have had in the industry,” Smith said. “We did hear that some businesses noted a bit of improvement after Labor Day, but all the recent turmoil seems to have slowed some of the progress.”