November 30,
2012 by in UnCategorized 
By Home Furnishings Business in on December 2012
Furniture retailers who expect 2013 to be a growth year had best look to their own devices. Slow economic improvement and still-touchy consumers make for a business environment thats strange new territory for a lot of store owners.
Things are looking up overall, but as with 2012, any opportunities furniture retailers have for the coming year are mostly the ones they seize themselves. The overall economy has improved since we gave our last outlook a year ago, but it remains an environment where fancying up ones personal space is far from first on most consumers list of priorities.
While the macro numbers home furnishings retailers look to as indicators for their business prospects are up as 2012 winds down, the coming 12 months remain iffy for the sector as a whole.
Late last month, the Consumer Confidence Index hit 73.7, up slightly from October and the CCIs highest reading since February 2008.
Gross domestic product increased at an annual rate of 2.7 percent in the third quarter over the prior three months, according to the Bureau of Economic Analysis.
In the second quarter, real GDP had increased 1.3 percent.
Despite Hurricane Sandys putting the Northeast at a standstill, the National Association of Realtors reported that October existing-home sales rose a seasonally adjusted 2.1 percent from September; and were 10.9 percent ahead of October 2011. New home sales in October rose 17.2 percent from the prior-year month.
And according to the U.S. Census Bureau and Department of Housing and Urban Development, privately-owned housing starts in October were 3.6 percent above the revised September estimate; and 41.9 percent ahead of October.
More good news for furniture retailers, especially in electoral battleground states, is that another presidential election is in the books, and they can start advertising more on television whether or not they were pleased by the actual results.
That all sounds good, and certainly brighter than this time a year ago, but economic growth hovering around the 2 percent annual mark wont be making a big dent in continued high unemployment, which still hovered in October near 8 percent.
It wont take another big negative headline or two for consumers to lose their slowly burgeoning confidence.
ANOTHER SLOG?
If economic growth remains sluggish, home furnishings overall wont see a big increase in 2013.
Global ratings agency Fitch Ratings, which has headquarters in New York and London, expects retail sales overall to grow between 3 and 4 percent next year, driven mainly by 2 to 3 percent same-store sales increases and a modest square-footage expansion.
Thats not a big piece of growth pie for home furnishings to bite into. (For Fitchs complete 2013 retail sales outlook report, visit FitchRatings.com)
There are other areas of concern to retailers, not just next year, but down the road according to Mark Vitner, senior economist at Wells Fargo, Charlotte, N.C.
Vitner shared his take on how 2013 will shape up during a presentation last month at the annual meeting of the American Home Furnishings Alliance in Miami.
Hes concerned about the coming year, and his biggest concerns include credit availability and finance reform; and regulatory uncertainty.
He also worries that the current fiscal cliff negotiations between the White House and Congress will just put off the problem until later.
The fiscal cliff, theyll finagle their way around this, he said, adding that he anticipates a compromise on extending Bush-era tax cuts. Instead of (eliminating) tax cuts for everyone who makes over $250,000, it will be everyone but those who make more than $1 million. Theyll let the tax cuts expire Dec. 31, then re-instate them for those making less than $1 million.
Vitner doesnt think a fiscal cliff compromise will lead to a recession, but he does think it will mean continued sluggish economic growth.
He also noted that the upper-income segment that has benefited most from rising stock and home prices, and refinancing at lower interest rates represents consumers wholl sock that money away, which wont help stimulate consumer spending.
The ones who are saving most on refis are those most likely to save their money, so it wont help growth that much, Vitner said. The economy will grow at 2 percent as far as the eye can see.
The Fed is keeping interest rates low, but the election result we got (in November) is not friendly to risk taking.
Here is Vitners worst-case scenario down the road doesnt bode well.
He believes that if the slow economic growth since the recessions end in May 2009 continues, the economy wont be in good enough shape to withstand another possible downturn.
In June 2015 the current expansion will be 73-months-old, he said. Only two economic expansions since the Civil War lasted longer. What happens if we go into another recession with the current level of economic growth?
TAKING CARE OF BUSINESS
Its nice to think the economy will improve and the industry will enjoy its fruits, but the coming year will be a hard one for retailers who wait for that to happen.
Fitch Ratings likes the chances better for retailers who take a multi-channel approach. That means looking outside a simple bricks-and-mortar strategy and maybe, adding an e-commerce Web site to the mix. Or, possible a mail-order catalog to help boost sales.
In view of the strong growth in online sales and other alternative formats, traditional retailers that are willing and capable of investing in a multi-channel strategy will continue to drive market share gains at the expense of retailers that struggle to maintain relevance in a mature but dynamic sector, according to its 2013 retail outlook summary.
Does your company take proactive steps, or does it wait for an economic boon that shows no signs of coming?
Two companies with considerable retail footprints nationwideThomasville and Ethan Allenarent waiting around.
Home Furnishings Business asked Thomasville President Edward Teplitz and Ethan Allen Chairman and CEO Farooq Kathwari to share their thoughts on the keys in 2013 to growth, both as in terms of the overall economy and also in terms of what retailers can do to position themselves in order to grab consumers business.
We are cautiously optimistic, and the reason is that slowly and steadily, with ups and downs, the economy has improved, Kathwari said, adding that theres a lot of uncertainty out of any single business control. We dont know what will happen with the fiscal cliff. The concept is not very complicatedif youre an enterprise you work to increase revenue and reduce your costs. The costs of entitlements have to be weighed.
He noted that includes subsidies to business, agriculture and defense as well as those things pundits usually speak of as entitlements, such as Medicare and Social Security.
Resolving that will help us from a consumer-confidence perspective moving forward, Kathwari said.
Teplitz looks at the coming year in macro terms related to the economy and micro termsspecifically what Thomasville can do as a company to impact its future.
Business over the last few months has been stronger, housing starts, housing sales continue to grow, but theres regionality there. Nobodys saying how great it is, he said. It will be great if we have better housing numbers, better consumer confidence, but thats not what were counting on for our own growth.
First, well continue to improve the retail experience in our store with better display, more tools, retail technology. Well keep introducing product thats more updated traditional and contemporary.
Kathwari noted that in 2009 and 2010, Ethan Allens operating earnings went from $130 million to $100 million.
In the last two years, our sales are up 34 percent, he said. Last year we made up half of what we lost.
Part of that was because Ethan Allen took some harsh bottom line moves that cost in the short run but left the retailer in a position to pick up business when the economy kicked inthings like putting design associates on salary so they could make a living in the stores while times were tight, which kept design skills in place to serve customers as they started coming back.
In 2013 we see a more positive consumer attitude, and weve positioned ourselves for growth, Kathwari said.
Looking at where Thomasville is today versus a year ago, Teplitz noted that while the economys not great, everything seems to be getting a little better.
If we do everything we need to do right, as far as 2013 goes, it will get better for Thomasville, he said. Home furnishings certainly remain a discretionary item. As much as wed like otherwise, that hasnt changed much year over year.
The key is that once you get them into your store through stronger promotions or advertising, give them a better retail experience, he said. Were putting more technology into our stores, better display. We dont want it to be just about closing the sale at a great price today; and playing to the aspirational aspect is important at our price points.
CHANGING EXPECTATIONS
Thomasville also looks to change consumer expectations of its product offerings, providing traditional based design, but mixing in wood and metal and leathers to make it more relevant to the way consumers live today. Collections are shorter, too, and that has a lot to do with the companys evolution.
If you look back to the 90s when we had a domestic (manufacturing) model, we had the ability to manufacture a lot more SKUs, Teplitz said. Weve changed to adapt to an import model and our service positions. Weve changed from a manufacturing to a retail point of view. One reason wed brought out all those SKUs (in the past) was to keep our plants full.
We dont need those large collections anymore to keep the consumer interested. Well still do whole-home collections, but we can drive volume out of fewer SKUs now. Todays consumer is spending more money on upholstery and occasional pieces.
On the vendor side, Samson Marketing CEO Kevin OConnor is very cautious about next year.
The reality is if you wipe away the (election) fight that took place, were still in the same place we were, regarding the Senate, White House and House of Representatives, he said. I hope leadership and bipartisan compromise is possible. If not, we could be in for a very tough year.
If we plunge ourselves back into recession we would dowse the hope that appears with the surge in housing thats taking place, he said.
CREATING OPPORTUNITY
The successful retailers OConnor sees have staked a claim in bedding.
Theyre finding a way to market that to the general public in a way that makes people feel they need a better mattress, he said. The motion part of the upholstery business is a part of the business thats replaceable. Dining is something used every day, and with kitchens being remodeled and lifestyles changing, thats an opportunity. The case goods segment of our industry is the most sluggish at the present time.
The challenge is to create excitement along the lines of what the bedding business has done. How do we make ourselves better? I think its clear most (companies) havent recovered from 2007 to 2009. Its depleted the balance sheets of a lot of companies.
Kathwari pointed out that the United States is in a different era of economic activity.
Cautious consumerism might just be the new normal, and retailers have to take charge of their own destiny.
Our focus is to have most of our growth come from within, Kathwari said. We have 2,000 interior design professionals, 800 of whom we acquired in the last three years, and almost all of whom owned their own interior design firm. Weve invested in technology. You look at all the macro factors. Independent enterprises have to take the opportunity to do it themselves.
Today were competing in a different world, he said. In our sector, weve grown more sophisticated and have more technology. ¦ All this also is an opportunity to improve infrastructure and technology in adapting to a new environment. Customization gave us an opportunity to provide services, and technology gave us the opportunity to provide services we couldnt before.
Thomasville is positioning itself to make the most of the coming years business environment.
Were looking to expand our footprint not only with stores, but also with multiple-vendor dealers where a (stand-alone) store doesnt make sense, Teplitz said. Hopefully well get some tailwind from the economy, but thats not where were focusing for our own growth.
The bottom line for furniture retailers in 2013 is to find a creative way to make their own magic and to run a smart, tight ship. Next year is upon us, and none of the brightest prognosticators are calling for record-setting sales. A modest gain seems to be in the cards, which means scrappy business sense is needed. HFB
November 29,
2012 by in UnCategorized
By Home Furnishings Business in Mattresses on November 30, 2012
Luxury mattress brand Pure LatexBliss has signed an exclusive partnership with Yulex Corp., a manufacturer of bio-rubber latex derived from the guayule plant.
Guayule is a desert shrub grown in commercial farms throughout southern Arizona. Offering an additional option to the companys other latex products derived from Hevea rubber trees, Pure LatexBliss will be the first manufacturer in the sleep products industry to create latex mattresses and pillows with Yulex latex technology.
The new bio-Latex is desirable for its eco-friendly properties. Plant-based, Yulex sets a new standard for creating sustainable, renewable, and low carbon sleep products. It has a natural elasticity, durability and softness, which make it an ideal component for bedding. Those same qualities make Yulex appropriate for a range of goods, and the company has strategic partnerships in other consumer categories, including with Patagonia sportswear and Ansell Medical.
This is a new to the world latex technology that has never been used before in our category, said Atlanta-based Pure LatexBliss President Kurt Ling. "When we discovered Yulex, we were convinced that this was an innovation we needed to bring to our product collections. Not only does Yulex produce a high-performance latex, we were excited to learn that guayule is grown and Yulex is made in the United States."
Guayule is a new industrial crop and the only species other than Hevea that has been used for rubber production on a commercial scale, according to Pure LatexBliss. Guayule is a non-food plant that requires very little water, is grown domestically, uses no pesticides and has a clean manufacturing process. Rubber is found primarily in the bark of this desert shrub. To extract the rubber, the branches are ground, releasing intact rubber particles and an aqueous suspension. The materials are separated in a centrifuge, and the rubber mixture is culled of the top and purified.
Pure LatexBliss plans to unveil its Yulex collection of mattresses, toppers and pillows at the Jan. 28-Feb. 1 Las Vegas Furniture Market.
November 29,
2012 by in UnCategorized
By Home Furnishings Business in Accessories on November 30, 2012
Wall art vendors Propac Images and Paragon have leased side-by-side flagship showrooms on Floor 12, Building 1 of AmericasMart Atlanta.
The new showrooms will be ready for the Jan. 9-16 Atlanta International Gift & Home Furnishings Market.
The closely held companies are run by second-generation siblings: Vince Glassco is the president of Propac Images; Lendell Glassco is the president of Paragon; and Malanta Glassco-Knowles is vice president and works with both companies in product development and marketing. Together the companies will occupy 8,400 square feet. Propac will exhibit its full line in 12-A-2, and Paragon will exhibit in the showroom next door in 12-A-8. Leasing adjacent showrooms means the companies can share technology, hospitality facilities, meeting space and customer service desks, creating a superior, seamless experience for buyers.
We are excited about the prospects both these powerful companies bring to the 12th Floor, said Dave Savula, executive vice president of leasing, AmericasMart. These are long-time successful, family-owned companies that offer diverse product collections, which helps ensure our buyers can find the breadth of wall décor product they look for when shopping in Atlanta.
As more retailers look to provide their customers with products that are made in America, the two companies are proud of their U.S.-based production.
We are based in Alabama so the southeast is our prime customer base, and we want to provide the best showroom experience possible in Atlanta, said Lendell Glassco, president of Paragon. Paragons first show was in the temporaries in Atlanta over 37 years ago, so we are extremely proud to offer a permanent, corporate showroom in AmericasMart.
In addition to their Market presence, the showrooms offer buyers an opportunity to shop throughout the year, ensuring continued access to the full collections in both showrooms--an option especially important to the interior design community.
We also look for increased exposure as the showroom will be open on a daily basis, said Vince Glassco, Propac president, which will allow for more opportunities for us to work with the areas residential and hospitality designers on projects.
November 29,
2012 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on November 30, 2012
Furniture retailer Havertys Furniture reports saving $2.2 million in lighting with GEs LED retail lamps.
Havertys, Atlanta, retrofited existing stores with GEs 14-watt Energy Smart LED retail PAR38 lamps and will use those lamps for new construction moving forward. The switch will translate to an average $22,300 lighting cost savings per store per year (based on a $.10 kWh rate and 4,000 hours of operation) or $2.2 million company-wide. The move also is part of a larger environmental initiative.
Our goal was to save money and be good stewards by reducing our energy footprint, said Glenn Boone, director of construction and design for Havertys. The GE lamps were an important ingredient in our cost-saving equation.
With the implementation of new GE indoor LED lighting as an element of its integrated energy management systems, Havertys Fairfax, Va., store is showing a 65 percent reduction for June 2012 compared to June 2011--attributable to a combination of new GE LED lighting and high efficiency HVAC systems.
Meanwhile, among stores retrofit with LED lighting only, Havertys reports an average 25 to 35 percent energy reduction, with its Austin, Texas, location alone seeing a more than 40 percent decrease.
To date, Havertys has purchased 10,000 LED Retail PAR38 lamps, with an additional 5,500 scheduled for delivery. All of its locations are expected to be completed by 2015. The average Havertys store houses 734 lighting fixtures traditionally fit with 90-watt halogen lamps, each costing $36 to operate annually. By comparison, each GE ecomagination 14-watt LED lamp will cost $5.60 to power for a year.
In addition to indoor LED lighting, Havertys is implementing more efficient HVAC and utility control measures across many of its stores to drive costs down further while shrinking its energy footprint. To date, the company reports an overall 21 percent reduction in electricity usage and is working toward even greater reductions over the next year.
The goal of HVTerra, Havertys environmental stewardship program, is to achieve a 25 percent reduction across our portfolio versus our 2008 baseline by the end of 2013. Currently, we anticipate reaching this goal by the end of 2012, one year early, Boone said. We feel very strongly that going forward with our current level of investment in LED lighting, HVAC upgrades and EMS systems, its possible to achieve a 45 to 65 percent reduction overall."
November 29,
2012 by in UnCategorized
By Home Furnishings Business in Markets on November 30, 2012
Dallas Market Center announced that the Jan. 18-21 Dallas Temp Show has added hundreds of new resources for buyers and more made-in-U.S.A. products than ever before.
The show takes place during the Jan. 16-22 Dallas Total Home & Gift Market.
Exhibitors offering products made domestically will be identified by a bold logo on their booth signs, which allows U.S.-made products to be easily recognized throughout the Temporaries.
More than 500,000-square-feet of product are presented in the Dallas Temp Show with a total of 21 categories. New categories include:
* Luxury Home FINDS, a juried collection of high-end home décor, furniture and home accessories located on World Trade Center (WTC) 1st floor with exhibitors including Authentic Models, Design Legacy by Kelly ONeal, The Elizabeth Lucas Company and Tritter Feefer.
* Boutique2Go, an immediate-purchase category including higher-end fashion and fashion accessories such as apparel, jewelry, handbags, linens, headwear and footwear located in Market Hall. Exhibitors include Aimees Linens, Annettes Touch of Class, Dian Malouf, Double D Ranchwear and Treasures of the Ozarks.
* Vintage Fashion & Gift, an immediate-purchase category featuring vintage-inspired apparel, fashion accessories and gift product located in Market Hall. Exhibitors include Bobby Boyd Designs, Le Muse, Rodeo Royalty, Silver Spoon, Tara Gasparian and Vintage Rose Wraps.
Recently launched categories showing for the first time during the winter edition include:
* Foodie FINDS, gourmet food and beverage items including candies, jams, sauces, mixes and more on WTC 12th floor with exhibitors including Angelic Gourmet, David Mountain Nut, Jennifers Gourmet, Jimmy Os, Hint Mint and Spicewood.
* Table & Housewares FINDS, a collection of functional gifts, dining, cooking and entertaining wares as well as clever items for the home located on WTC 12th floor with a range of exhibitors including Artistic Creations, Creative Gift, Dansk, Gorham and Lenox.
November 29,
2012 by in UnCategorized
By Home Furnishings Business in Upholstery on November 30, 2012
The American Home Furnishings Alliance says the jury's still out on upholstery flame retardants that garnered headlines in news reports this week.
A recent Duke University/University of California-Berkeley study found that a majority of sofas contain some level of flame retardant chemicals," read the position statement AHFA issued in response to the study. "The American Home Furnishings Alliance is not aware of any evidence, and there is none in this study, linking the level of flame retardants typically found in home furnishings to human health problems.
"Nevertheless, we agree with the authors of the study that additional research should be conducted on the chemicals currently used as flame retardants. These chemicals are used in the home furnishings industry for the sole purpose of meeting a stringent flammability standard mandated by the state of California."
AHFA noted that California regulators themselves are now questioning their standard and the reliance it created on flame retardant chemicals.
"AHFA is working with those state officials in their efforts to balance the desire for the highest possible level of fire safety with the equally important goal of limiting exposure to potentially harmful chemicals," the statement continued.
AHFA pointed out that over the past 25 years, the number of U.S. household fires involving upholstered furniture has been reduced by more than 85 percent, due to compliance with the voluntary Upholstered Furniture Action Council standard; fewer smokers; increased use of residential smoke detectors; and, most recently, development of reduced ignition propensity cigarettes.
Because of the positive results achieved by these industry and societal changes, AHFA has for many years advocated a federal flammability standard based on the UFAC smolder test--and argued that point before a Congressional subcommittee in Washington, D.C. as recently as August 2012.
November 28,
2012 by in UnCategorized
By Home Furnishings Business in Financial Reports on November 29, 2012
Home furnishings retailer Pier 1 Imports (NYSE: PIR) announced fiscal 2013 third-quarter sales of $425 million, a 10.9 percent increase over the prior-year period.
Earnings per share for the three months ended Nov. 24 were $0.22, compared with $0.21 in third-quarter 2011. Comparable store sales for the quarter increased 7.9 percent on top of last year's 7 percent gain. Three-year cumulative comparable store sales for the third quarter have increased 25.1 percent.
Through fiscal 2013's first nine months, comparable store sales increased 7.3 percent versus a comparable store sales increase of 9.2 percent in the year-ago period. Total sales for the first nine months increased to $1.153 billion from $1.057 billion for the same period last year.
Pier 1, Fort Worth, Texas, estimated the impact of lost sales and costs associated with Hurricane Sandy to be approximately $0.02 per share, net of tax, for the third quarter of fiscal 2013. In the days immediately following the storm, up to 225 stores were closed, primarily due to power outages in affected areas, and 50 stores operated on reduced hours. All stores were reopened and fully operational by the end of the second week in November, with the exception of one store located in Long Island, N.Y., which remains closed due to storm damage.
"While a large number of our stores experienced closure and disruption due to Sandy, our focus was directed first and foremost on the safety and well-being of our associates and others in need," said CEO Alex Smith. "I am extremely proud of and grateful to our associates for their efforts to reopen our stores quickly, even though their own lives were, and in some cases still are, disrupted.
"We're pleased to deliver strong sales growth this quarter, as customers responded particularly well to our fall assortments. Excluding the impact of Hurricane Sandy, we estimate that third quarter comp store sales would have increased slightly over 9 percent."