Daily News Archive
Brought to you by Home Furnishings Business
October 31,
2008 by in UnCategorized 
By Home Furnishings Business in on November 2008
We’ve all heard it over and over. Whether it revolved around applying to colleges, job interviews or overall business strategy, sage advice came down to the age-old saying—don’t put all of your eggs in one basket.
The dour economic news and the dramatic swings on Wall Street have made the simple words ever so sound and wise. Surely no one who has watched the value of his or her 401K drop by a drastic 35 percent or more in the last couple of months—despite the wisest of diversification strategies—would argue with spreading investments across different instruments. It just makes good sense.
When you look at the furniture industry and its dependence on China for imported case goods and upholstery, the pendulum definitely swings in China’s favor. But changes are on the horizon.
As in most sound investment strategies, retailers and marketers of furniture are looking beyond the mainland of China for cost-effective goods and looking to diversify the supply chain with product from other locales. Sharing the wealth, so to speak, or spreading the eggs to several
different baskets.
Playing in a global economy is never easy. Factor in the changes the global economy is currently undergoing, and it gets more complicated. While currency fluctuations aren’t the only concern regarding whether to import from a particular country, they do play a role.
The strength—or lack thereof—of the U.S. dollar is down significantly against most foreign currencies, meaning it buys less of what you need. When compared with the Chinese yuan, the value of a
dollar dropped 9.9 percent from June 2007 to June 2008. In Taiwan, the same comparison shows a 7.5 percent decline against the Taiwan dollar. In Brazil, the dollar’s value against the real has dropped 17.4 percent; against the euro, we’ve seen exchange rates drop 14.1 percent.
Retailers and suppliers who shared their experiences with us in this issue are looking at other source countries for products. Many have already shifted some buying
to Indonesia, Malaysia and Vietnam.
Other worries:
• Customers looking beyond China are concerned that factories are looking to be more efficient in a down economy and what was once known as quicker service has slowed with adjusted production schedules. Getting that container of bedroom groups may take longer than you’re typically used to, and sometimes a warehousing program just won’t cut it.
• New regulations are coming down the pipeline in January that will impact the levels of formaldehyde in furniture. Those regulations, which require testing in off-shore factories, will also dictate documentation of custody chains for furniture.
• And, factor in the skyrocketing costs of travel today when considering a trip to the Far East in search of new vendors. Air travel alone can exceed $5,000 for a business-class fare.
The import road remains bumpy for the industry and will for years to come. Just when we think we’ve figured out the best way to balance importing for a sound business strategy, macroeconomics, cultural and social issues will continue to throw up roadblocks.
The key is to be prepared for the changes that lie ahead with solutions that work. Read on for some insight into what the industry faces in the next year concerning imported goods.
October 31,
2008 by in UnCategorized
By Home Furnishings Business in on November 2008
It’s pretty hard to get away with doing anything wrong these days. Technology, it seems, has taken away the sport in doing the things we shouldn’t.
Back in the day, if you didn’t have a report completed, it was easy enough to say, “it’s in the mail”. That was always good for buying a day or two. Then came the fax machine—quickly followed by PDAs and cell phones on everyone’s hip. It totally killed the good, old-fashioned fun of acting like you have yet to receive someone’s message.
Now, Katie bar the door, we have Webcams, and GPS systems, and those horrible people that want you to send them a message back saying you got their message. (I truly wonder about those people.) Do they not already have enough e-mail in their box? They really want one that says their message has been displayed on my computer? And does that work when someone reads a message on a BlackBerry? No one really knows. AND—if you’re really diabolical, you let the sender know you read their message—and then still don’t answer.
In today’s world, you had better be doing what you are supposed to be doing—or someone, somewhere will catch you. There’s nowhere left to hide. Unless, of course, you’re importing furniture. In the world of importing furniture, a vendor can actually take your money and play a game of hide and seek with you not seen since the mid ‘80s—pre-fax machine, you know.
A dark hole often exists between issuing a purchase order and receiving goods at your dock. Do your sources allow you to see what they are up to during that time? Do you really know when the goods leave the factory? Are your containers going to be delivered by Thanksgiving weekend? Should you really tee up that ad for your new dining room suite? Did your containers show up too early and you have nowhere to unload them? Are they tied up in customs or did they get re-routed to replenish another retailer? You know the retailer, it’s the same bunch that carries a bigger checkbook and knocks you out of your spot at every turn.
Oh, and by the way, the longer your supply chain, the more credit it sucks out of your system. Everyone has credit to spare these days, huh?
The right product, delivered intact, in a reliable fashion, is your lifeblood as a retailer. You wouldn’t even consider shipping a UPS package across town without a tracking number. It’s amazing how the same mentality doesn’t transfer over to a very expensive container of furniture. Look for transparency with your vendors. Your friend, the one you trust, might be getting lied to as well.
Tighten things up a bit. Some of you reading this really do need to order containers. Others should take advantage of the infrastructure of local distribution centers that sprang up all across the country, while everyone else was getting enamored with containers. Maybe the words “U.S. warehouse” do make a difference. Are you really saving a lot of money ordering containers or just eating it up with expenses on a different line on your P and L sheet? Oh, and by the way, what was the smart decision
six months ago may no longer still be the best plan. There’s a tremendous amount of moving and shaking going on in the transportation industry. It may be time to lift your head up and look around.
These days, you can track your kids via a GPS placed in their shoes, you can use a teddy bear Webcam to catch your wife getting too friendly with the mailman, and you can post embarrassing videos of your drunken boss at a dance club on YouTube straight from your cell phone. That’s a nice wide range of tracking abilities. It seems
like you should be able to track your money (aka furniture). If it’s really sitting
in the middle of the ocean, you should at least get to know what island is passing by.
Just a thought.
October 30,
2008 by in UnCategorized
By Home Furnishings Business in on October 2008
Furniture Brands International, St. Louis, reported Thursday that third-quarter 2008 sales fell 17.6 percent to $413 million compared with the same period last year; and a net loss of $41.7 million. FBI lost $13.7 million in third-quarter 2007.
Year to date, through Sept. 30, FBI sales of $1.34 billion are down 15 percent from the $1.58 billion it recorded for the first nine months of 2007. FBI has lost $32 million through 2008’s first three quarters, compared with a $ 4.97 million loss at the same point last year.
FBI credited the third-quarter sales decline to weak consumer market conditions, and the loss to weak market conditions and restructuring, inventory and accounts receivable charges.
“By nearly every measure, the economic environment in which Furniture Brands operates has worsened in the past three months, and consumer confidence has been shaken by the unprecedented turmoil in the global financial markets,” said Chairman and CEO Ralph P. Scozzafava in an announcement of results.
FBI revised its fiscal 2008 sales forecast slightly downward to a range of $1.7 billion to $1.75 billion. The company anticipates that additional pre-tax charges totaling between $56 million and $72 million relating to the weak economy and restructuring will be recorded during the fourth quarter of 2008.
“Furniture Brands is and will be taking direct steps to maintain the company’s financial position during this very challenging period,” Scozzafava said. “The charges included in the third-quarter results are primarily non-cash and reflect actions that will improve future financial performance. The management team is continuing to focus on Furniture Brands’ financial structure. We are working to ensure that the company will emerge from this period of economic instability as a stronger competitor.”
As of Sept. 30, FBI had cash and equivalents totaling $110 million, long-term debt of $200 million, and credit facility availability of $28 million.
In addition, FBI’s board of directors elected on Thursday to suspend the company’s quarterly dividend until further notice. FBI anticipates redirecting the approximately $8 million in annual dividend payments to reduce long-term debt and other corporate purposes.
“In light of the challenging retail environment, the board of directors agreed that the company’s shareholders are best served by a strategy of cash preservation and maximum financial flexibility,” Scozzafava said.
October 30,
2008 by in UnCategorized
By Home Furnishings Business in Bedroom on October 2008
The U.S. Department of Commerce has revised its results for two Chinese manufacturers responding to the new shipper review of wooden bedroom furniture from China covering the period January through July 2007.
Mu Si received a final duty of 33.01 for the period after recalculation of some factors of production and movement expenses. Mu Si had been assigned a preliminary duty of 103.55 percent.
DOC also confirmed that Bon Ten received no duty after submitting a “timely rebuttal brief,” according to an
entry in Friday’s Federal Register.
October 30,
2008 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on October 2008
Gallery Furniture, Houston, committed to provide furniture, electronics and interior design to 35 United Service Organizations centers around the world, according to a report Thursday from the Houston Business Journal.
The USO provides morale, welfare and recreational services to U.S. military personnel and their families through 86 centers in the United States and 22 centers in other countries.
Gallery Furniture will start with new furniture for USO centers at William Hobby Airport; Mississippi’s Gulfport-Biloxi International Airport; Fort Carson, Colo.; Fort Drum, N.Y.; Philadelphia International Airport; and Camp Virginia, Kuwait.
During Hurrican Ike, Gallery also set up televisions, computer stations and gaming equipment at two USO mobile canteens.