2-5-2021 – Time to boost bottom line, furniture report says

Posted on: February 5th, 2021 by admin

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February 5, 2021

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By Guy Lucas guylucas@newstopicnews.com

Feb 4, 2021 Updated 12 hrs ago

 

Furniture orders continued to be strong in November, just not as much as the previous five months, and manufacturers should raise prices, a consulting firm that follows the industry says.

 

Orders were up 17% from November 2019, putting orders for the first 11 months of 2020 14% ahead of where they were in the first 11 months of 2019, according to the latest Furniture Insights report from Smith Leonard, an accounting and consulting firm based in High Point.

 

As has been the case, not all manufacturers have seen orders increase from 2019’s levels, but two-thirds of all manufacturers answering Smith Leonard’s survey have. That is an improvement from the previous month, when it was just a little more than half.

 

Ken Smith of Smith Leonard wrote that companies should take advantage of the chance to solidify their profit margins.

 

“With demand this strong, we hope that at retail and wholesale, the industry does not give up margins just to chase sales,” he wrote. “We realize the industry thrives on low prices in too many cases, but it makes no sense to try to enjoy all these increased sales at low margins.”

 

Backlogs remain the industry’s big problem, he wrote.

 

“Backlogs continued to grow in November to levels certainly not remembered in my years of following our statistics,” he wrote. “We hear of some custom upholstery companies quoting as many as 20 weeks for delivery. We have heard that backlogs are slowly coming down, but that is a slow process due to lack of trained people as well as … flow on goods especially from Asia.”

 

The report projected strength for the industry in the coming months, though the backlog is a shadow hanging over that.

 

“The consensus with most folks we talk to is that we should continue this good ride on into 2021,” it said. “One of the major concerns that we are hearing is that some dealers are starting to hear about cancellations due to the long lead times.”

 

Upholstery suppliers also report some shortages of raw materials, the report said.

 

“On the good side, most of the economic data that we think drives furniture sales is still good,” the report said.

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