The numbers continue to astonish. The latest Smith Leonard survey of residential furniture manufacturers and distributors reported a 39 percent increase in new orders from July 2019 to July 2020. That followed a 30 percent rise in June from a year earlier.
“We pretty much expected another good month and, based on conversations, we expect increases to continue to be reported for August and September,” the report said.
Smith Leonard is a High Point, N.C., accounting and consulting firm. Assurance Partner Kenneth D. Smith focuses his practice on the furniture industry and is the monthly report’s principal author.
HFA members say business is booming
Home Furnishings Association members know consumer demand is sky high. They have told us so:
“We’re knocking last year’s figures dead” – Bill Grace, Grace Furniture in Marcy, N.Y.
“Almost every day is like a Saturday” – Randi Schachter, BILTRITE Furniture in Greenfield, Wis.
“We have our foot on the gas” – Brent Simon, Colorado Style Home Furnishings in Highlands Ranch, Colo.
“They want anything you’ve got” – Jerry Peters, Charlotte, N.C.-based Kimbrell’s Home Furnishings.
“Business has been booming this year” – Tom Buckley-Sprick, Black Whale Home in Encinitas, Calif.
“I’ve never seen anything like it before” – Eric Sinclair of Sioux Falls, S.D.-based Montgomery’s.
Orders far exceed shipments
Yet, supply is lagging.
“With new orders exceeding shipments, backlogs grew to an increase of 69 percent over July 2019,” Smith Leonard reported. “The increase in backlogs is worrisome as the needs at retail are now. We realize the manufacturers and distributors are doing all they can to catch up. But it will take some time as we think most have been surprised by the length of the ‘recovery.’ ”
Inventories were too high before the pandemic, the report said, but that was fortunate “as having inventory to either ship or produce has been a good thing the last few months.”
The report noted the labor shortages impacting the industry: “The level of factory and warehouse personnel is in a state of flux and continues to be. Most everyone we talk to in most any industry is complaining about the lack of employees. Through July, much of it in our industry was caused by the added federal unemployment compensation payments, making it more profitable to stay home and do nothing versus working, but that ended at the end of July so, hopefully, things have gotten somewhat better. Although that is not really what we are hearing from most.”
Strong business is expected to continue
The authors added a few more thoughts, including:
“The good news is that business has remained strong for most, even through September, and most are expecting October to continue.
“Of course, any time business gets good, something happens to make material prices go up, including imported goods. Price increases are here and likely will need to continue, as most of the parts and pieces are going up.
“Most all reports from premarket were very positive. We know attendance, by all reports, was considerably higher than ever before and orders were written along with commitments. It will be interesting to see what the fall market brings. Some said, (buyers) may not come back, but if business holds up, we suspect many will need to come even if (they were) here at premarket.”
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