Choppy conditions make '03 a challenge
By Jay McIntosh -- Furniture Today, December 31, 2005
HIGH POINT — HIGH POINT— Business turned choppy last year for the top furniture manufacturers and importers in the U.S. market, with about half reporting sales gains and the rest declines.
Among the Top 25 sources, only three companies had double-digit sales gains in 2003, and two of those were powered by acquisitions. Two suffered double-digit declines from 2002.
The rest were mired in the middle, in a year when even a small gain in sales probably meant an increase in market share. As a group, the Top 25 sources' sales rose 1.2% last year to $13.5 billion. Without the acquisition activity, the aggregate number would have been close to flat.
Standing out among the Top 25 once again was Ashley Furniture Inds., whose 20.7% sales gain came without the help of acquisitions. Ashley, which combines a modern manufacturing base, mainly in Wisconsin and Mississippi, with a robust import program, remained in the No. 3 position with $1.6 billion in sales last year.
"We had increases in every category, including HomeStores," said Ron Wanek, the company's chairman.
Ashley Furniture HomeStores, a dedicated-store network that had 121 stores on Dec. 31 and continues to grow, generated $600 million in retail sales in 2003, up 71% from $350 million the previous year.
For six straight years, the company has posted sales gains of at least 16%, well ahead of the industry average. What's behind the growth? Wanek said he believes Ashley is in the right price points — promotional to medium — and that its dealers appreciate the company's focus on retailer profitability, expressed as GMROI (gross margin return on inventory investment).
If Ashley keeps growing at this rate, it may pass La-Z-Boy as the second-largest source next year, and could threaten No. 1 Furniture Brands International in two years.
But that's if those two longtime heavyweights don't rebound from a sub-par year.
At Furniture Brands, CEO Mickey Holliman attributed last year's 1.2% sales decline to weak demand for furniture, particularly at higher price points. The company also said it had price deflation of about 1.5% as it added more imports to its mix — FBI has closed 21 of its U.S. plants in the past three years.
Furniture Brands' sales strengthened late in the year, and in the first quarter of 2004 were up 7.3%.
La-Z-Boy, meanwhile, saw its U.S. furniture sales slip 9.9% in the 12 months ended Jan. 24, mainly because of declining case goods sales.
Producers with U.S. case goods plants continued to feel the heat of import competition last year. Chromcraft Revington attributed much of its 14% sales decline for the year to lower sales of bedroom furniture as imports gained market share.
Two Virginia companies that incorporate imports with their U.S.-made product reported significant sales gains last year.
Stanley's sales grew 8.8% and the company climbed two spots on the ranking, to No. 19. Executives said the company pursued a strategy of using offshore sourcing to improve its products' styling and features without raising prices.
At Hooker Furniture, much of a 24% sales gain in the fiscal year ended Nov. 30 resulted from the purchase of upholstery producer Bradington-Young in January 2003. But even without the acquisition, sales would have risen 6.6% in its wood furniture operations, which blend domestic and imported product. Also benefiting from acquisitions last year were Flexsteel Inds. and Dorel.
Flexsteel bought case goods, occasional and office furniture supplier DMI last September, adding about $35 million to its sales and boosting the company from 25th to 18th in the ranking. Dorel acquired Canadian ready-to-assemble specialist Carina in September, helping the company to a gain of 8.2% in U.S. furniture shipments.
Bassett Furniture slipped from 12th to 15th on the list as its sales declined 8% to $287 million in the fiscal year ended Nov. 30, mainly because of a $17 million decline in sales to JCPenney. The company was looking forward to this year, with additional Bassett Furniture Direct dedicated stores set to open. Sales in this year's fiscal first quarter were down just 1.3%, even with the continued JCPenney shortfall.
