HIGH POINT – New orders for furniture rose 27% in January compared with the same month in 2020, the eighth month in a row for high double-digit year-over-year increases as strong demand continues at retail.
According to the latest Furniture Insights survey of residential furniture manufacturers and distributors from accounting and consulting firm Smith Leonard, that’s the same percentage increase as reported for December 2020, although January’s new orders were off 2% from the prior month. While brick-and-mortar and online furniture sales stay high, getting the goods to stores and consumers remains a challenge.
New orders in January rose for 77% of survey participants, slightly lower than reporting last month. The January 2021 increase compared with a 2% increase when comparing January 2020 and January 2019.
January shipments increased 7% and were up for 65% of companies surveyed compared with January 2020, but fell 5% from December.
As January orders continued to exceed shipments, backlogs kept growing, up 2% from December and up 177% from January 2020 levels.
“Backlogs continue to grow due to lack of ability to get raw material (mostly foam) for upholstery suppliers and issues with imported goods not flowing like they normally would be due to all sorts of issues,” said Smith Leonard Partner Ken Smith in the survey report.
Receivable levels appeared to be in line with a 3% increase in January vs. January 2020. “In our talks, we think the PPP government loans have helped dealers and customers to keep their bills fairly current,” Smith said.
Inventories for January rose 7% from December levels and were 4% higher than a year ago. “Inventories continue to be too low, but lack of ability to get goods is keeping inventories down,” he noted.
While factory and warehouse employment was up 1% from December, the number of employees was down 3% in January from the same month in 2020.
“It continues to be a problem to find workers, especially trained ones,” Smith said. “And even when you can find workers, training them is very costly and time consuming.”
January payrolls were flat compared with last year but fell 1% from December, which Smith said reflects the inability to get employees in many cases.
Smith Leonard’s ongoing conversations with industry contacts keep yielding the same issues and challenges: the need for people, raw materials and imported finished goods.
“Shortages of integral materials to make foam, some lumber issues due to the increase in housing and upfits to homes, and other materials continue to have a negative impact,” Smith said. “Glue for case goods is even in short supply. If those hurdles can be cleared and goods can actually be made either domestically or overseas, getting the goods delivered has been a big issue.”
The backlog issue is having considerable impact when it comes to price increases.
“In most cases, orders are placed based on current price lists, but by the time the goods can be made and shipped, the prices have gone up,” Smith pointed out. “It is hard for the manufacturers to absorb those increases, yet it is hard for the retailer to do the same, and they certainly have issues with going back to customers trying to raise prices after the goods were ordered.
“Most people we talk with say they can never remember business being this good, yet most admit they would have never imagined the challenges that have emerged in the midst of such positive growth,” he continued.
Looking ahead, Smith expects business to “slow a bit” in coming months as resumption of travel and vacations dry up some consumer purchasing power.
“We think it will still be positive but just not as robust,” he said. “Hopefully, this will allow folks to take a breath and catch up somewhat. In the meantime, enjoy the good business as best you can.”
Click here for the entire Furniture Insights report.
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April 01, 2021 at 02:58AM
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Furniture Insights: January orders jump 27% - Furniture Today
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