HIGH POINT – As expected, new orders for furniture skyrocketed in March relative to the same month last year, when the COVID-19 hit home stateside, forcing closures among furniture stores and brick-and-mortar retail in many other categories.
While March new orders were up 96% compared with March 2020, the more realistic comparison with March 2019 still shows high-double-digit demand growth, with orders increasing 40% comparing those months.
That’s according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from accounting and consulting firm Smith Leonard.
Smith Leonard Partner Ken Smith noted up front that such skewed comparisons of monthly order results with 2020 are “something that we have not had to deal with before.”
“Some really may not be that meaningful, in and of themselves, other than to say that we are glad the March to May periods last year are in the past,” he continued. “We certainly hope never to be dealt with again. New orders in March were up 96% over March 2020 when the pandemic really took over and businesses were shut down. We looked back to March 2019 for a better comparison and found that orders in March 2021 were up 40% over March 2019, so when we say business is really good, we think that speaks to just how good business has been.”
Year-to-date, the orders through 2021’s first quarter were up 50% compared with 2020’s first three months. Compared with the first three months of 2019, new orders in 2021 jumped a considerable 38%.
Shipments in March 2021 were up 34% compared with March 2020.
“As has been the case, shipments have not been able to keep up with the increase in orders, as discussed before due to foam and labor shortages, container and shipping issues, etc.,” Smith said.
Shipments in March 2021 were 19% ahead of March 2019. Year-to-date, shipments rose 19% vs. same period of 2020 and were up 15% compared with 2019’s first quarter.
With new orders continuing to far exceed shipments in dollar value, backlogs continued to build in March, up 6% compared with February, and up a whopping 251% from March 2020 levels. The March backlogs were up 229% compared with March 2019.
Receivables, up 11% compared with March 2020 were “very much in line” with shipments.
“Most of the people we have talked with are doing a good job of watching their receivables closely and keeping them clean,” Smith said. “Also considering the difficulty many are having just getting orders delivered, most are making sure they are current with vendors in order to make sure they can get product.
Inventories fell slightly in March from February as shipments continued to increase, up 14% compared with March 2020 levels, and down from 15% reported in February.
While March payrolls rose 10% compared with March 2020, Smith noted that “real effects of the pandemic will not be felt until we get the April results. Some of that will also be impacted by those who received PPP money.”
Factory and warehouse employment in March was about even with last year, but Smith noted this was another instance of “not really meaningful comparisons.”
The survey of March results was the first reflecting the lack of comparability to the prior year due to the pandemic, and Smith pointed out it will be some time before those comparisons will be reasonable.
“But overall, orders have been really good for most in the industry,” he added. “We did some comparisons of March 2021 to March 2019, and those results were very favorable.”
Cost increases, supply and labor shortages are dampening “some of the jubilance” as the furniture sector has demand at or exceeding that of other industries for the first time in recent history.
“But most have agreed that it is a much better problem to have than lack of orders,” Smith said. “Yet it has been very frustrating for most to not really feel that they are reaping the benefits of this increased business. Add to that the issues with how to set pricing when taking an order, when shipping is delayed by many months and costs continue to rise.”
He also noted that some vendors have chosen to catch up on shipments instead of participating in June High Point Market, while others feel the need to show.
“Who would have thought such demand for the industry products could cause such headaches?” he concluded. “We hope this short-term pain will result in long-term gains and profit realization down the road.”
Click here for the full Furniture Insights report.
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May 28, 2021 at 02:02AM
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