High Point, NC, October 20, 2006--Furniture makers said they are cutting costs and reducing inventories to weather the current slowdown in sales, but hope that declines in interest rates and a brighter economy will over time entice consumers to resume spending on big-ticket items.
"General consumer retail is doing pretty well, but furniture retail is not," said Larry Ryder, chief financial officer for Hooker Furniture Corp., the Martinsville, Virginia, maker of wood and upholstered products.
"We're all in a position where we're saying we need to reduce expenses, to economize, drive inventories down to lower levels," Ryder added.
Not all manufacturers are feeling squeezed. Alex Bernhardt Sr., chief executive of the 117-year-old private furniture business that bears his family name, told Home Furnishings News, a trade publication, that September was the best order month so far this year.
But some of the biggest publicly traded companies such as Furniture Brands International Inc. and Stanley Furniture Co. have announced weaker quarterly results or advised Wall Street to expect lower earnings as cooling home sales, higher borrowing costs and uncertainty over fuel prices pressure consumers.
"It's not so much whether (interest rates, gas prices, housing starts) are going up or down, but the uncertainty," said Kurt Darrow, president and chief executive of La-Z-Boy Inc. , the Monroe, Michigan, upholstery maker.
"Until there's more clarity on some of these economic factors, I think the customer says 'I can go another six months without a sofa,'" he added.
La-Z-Boy said it is reducing warehouses and centralizing accounts payable and other office functions to cut costs so that it will be able to compete better when the sales upturn does arrive.
Stanley Furniture, which makes most of its wood furniture at its four U.S. plants, is also cutting inventory and focusing on delivering products faster to consumers amid the tough conditions.
"Business is going to get better. We just don't know when," said Jeff Scheffer, Stanley Furniture chairman and chief executive.
Paul Toms Jr., chairman and CEO of Hooker Furniture, is optimistic that consumer confidence will improve, which in turn will aid furniture sales, as people come to feel secure in their wealth.
Still, he added that over the longer term, the furniture industry needs to focus on inspiring consumers so that they are anxious to buy furniture even before entering a store.
"Given the amount of time people spend in their homes, it should be natural that they would want to spend money and make them comfortable," Toms said. "But we as an industry have been outmarketed by automobiles, electronics, travel -- all the industries that we compete with for disposable income."
