Decline in residential furniture orders in February, but “not so bad”
HIGH POINT, North Carolina – Although new orders fell 20% in February compared to 2021, this is “not so bad” given that the figures for 2021 were up 24% compared to February 2020, the last month before the start. of the pandemic, said Ken Smith, managing partner at Smith Leonard.
This represents a 16% drop in new orders since the start of the year. An estimated 75% of participants reported lower orders for the month, with around 63% reporting year-to-date declines, according to April’s Furniture Insights.
Shipments were flat compared to February 2021 and down 1% year-to-date. By comparison, in February 2021, shipments increased by 18% compared to 2020 figures. About 66% of participants reported an increase in shipments compared to February 2021 figures, as well as for the year-to-date.
Arrears increased by 35% compared to February 2021, compared to 43% in January. “But all of these results, especially for orders and shipments, are somewhat impacted by the onset of price increases that really started to take effect in the latter part of 2021,” Smith noted in the monthly report.
Receivables were up 1% from January 2022 levels, but down 4% from February 2021. Inventories were up 4% from January and 32% from a year ago .
“Receivables levels remained in good shape given shipment levels,” he added. “Inventory is up 32% from a year ago, when it was up 15% from February 2020. So, given the somewhat slowing in orders, there is some concern about inventory levels. With arrears so high, the increase may not be that much of a concern now, but will need to be watched.”
March sales at furniture and home furnishings stores were up 3.6% from March 2021 and 5.5% year-to-date, the report said.
“February’s results, although appearing negative, weren’t that bad considering the quality of the comparative numbers from the prior year, but we’re starting to feel a real downturn in business overall,” Smith said. And although March and April saw some slowdown, business was still at a “respectable” level, he added. “It looks like the low end may hurt more than the mid and upper price points, as inflation affects those customers a bit more.”
“The decline in the GDP estimates for the first quarter makes sense although apparently it wasn’t that negative on the level of consumer spending. We all expected that the current levels of activity would not last forever, so the downturn is not unexpected although we all would hope it can continue but with the overall economy being affected by inflation, supply chain issues for many products, war in Ukraine and uncertainties from that, along with all the political negativity must have affected consumer spending on furniture,” he continued.
“The next few months should be interesting. Hopefully the price increases for raw materials, as well as imported goods, have started to subside as business returns to more normal levels. While we don’t see container costs going back to the good old days, as demand declines we should see significant reductions from some of the very high prices.
“For now, business should continue to be good as shipments catch up and reduce high backlogs. Hopefully this will keep the flow of goods flowing until some of the uncertainties dissipate,” Smith concluded.