HFN Staff Report
NEW YORK–It may not have been the worst of times, but it certainly was nowhere near the best.
There’s no other way to put it: 2007 was a cruel year for most home furnishings producers. HFN’s exclusive annual look at the Top 50 Vendors shows that about half the industry’s biggest suppliers had negative or flat growth during 2007.
That compares to only about a third of the Top 50 having off years in 2006.
Their top lines crushed by a one-two punch of the collapse of the housing market and dramatically higher costs for such consumer staples as gasoline and food, home furnishings suppliers found themselves caught in the vortex of a perfect storm.
And while this ranking reflects just calendar 2007, the storm has only gotten worse over the first six months of 2008. The housing market shows no signs of starting to bounce back and even once-strong holdouts like the Northeast, particularly the New York area, are feeling some pain.
In the meantime, gas prices, which finished 2007 at about $3.05 for a gallon have skyrocketed more than 33 percent to last week’s $4.07 a gallon average.
The list of the industry’s bigger losers almost reads like a who’s who of home furnishings: such one-time blue chip suppliers as Salton, WestPoint, Berkline and Springs all showed sales declines in excess of 20 percent.
For home suppliers who showed gains during 2007, it was largely the result of acquisitions. Big gainers like Groupe SEB, which realized the sales from its earlier purchase of All-Clad, and Techtronic, which bought Hoover, were more the exception than the rule as merger-and-acquisitions activity died down when the lending markets began to dry up.
The number of purely organic growers was relatively small. In calendar 2006, nine companies ranked in the Top 50 had double-digit growth without the benefit of acquisitions or takeovers. A year later, only six companies, a third less, showed at least the same level of growth. Even perennial growth leader Ashley Furniture showed only a modest 2.9 percent gain in its business, a far cry from its much more robust growth rates over the past decade.
But Ashley’s performance still far outweighed the results of its furniture brethren. Eleven of the 12 other furniture producers on the Top 50 list showed declines, usually in the double digits. Only Dorel Industries, the RTA resource, showed an increase.
Some other sectors didn’t fare any better. The two biggest textiles suppliers, Springs Global and WestPoint Home, both showed declines of at least 20 percent. Other, smaller textiles producers did better, but still mostly lost share.
In floor covering, the two giants who control that segment—Shaw and Mohawk—both had declines, though at 7.9 percent and 11.3 percent, respectively, they were closer to the industry averages.
It was not all doom and gloom, however. Mattresses as a category did fairly well, led by Simmons and Tempur-Pedic, while several housewares firms—BSH, Libbey and Conair—all showed gains of more than 14 percent. First-timer Welspun India broke the textiles mold with a 25 percent year-over-year gain.
Proving that even in what appears to be nearly the worst of times, the best can prosper.