HIGH POINT, N.C.–The universal topic of the economy is naturally expected to be at the forefront of business conversations this week.
While pressure from sources such as oil prices and the housing market are beginning to sound redundant, there is no avoiding their impact on this category and the home furnishings segment as a whole, and executives don’t anticipate much change until at least the fourth quarter.
“There is no question, with gas prices expected to push $4 a gallon, depressed housing prices and an election, 2008 is going to be a challenging year,” said Roy Evans, vice president of sales and marketing at CMI. “Home furnishings suppliers and retailers will have to work very hard to capture the consumer’s precious disposable income.”
Steve Mazarakis, president and chief executive officer of Hellenic Rug Imports, also pointed to oil prices, saying it’s hard to predict your own performance when you’re faced with something as unpredictable as the cost of a barrel of oil directly affecting your business.
Oil, of course, isn’t the only factor in today’s home-oriented businesses.
“We feel this year will be difficult for the home industry in general, and for the rug industry as well,” said Arash Yaraghi, co-principal of Safavieh. “Both are tied to the real estate market, which is very tough right now and will probably continue that way through 2008.”
Echoing Mazarakis’ thoughts, Yaraghi said, “We have to work that much harder to compensate for market conditions that are beyond our control.”
“Hopefully, everyone gets a nice tax return and we could see a spike,” said Rich Siminou, vice president for Harounian Rugs International. “But I think we have to wait until after elections. The stock market is holding up nicely, but I doubt people will spend their disposable income on home furnishings.”
Siminou was, however, among those who noted the high-end market should continue to hold up well in spite of the sluggish economy.
Despite concerns, the first few markets and months of the year have proved relatively flat for many. Some noted a slight dip in February, but most executives are reportedly pleased with their results for January, considering the economic conditions they’re up against.
CMI, for example, is up in total over last year. Evans said that while some segments of the company’s business are down, others are making up ground due to initiatives the company has taken to expand its base of retailers.
Initiatives at other companies have proven highly successful as well, with many expanding into other categories and price points to reach a wider retail pool. In particular, Jaunty reports it is more than 60 percent over the same period last year. The company credits much of that success to its decision to steer clear of Internet discount Web sites and also some aggressive marketing concepts.
Executives are still optimistic, however, as this is certainly not the first time their businesses have weathered economic storms. The attitude is one of survival of the fittest: Work hard, hold on and this too shall pass.
“I feel optimistic about the home and rug industry,” said Ali Momeni, vice president of the company that bears his family name. “Traditionally at this time, it does start to slow down and I feel that the coming months may be slower than usual. However, we feel very strongly about the fourth quarter. That has consistently been the best time for us.” — Jennifer Quail