AFMA Sees Rebound In Furniture Sales

Furniture World Magazine

The American Furniture Manufacturers Association and industry analysts are looking ahead to much stronger furniture sales in the second half of this year. AFMA's year-end numbers show that although wood furniture sales dipped slightly in the fourth quarter last year, shipments of both wood and upholstery were up overall for the year, with wood rising 2.9% and upholstery up 2.7% in dollar value. Analysts say they think December 2000 was the bottom of the trough and that sales will be improving. A key factor in the turnaround is lower interest rates, which will lead to stronger housing sales. "December was as bad as it will get," said Jerry Epperson, managing director at Mann, Armistead & Epperson in Richmond, Va." 'We are already seeing an improvement, and we believe lower interest rates will trigger stronger housing turnover by the key summer sales season." Furniture sales should be up within three months after the housing pickup, Epperson said. "We expect we will have a strong fall for furniture." Joseph P. Logan, vice president of financial services for AFMA, agrees. "We expect the first half of 2001 to be off slightly; then we'll see a turn in the third and fourth quarters of the year," Logan said. The analysts are not particularly concerned about low consumer confidence, which dropped to its lowest level since June 1996 in February. "Consumer confidence is an important barometer, but it can be as backward looking as forward," said Joel Havard, vice president of equity research for BB&T Capital Markets in Richmond, Va. "We believe we will see an improvement in consumer spending before we see a shift in consumer confidence. "The turn may be under way already," he added. "With interest rates coming down, it's just a matter of time before the consumer starts spending again." Epperson noted that he also is seeing signs of an improvement. "We believe retail inventories are back under control, and retailers were buying at markets in San Francisco and Tupelo in January and February," he said. "That's a positive sign." Ken Smith of BDO Seidman in High Point is a bit more cautious about the outlook, however. Although he agrees that lower interest rates will help boost furniture sales and that the industry will see some pickup in the fourth quarter, he does not think the turnaround will be significant until 2002. "There's a lot of hope that the second half will be better, but I think it will be a gradual improvement," said Smith, who is BDO's national director of furniture industry services.