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Furniture/Furnishings Weekly

Economists tell us that the economy is growing. Don’t tell that to anyone in the hardlines supply chain. Furniture consumers are behaving like it’s 2008. It’s a “riddle, wrapped in a mystery, wrapped in an enigma” (apologies to Winston Churchill). Job statistics are strong, wages are up, and savings remain strong. The consumer is flush and should be spending. Yet consumer confidence is weakening. Some recent sell-side published research has asserted that hardline retailers’ traffic in September was the worst of 2023. That comports with our industry contacts, who report the response to Labor Day sales was decent, but between promotions, the sales floor is slow. A specialty furniture retailer reported the same. Sales are down ~30% YTD. Credit card transaction data support the view that sales have been weak. A bit of good news: inventories appear to have normalized. The overhang that plagued the industry early this year has largely cleared, which may explain why furniture manufacturers reported some low single-digit sequential upticks in orders. Microcap DIRTT Environmental Solutions, a struggling Canadian-based maker of customized office interiors, announced the permanent closing of a production facility in South Carolina. It expects the closure to cost ~$500,000 and will write down assets by $7-9 million. The latest NAICS data (August) showed manufacturer shipments were flat versus the prior month. Inventories declined slightly (see chart on page 5). Overstock.com (OSTK) was the best performer in our universe last week after “The Profit” Marcus Lemonis bought a stake. The Kastle Systems RTO Index dipped below 50%.