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Furniture/Furnishings Weekly

The Water Tower Research Office Index posted the best relative performance of the week, up 1.6%, compared with the other indexes, which fell between 1% and 2.8%. Both the Residential Manufacturers (-4.4%) and Home Goods Retailers (-5.1%) had rough weeks on a relatively quiet news front. Bassett reported its 1QFY24 results, missing our revenue and EPS estimates. The main story was weak demand, echoing what we continue to hear from the rest of the industry. Yes, January had adverse weather and supply chain disruption continues (although this is less of an issue for Bassett than some of its peers given its strong US manufacturing base), but it’s the weak consumer that is the primary character in this show. On the positive side, Bassett posted record gross margins. Natuzzi posted 4Q23 results. 4Q23 revenue fell 27.8% (modestly better than the -29.9% full-year comparison) versus a strong 4Q22 that was backlog driven. The venerable Chairman Pasquale Natuzzi remarked, “2023 has clearly been a challenging year for the overall industry…It’s evident that the furniture industry faced extraordinary conditions in 2023, with major markets experiencing a significant slowdown in demand, following two consecutive strong years post-COVID.” Weak demand was seen in North America, Europe, and China for Natuzzi. The company will host its 4Q23 earnings conference call on Monday, April 8, 2024, at 10:00 am ET. POÄNG chairs at work? As reported in a trade press article, IKEA will launch an 85-piece configurable office furniture collection in July. The focus is on simple pieces that enable rapid reconfiguration on the fly so that people can adapt their space throughout the day as work needs change. The key words the company used to describe the collection are comfort, timelessness, and “holistic ergonomics.” IKEA’s move here fits a classic disruptive innovation narrative: it aims for the lower end of the market for buyers and companies do not need more highly engineered products offered by the established industry incumbents. It would be foolhardy to underestimate IKEA, but also premature to accord it success. Irrespective, it is an interesting development that we will continue to monitor. Work from home is beginning to reshape the nature of the home as hybrid working becomes the new normal. The WSJ (gated) recently reported how working at home has begun to change the architecture of the home itself as people demand more from their home office than the small bedroom converted to an office can deliver. Multiple home spaces, sometimes extending to outdoor spaces as well, can function equally as both living spaces and office spaces in the era of 24/7. This week’s calendar includes earnings reports from several issues, including Lovesac, Hooker Furniture, and Conn’s. Additionally, the Residential Furniture Spring High Point Furniture Market officially begins late this week. We will attend and visit several publicly traded issues and private companies.