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Furniture/Furnishings Weekly

A tough week for our indexes. It was a down week in the market for Water Tower Research’s Residential Manufacturers & Suppliers Index (-6.4%) and Home Goods Retailers Index (-6.7%) relative to the broader market indexes (-0.1% to -1.5%) and the Mass Retailers Index (-1.6%). On a relative basis, the Commercial/Contract Furniture Index (-1.0%) outperformed. Leggett reappointed Karl Glassman as CEO. Amidst the ongoing mattress industry recession/depression, Glassman, who served as Leggett’s CEO from 2016 to 2021 and Board Chair since 2020, was again appointed President and CEO, succeeding CEO Mitch Dolloff, who resigned. Glassman will remain Board Chair. According to Lead Director Robert Brunner, Glassman’s intimate knowledge of Leggett and his strong relationships with its customers and associates will ensure a seamless transition. Dolloff will consult during the transition. In 2023, ‘Digital Nomads’ reached 17.3 million in the US alone, up ~2x since 2019. Digital Nomads are office workers who work remotely. While the stereotype pegs them as freelancers, new research, the Financial Times reports, suggests many Digital Nomads work in traditional full-time salaried roles. What seems novel is that countries are now competing for these “nomads”, offering special visas for remote workers to offset longer-term declines in working age populations. As many as 58 countries offer special visas for remote workers. With a total US workforce of 168 million, according to the Bureau of Labor Statistics, this represents a non-trivial percentage of the office workforce, pressuring the addressable market for office furniture makers. Office vacancy rates remain elevated across key office markets. According to a report from the City and County of San Francisco, office vacancy rates remain stubbornly high across several important ‘high technology’ office markets (see figure below). Although there is variance across cities, the general trend remains fairly consistent. However, while SF in particular remains especially high (32.4% in March 2024), New York may have turned the corner, with vacancy rates appearing to have diverged from the pack in recent quarters. Industry composition seems to matter in return to office. Two positive data points on the consumer. Credit card delinquencies may have peaked in January. The Federal Reserve Survey of Household Economics and Decisionmaking (SHED) suggests that while higher prices are a drag for consumers, continued labor market strength means that, overall, financial wellbeing basically remains unchanged since 2022. Shipping rates continue to climb, pressuring margins for importers. Logistics startup Flexport CEO Ryan Petersen outlines the ‘perfect storm’ pushing rates higher in a thread on X (formerly Twitter).