ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, January 7, 1996 TAG: 9601110003
SECTION: BUSINESS PAGE: D1 EDITION: METRO
SOURCE: MEGAN SCHNABEL STAFF WRITER
After surviving a year of low demand and disappointing sales, the furniture industry is poised to rebound in 1996.
"It was not a good furniture year," said Albert Prillaman, president and chief executive officer of Stanley Furniture Co. Inc., based in Stanleytown. "And this was in a relatively strong economy," he said of 1995.
Employment was up and interest rates were down, but people simply weren't buying furniture.
"Frankly, it's puzzling why furniture isn't [selling] better than it is," Prillaman said.
One of the biggest reasons for the slump was the amount of debt that consumers have amassed over the last few years, said Jerry Epperson, who follows the furniture industry for Mann, Armistead & Epperson, a Richmond analyst. Americans piled up more consumer debt during the second half of 1994 than in any other six-month period in history, he said.
Prillaman agreed that consumers are "spent out," but said the self-imposed hiatus from spending may be nearly over.
"There's so much debt out there that they needed a breather," Prillaman said. "We think they've had one now."
Overall sales were flat in 1995, after forecasters had predicted 5 percent to 7 percent growth.
A panel of economists and industry observers organized by Furniture/Today magazine, a trade publication, predicts sales of furniture and bedding will grow by 5.4 percent in 1996 and another 5.1 percent in 1997.
Retailers and manufacturers who expected 1995 to be a repeat of - or an improvement over - the two previous years greatly overestimated consumer demand and were left holding unwanted merchandise.
"We had a lot of people get slam-dunked," Epperson said.
But the drought seems to be ending, Epperson said. The costs of many raw materials have declined over the past year, and there has been a "significant" increase in housing activity.
Additionally, the last few months have brought a boom in mortgage refinancing. The short-term effects of such refinancing on the furniture industry could be negative, because homeowners often must pay thousands of dollars in fees to lenders and real estate attorneys. But in the long run, money that consumers save by converting to a lower interest rate may be spent on furniture, he said.
Epperson also has predicted that the nation will see a major boom in vacation homes as the population ages and, without children to care for, builds up more disposable income.
Prillaman has heard the predictions, and he is cautiously optimistic.
"I hope they're closer to being right this time," Prillaman said.
Furniture categories that are likely to be strong in 1996:
Ready-to-assemble furniture. People are buying home entertainment systems and personal computers, and they need furniture to house the equipment. Look for larger selections of such furniture to appear in better stores.
Home office furniture. Computer-friendly desks and armoires were hot at the October wholesale markets, with new introductions by companies including Bassett Furniture Industries and Hooker Furniture Corp. They'll be hitting furniture stores soon.
Multifunction furniture. This was another strong seller at the High Point, N.C., wholesale market, and evidence that furniture manufacturers have caught on to the fact that many consumers are tired of pretty, but useless, furniture.
Casual furniture. Companies including upholstery manufacturer Rowe Furniture Corp. have been introducing looser, softer, more comfortable furniture.
LENGTH: Medium: 70 lines ILLUSTRATION: GRAPHIC: graph - Furniture Forecast STAFFby CNB