October High Point Market 2023
The Stump team pounded the pavement for 6 straight days over the semiannual High Point Market, where reportedly 50,000 people showed up to purchase (or at least look at!) furniture. Most attendees would dispute that number and suggest a decline in attendance. At least the weather was nice.
Most exhibitors will privately admit that revenues are down significantly over last year. Consumers continue to be moving away from durable goods and redirecting their dollars towards travel, hotels, and experiences ($2,000 Taylor Swift concert tickets, anyone)?! By the way, we will be in New York in 2 weeks for the BDNY hospitality show - that part of the furniture market is booming.
As is often the case, the higher-end of the market is performing better than the lower-priced/promotional world, and designer/trade-focused businesses are outperforming their peers that sell retail stores.
Of course, the Middle East strife was top of mind. Many believe the turmoil in Israel could affect consumer confidence well into 2024. China was frequently mentioned as manufacturers continue to seek production elsewhere. Vietnam and India are the common names, and we heard about several fantastic new factories in Cambodia. Mexico was a clear focus for sourcing 1-2 years ago during the supply chain crisis, but dramatically lower ocean container rates has caused an abatement there, for now. And our own US political turmoil and election noise is not helping consumer confidence.
With the musical chairs of big movements in showroom positions, there are now many vacant spots for new entrants or legacy players looking to move showrooms to a more prominent position. Key spots include the now vacant Klaussner showroom on N. Hamilton, as well as the old Hooker (moved to Showplace) and Vaughan-Bassett (spearheading the new Furniture First building) spots on IHCF C-10. As well as Mahwah’s old spot in the Plaza building. And with Home Elegance going to the Zaki building on S. Main, what happens to their old location?
This downturn and economic turmoil have created tremendous business pressure and failures, and Stump is in the middle of most. We have pulled out our M&A toolbox for distressed sales and bankruptcy proceedings. MG+BW and Noble House have been extremely visible and challenged companies, and just this week Stump was retained to sell Z Gallerie as it entered Chapter 11. While selling big multiples of EBITDA is more fun, our firm has a long history of managing these distressed situations. Call us if you are interested in acquiring businesses in turnaround mode.
When will our industry get its mojo back? Early in the year, we thought Q4-2023 would be the rebound time; then shifted that expectation to Q1-2024; now we hear more skepticism, and most are looking to 2025 as the breakout year.
Quote of the market:
"Invest in people and build a culture of excellence," suggested one CEO, as he recommended the book, "The 6 Types of Working Genius" by Patrick Lencioni. Get the book, read it, and deploy its principles.
Despite the lesser attendance and somewhat gloomy business outlook, we heard of many success stories and many of our clients continue to achieve growth and solid profitability. Our industry is still producing fantastic companies, and is blessed with some of the best people in the business world. We enjoyed our time with our clients and friends and look forward to better times ahead.