April 20, 2015

Spring High Point Market - April 2015

It was another whirlwind 8 days in High Point, NC. Things seemed to start off slow last week - yet despite torrential rains (and 2 tornado warnings), we emerged with a much sunnier picture of the industry than we've seen since the go-go days of the mid-2000s.

Sales are up, retailers are looking and buying, and consumer demand should have plenty of legs left going forward. We walked through over 250 showrooms and were blown away by our clients' new collections. The theme for this year's market would have to be labeled "50 Shades of Grey" – most everyone seems to be tilting towards the modern, plush grey couch and upholstered bedroom headboard.

Optimism at the market was palpable. Most owners mentioned looking 1-2-3 years down the road and seeing encouraging signs for increased sales growth and shareholder value creation. With these good feelings comes renewed chatter in the Merger & Acquisition market. Many Private Equity firms want out of existing positions, while plenty of others want in. Some will want to add to existing portfolios to bolster their holdings. Strategic acquisitions are likewise heating up. We are preparing to bring several fantastic firms to the market in Q2 and Q3. As always, please feel free to reach out to us for your company's confidential valuation work and long-term planning needs.

We continue to hear discussions about reshoring, mostly in regards to replacing lost upholstery operations. Speed to market, quality control, and political/business stability remain our industry's calling card here in the United States, and that is not going anywhere. Labor seems to remain the dominant US issue for many folks, but hopefully the oft-discussed vocational programs and some political compromises can help bolster labor supply moving forward. On the casegoods side, Mexico has emerged as an attractive option with comparable costs to China and much reduced shipping times. We also hear many companies are exploring opportunities in India and Cambodia. We are excited to be working around the globe to meet our clients' needs.

All in all, we found it an encouraging – and much needed – market. While there has been a bit of uncertainty around the residential sector for quite some time, most companies have emerged from the doldrums of the recession on solid footing and a forward thinking game plan. We're expecting to see this optimism carry through to next market. We will see you there.

Quote(s) of the Market: "We squeezed the *&^%$#@! turnip too hard" one domestic manufacturer opined of the constant search for cheaper goods made in some far off land. "It's simple. It's about offering a product that the customer can sell at a reasonable margin."

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