HIGH POINT — Natuzzi’s Reimagined Gallery program announced last fall is starting to gain traction around the globe, with 113 retailers signing up globally, including 21 in the U.S. and Canada.

This represents about 121 gallery locations in development worldwide, with 29 in the U.S. and Canada, Codrin Coroama, chief wholesale officer, told Home News Now.

In North America, the company has updated 12 of its existing galleries thus far, with another 18 currently in the development process.

Since the program was first announced, the company has made some tweaks, including to the sizes. Initially, for example, they were in 1,200-, 2,000- and 3,200-square-foot sizes, representing small, medium and large. They have since been expanded slightly to 1,300, 2,200 and 3,500 square feet in size.

Coroama said that 2,200 square feet, which features about 10 room settings, has been the most popular size. The cost of this footprint is $48,000, which includes products and display systems that are delivered to the retailer and ready to place on the floor. By comparison, the 1,300-square-foot gallery offers six room settings and is available at $30,000, while the large gallery offers 20 room settings and starts at $82,000.

He added that the company has enhanced the merchandising aspect of the galleries with new products that include its Natuzzi Editions Houston New Generation Zero Gravity collection and the Roma, a sofa with an adjustable armrest and backrests and standard and extra-deep-seating options.

“Both models were introduced at the April High Point Market and received fantastic feedback, thanks to their Italian-inspired design and innovative features,” Coroama said.

Another new offering that can be showcased in the gallery footprint is what he described as the concept of Space Performance, which offers room-set options tailored to the needs of the retailer.

“The classic room set focuses on space efficiency, while the power-pad room set emphasizes versatility, functionality and customization, inspiring consumers’ creative expression,” Coroama said.

He also noted that on July 1, gallery partners will have access to a digital marketing platform that is “designed to amplify their marketing campaigns across digital channels.”

“This platform will be integrated with Natuzzi’s marketing planner and digital content database, providing support to drive local engagement and ultimately boost sales,” he said.

Retailers and their customers can also look at products on the Natuzzi website, where a number of custom configurations, fabrics and leathers are available, allowing them to pick and choose the look and design footprint they want. Upholstered beds also are available in multiple configurations and fabrics, also shown in detail on the website.

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MONROE, Mich. — From La-Z-Boy’s latest earnings call for its fourth quarter and full fiscal year ended April 27, it’s clear that retail development — both new store openings and acquisitions — remains a core part its strategy moving forward.   

Of course, none of this is new given the number of stores the company has in place currently. But it appears to be positioning itself for even further growth in the months and years ahead.  For example, during its latest earnings call, company President and CEO Melinda D. Whittington noted that the brand is looking to have about 400 La-Z-Boy Furniture Galleries over the next several years, up from 355 at the end of its latest fiscal year.

The 355, which is up six locations from the prior year, brings the number of total company owned stores to 187, including the six new store openings and 11 acquisitions during the full year, including the acquisition of a two-store independent network in Florida during the quarter. And in May, she said, the company also signed an agreement to acquire an additional one-store market from an independent dealer in the Midwest that’s set to close in the first quarter of fiscal year 2025.

Bob Lucian, senior vice president and chief financial officer, noted that the company plans to open 12-15 new stores — separate of any acquisitions — mostly in the second half of the year as part of a planned $70 million to $80 million in capital expenditures during the fiscal year, which he noted “includes land and building investments and stores to maintain the growth of our retail network.”

Obviously, the company is bullish on its store network during a time when furniture retail is struggling amid an environment of high interest rates that are hampering existing home sales, combined with consumers tightening their belts with high-dollar purchases.

During the call, Whittington noted that while total written sales for company-owned La-Z-Boy Furniture Galleries were up 1% for the quarter, written same-store sales for the entire network of 355 stores were down 3% for the quarter compared to the prior year and down 2% for the entire year. But she also noted that this performance is still better than the industry overall “against a backdrop of 8% industry contraction” during the quarter and down 6% for the year “as our significant outperformance versus the market persisted throughout the year.”

“Despite ongoing challenging traffic trends, our stores continued to execute very well, with higher conversions, higher ticket and design sales partially mitigating the traffic headwinds,” she noted.

In addition, the company now owns 53% of the stores in the La-Z-Boy Furniture Galleries network for the first time in its history. Of course, some of this has to do with the acquisition of stores from independent dealers looking to get out of the business during this ongoing period of malaise. Perhaps company ownership will improve the performance of these locations as things start to turn around, but that largely depends on support from the economy.

For Whittington, the growth of the store footprint makes sense moving forward.

“We see meaningful opportunity to expand the company-owned portion of the network through new store growth and acquisitions,” she said, adding, “These store acquisitions are immediately accretive to our profitability, allowing the company to benefit from integrated wholesale and retail margins.”

She also noted that growing the company-owned store network is important “as it enables the brand to control the end-to-end consumer experience and leverage the strength of our vertically integrated model.”

Another benefit in the company-owned store approach? It also helps guide product development.

“We continue to shift organizational decision-making to be more consumer-centric while also leveraging a data-driven approach,” Whittington said, adding, “This is enabling us to develop more consumer-relevant, on-trend upholstered furniture, particularly in the motion and reclining categories where we are a market leader.”

Of course, this consumer-driven approach is not just beneficial to the development of upholstery and recliners, but also wood categories such as occasional, along with bedroom and dining furniture offered by its sister brands.

The success of this growth initiative also obviously depends on a number of factors, ranging from interest rates and housing sales to the consumers’ willingness to return to spending more on the home. Yet despite these uncertainties, Whittington was optimistic about the company’s strategy, not just in its retail store footprint, but also how it is serving consumers in the market overall, ranging from the agility of its supply chain to product development initiatives.

“We know there are consumers out there still investing in their home, even in a challenging economy, and we believe we are disproportionately capturing them,” she said. “But if I were to step back and say ‘what is the biggest pivot for us as a total enterprise?’ It’s really this focus on driving our own company-owned retail and the reason for that is two-fold. We can control that brand experience for the consumer end-to-end. We can avail ourselves of the data from that consumer by interacting with them directly, and from a financial standpoint, we can take advantage of that integrated margin of owning the entire chain, from pieces of fabric and steel all the way to putting that product in the consumer’s home. And we believe that’s good for the consumer, and that’s good for our financials as well. So really, I would call continuing to expand our reach of our own retail probably the No. 1 biggest driver.”

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Schumacher, who left his executive post at HFA at the end of May, recently posted on his LinkedIn page that he had joined the board of the lifestyle retailer.

In his post, he noted, “For years I have admired R&B’s commitment to their team, customers, sustainability and social responsibility. Their recent designation as a B Corp, which means Room & Board meets high standards of social and environmental performance, transparency and accountability, is a testament to the culture they have built.”

He also noted that in April, the company transitioned into a 100% Employee Stock Ownership Plan (ESOP), which gives its 1,100 employees a financial stake in the organization.

“The new board of directors is tasked with providing strategic direction and financial oversight for the company during this time,” Schumacher said. “I can’t express how honored and humbled I am to become part of the Room & Board team.”

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THE WOODLANDS, Texas — The Nasdaq Stock Market has given specialty furniture, bedding and home goods and appliances retailer Conn’s Inc. 60 days to submit a plan to regain compliance with a rule related to the timely filing of its quarterly reports.

On June 11, the company notified the U.S. Securities and Exchange Commission that it was unable to file a timely 10-Q financial report for its fiscal first quarter ended April 30. The company said the delay was because it had been unable to complete disclosures related to possible amendments to, or the refinancing of its revolving credit facility that were required to be included in its 10-Q.

“As a result, the company is unable to file, without reasonable effort or expense, the Form 10-Q on or prior to the prescribed filing date,” the company said in its June 11 disclosure.

On June 20, the company received a delinquency notification letter from Nasdaq stating it was not in compliance with Nasdaq Listing Rule 5250(c)(1) because it had not filed the report by the due date required by the SEC.   

The company said the notice has no immediate effect on its listing  or trading of its common stock on the Nasdaq Global Select Market. However, it said that it has until Aug. 19 to submit to Nasdaq a plan to regain compliance with the Nasdaq Listing Rule.

Conn’s noted that if Nasdaq accepts its plan to regain compliance, Nasdaq may grant the company up to 180 calendar days from the prescribed mid-June due date for the 10-Q, or until Dec. 16, to file the 10-Q in order to regain compliance.

“However, there can be no assurance that these events will occur,” the company said in a statement issued Wednesday relating to the delinquency notice.

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WASHINGTON — Consumer confidence fell this month as consumer plans to buy homes and cars have stalled, while spending on some other big-ticket purchases including vacations continues to rise.

The Consumer Confidence Index fell to 100.4 in June down from 101.3 in May. Meanwhile, the Present Situation Index that is based on consumers’ assessments of current business and labor market conditions, rose to 141.5, up from 140.8 in May. The Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions, dropped to 73 in June, down from 74.9 in May. This is the fifth consecutive month it has been below a threshold of 80, which officials say signals a recession.

“Confidence pulled back in June, but remained in the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future,” said Dana M. Peterson, chief economist at The Conference Board, adding that “if material weaknesses in the labor market appear, confidence could weaken as the year progresses.”

Peterson noted that the decline in confidence between May and June was largely centered on consumers between 35 and 54, while there was an improvement in confidence for those below 35 and those 55 and older in June.

“No clear pattern emerged in terms of income groups,” Peterson added. “On a six-month moving average basis, confidence continued to be highest among the youngest under 35 and the wealthiest (earning more than $100,000) consumers.”

The latest survey showed that buying plans for big-ticket appliances and smartphones rose slightly while fewer planned to buy a PC or laptop computer. In addition, the share of consumers planning a vacation in the next six months continued to rise and remains above the level a year ago, with more consumers planning to vacation in the U.S. than overseas and more people planning to travel by car versus by plane. However, the survey noted that the share of consumers planning to go on vacation is about 10 percentage points lower than pre-pandemic.

While fewer indicated they are concerned about a recession, and average 12-month inflation expectations fell slightly from 5.4% to 5.3%, write-in responses from consumers showed that elevated prices, including those for food and groceries, continue to impact their views on the economy, followed by the labor market and political situation in the U.S.

However, the share of those believing that the 2024 election would impact the economy was low compared to write-in responses in June 2016 and slightly higher than during the same period in 2020.

Consumers also were positive about the stock market. For example, 48.4% expect stock prices to increase in the year ahead compared to 23.5% expecting a decrease and 28.1% expecting no change. In addition, the share of consumers expecting higher interest rates over the next 12 months fell to 52.6%, the lowest level since February.

Other highlights of the report were as follows:

Of their Present Situation, or assessment of business conditions:

+ 19.6% of consumers said business conditions were good, down from 20.8% in May.

+ 17.7% said business conditions were bad, down from 18.4% in May.

+ 38.1% of consumers said jobs were plentiful, up from 37% in May.

+ 14.1% of consumers said jobs were hard to get, down from 14.3% in May.

Of their expectations of short-term business conditions six months from now:

+ 12.5% of consumers expected business conditions to improve, down from 13.7% in May.

+ 16.7% expected business conditions to worsen, down from 16.9% in May.

Regarding the short-term labor market outlook:

+ 12.6% of consumers expected more jobs to be available, down from 13.1% in May.

+ 17.3% anticipated fewer jobs, down from 18.8% in May.

Of their short-term income prospects:

+ 15.2% of consumers expected their incomes to increase, down from 17.7% in May.

+ 11.7% expected their incomes to drop, up from 11.5%.

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WINSTON-SALEM, N.C. — Having been to Big Lots plenty of times in recent years, it’s my impression that the retailer has always offered strong values, including in its furniture mix.

The stores also are well organized, clean and thoughtfully merchandised across product segments. I’m guessing other stores outside the Piedmont Triad area of North Carolina that’s home to High Point offer a similar experience.

Nonetheless, the economy, following a relatively strong holiday season for the retailer, hasn’t cooperated much at least during its fiscal first quarter ended May 4. Net sales were down 10.2% to $1.01 billion, from $1.12 billion the same period last year, driven largely by a 9.9% comparable sales decrease.

Now based on what we’re hearing in the furniture industry, that’s not a huge drop given some reports of year-to-date decreases topping 20% in the furniture sector. The declines no matter how large or small, are affecting just about everyone in the industry, from suppliers of hardware, equipment and raw materials to finished goods at the wholesale and retail level.

But Big Lots has been in a bind because it attracts value seekers across product categories. And many of these consumers are already struggling because of the cost of everyday expenses ranging from food and gas to utilities and health insurance. It’s why the lower-middle segment is probably suffering more than the upper middle and upper end of the business, where consumers tend to invest on things of value like furniture and other décor for their home.

But Big Lots appears to be headed toward even sharper values moving forward, including in the furniture segment. In its latest conference call, executives mentioned the term closeout more than a dozen times, noting that it is part of the extreme bargain positioning the company will continue to increase throughout the sales floor.

“The penetration of those extreme bargains is happening across all our categories,” noted President and CEO Bruce Thorn, adding, “We’re also seeing the extreme bargain penetration we have with our Broyhill and Real Living lines in upholstery actually go to positive comps…And that’s accelerating into Q2.”

Furniture remains the largest category by far, representing some 29% of sales in the first quarter, according to the company’s latest investor presentation. As seen in the illustration above, it also was the area that saw the lowest overall decline in sales — down 6% compared to seasonal, down 15%; soft home, down 11%; and food, down 10%, to cite a few key areas of the business.

But the term closeouts can have a negative impression in home furnishings, a fashion industry where customers tend to look for the latest styles albeit at value price points. Yet for the consumer who’s strapped for cash and seeking the best prices possible, the term closeout probably has huge appeal and thus could spur further interest and spending.

As Big Lots continues to sharpen its price point and value proposition, another consideration will be quality and durability. Appealing to families, particularly with its toy and seasonal departments, Big Lots’ durability story will be key as consumers likely spending hard-earned dollars won’t want to be replacing their newly acquired furniture anytime soon.

This is particularly true in upholstery, one of its strongest categories, yet one that also tends to get used and abused the most by kids and pets and, in some cases, adults, depending on what they’re doing in their living room.

So, at best, it’s going to be a balancing act that will involve several things, including price, but also the styling, construction and durability. This applies not just to indoor products, but also the outdoor category, where Big Lots also has a strong selection.

Yet during the call, Thorn indicated that the strategy already appears to be making headway, perhaps most notably in furniture — as seen in the strong comps — but other areas, too.

“We remain focused on managing through the current economic cycle by controlling our controllables,” he said. “Our operational initiatives to offer a large assortment of new and exciting extreme bargains, cut costs, and increase productivity, exceeded our targets in Q1. This enabled us to improve consumer perceptions about our brand and the value we offer and to deliver a year-over-year improvement in gross margin rate and operating expenses, despite the significant sales pressure this quarter.”

However, he noted there is room for improvement, which the company is pursuing through a stronger business model the retailer has created through five key actions that are expected to result in better results, most notably in the second half. These include 1) own bargains 2) communicate “unmistakable value” 3) increase store relevance 4) win customers for life through its omnichannel efforts and 5) drive productivity.

“We are confident that the five key actions are putting us on the right path to turn around our business, though we still have a lot of work ahead of us,” Thorn said.

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This is the first Ashley retail location opening for Goffena Furniture, which is a third-generation-family-owned business. The Troy store will employ about 17 people. Ashley, the largest furniture store brand in North America and one of the world’s bestselling home furnishing brands, has more than 1,100 locations worldwide. 

“We are thrilled to bring Ashley, the largest furniture retailer in North America, to Troy,” said Drew Goffena, Goffena Furniture senior vice president. “It’s amazing that we get to bring quality, stylish home furnishings with the hometown family feel of Goffena Furniture to the Troy community.” 

The new store will feature Ashley’s 7.0 store concept, a design approach that allows customers to experience a simplified, bright and open floor plan. The showroom will feature complete lifestyle vignettes, down to the final detail of lighting, rugs and wall art. Product categories include bedroom, dining room, upholstery, leather, occasional tables, home office, youth bedroom, recliners, mattresses and accessories. The store also has a new Ashley mattress gallery, featuring Ashley Sleep, Tempur-Pedic and Purple mattresses. 

The new store’s hours are Monday through Friday 10 a.m. – 7 p.m., Saturday 10 a.m. – 5 p.m. and Sunday noon – 5 p.m. Follow @ashleyofficial on Facebook and Instagram to stay up to date with promotions and events. 

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SEFFNER, Fla. — Another dresser sold exclusively at Rooms To Go has been recalled because it does not comply with the performance requirements of the STURDY (Stop Tip-Overs of Risky Dressers on Youth) Act according to the United States Consumer Product Safety Commission.

On Thursday, the CPSC announced a recall involving 400 Cedona Natural View six-drawer dressers. Although there have been no injuries or incidents reported, the CPSC said that the units are unstable if they are not anchored to the wall, thus posing “serious tip-over and entrapment hazards” that can kill or injure children.

This is the second recall in the past two months for a dresser sold exclusively at Rooms To Go that allegedly does not meet the performance requirements of STURDY.

The recall involves the Cedona Natural View six-drawer dresser with model number 33117082, which is printed in black ink on a label at the back of the unit. The dresser is 68 inches long by 18 inches wide and 36 inches tall and weighs about 238 pounds.

The CPSC said the unit was made in India and sold at Rooms To Go stores nationwide and at www.roomstogo.com from November 2023 through February for about $1,000.  

Consumers have been advised to stop using the recalled dresser immediately and go to their local Rooms To Go for a replacement. The retailer, which also is contacting all known purchasers directly, will schedule a free delivery of the replacement dresser and remove the recalled dresser from their home, the CPSC said.  

For more information, consumers can contact Rooms To Go toll-free at 855-688-0919 from 9 a.m. to 4 p.m. ET Monday through Friday. Or they can email productcare@roomstogo.com or go online at www.cedonadresserrecall.com.

Home News Now has reached out to Rooms To Go and is awaiting a response to this recall and the one involving its Mill Valley Jr. six-drawer dresser announced on May 2.

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WASHINGTON — Existing home sales fell 2.8% in May from May 2023 and fell .7% from April, according to figures released by the National Association of Retailers on Friday.

Sales of single-family homes, condominiums and co-ops totaled 4.11 million in May, down from 4.23 million in May 2023, rising in the Midwest, but falling in the Northeast, South and West. Sales fell from about 4.14 million in April, falling in the South, but remaining flat in the other three regions.

Single-family home sales totaled 3.71 million in May, down 2.1% from May 2023 and down .8% from 3.74 million in April. The median existing single-family home price was $424,500, up 5.78% from May 2023. Existing condominium and co-op sales totaled 400,000 in May, down 9.1% from 440,000 in May 2023 and unchanged from April. The median existing condominium price was $371,300 in May, up 5.1% from $353,300 in May 2023.

The NAR said that total housing inventory at the end of May was 1.28 million units, up 18.5% from the 1.08 million registered a year ago and up 6.7% from 1.20 million in April. Unsold inventory is at a 3.7-month supply based on the current sales pace. This is up from 3.1 months in May 2023 and 3.5 months in April.

“Eventually more inventory will help boost home sales and tame home price gains in the upcoming months,” said NAR Chief Economist Lawrence Yun. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”

Higher inventory levels also should have a positive impact on home prices, particularly for those first-time buyers wanting to buy an existing home. But home prices continue to rise despite the rising inventory levels. For example, the median existing home price for all housing types in May was $419,300, which was up 5.8% from $396,500 a year ago, with all four regions posting price increases. It also was the highest price recorded by the NAR.

While bolstering the assets of existing homeowners, it also has presented a challenge for first time homebuyers, many of whom don’t either have the down payment necessary to afford a more expensive home or who can’t afford a mortgage based on current interest rate levels.

Or they lose out to all-cash buyers in the market. All-cash sales represented some 28% of transactions in May, which was up 25% from May 2023 and unchanged from April.

The NAR said that individual investors or second-home buyers that make up many cash sales, bought 16% of the homes in May, up 15% from May 2023 and unchanged from April. Meanwhile, first-time buyers were responsible for 31% of sales, up from 28% in May 2023 but down from 33% in April.

“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” Yun noted, adding that the mortgage payment for a typical home today is more than double that of homes purchased before 2020. “Still, first-time buyers in the market understand the long-term benefits of owning.”

By region the activity was as follows:

+ In the Northeast, existing home sales totaled 480,000, down 4% from May 2023 but unchanged from April. The median sales price in the region was $479,200, up 9.2% from May 2023.

+ In the Midwest, existing home sales totaled 1 million, up 1% from May 2023 and unchanged from April. The median sales price was $317,100, up 6.4% from May 2023.

+ In the South, existing home sales totaled 1.87 million, down 5.1% from May 2023 and down 1.6% from April. The median sales price in the region was $374,300, up 3.6% from May 2023.

+ In the West, existing home sales totaled 760,000 in May, down 1.3% from May 2023 and unchanged from April. The median sales price in the region was $632,900, up 5.5% from May 2023.

Other highlights from the report were as follows:

+ Properties remained on the market for about 24 days in May, up from 18 days in May 2023 but down from 26 days in April.

+ Distressed sales, including foreclosures and short sales, represented 2% of sales in May, unchanged from May 2023 and from April.

+ Citing Freddie Mac, the NAR said that the 30-year fixed-rate mortgage averaged 6.87% as of June 20, down from 6.95% the week before, but up from 6.67% a year ago.

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HIGH POINT — Rising container rates that are occurring in a still slow business environment are causing furniture industry resources to take measures including raising prices and implementing freight surcharges. Others meanwhile are cutting expenses in order to cover costs.

Ashley Furniture, for example, has alerted customers that it is raising prices by about 3% on all products except domestic case goods and domestic bedding which will increase by about 1%. The increases take effect on all new orders on July 15. It will reprice all open orders July 29.

The company said the change is related to disruption in the marketplace including factors such as 1) a surge in demand driven by a shortage of capacity 2) the fact that major ports such as Singapore are experiencing severe backlogs because of congestion 3) the impact of disruptions in the Suez Canal 4) average vessel speed being at its lowest recorded levels.

“The disruptions in the marketplace have had a notable impact on shipping capacities and have contributed to significant cost increases across various areas,” wrote John Mask, senior vice president of strategic sales and marketing. “Ocean freight, labor costs, vendor finished goods, vendor components and raw materials prices have all been impacted. In response to these challenges, we have engaged with our container suppliers and have secured the necessary container volume to continue moving our freight. Securing these containers has come at a higher cost than we anticipated during our product costing process. To effectively navigate these rising costs and maintain the quality and reliability of our services, we find it necessary to review our pricing structure. … We remain committed to offering you the best value in the industry. When container freight costs stabilize, we will reassess our pricing.”

Yet for now, it has been extremely difficult for Ashley and others facing similar pricing decisions, whether it be an increase or a freight surcharge. Todd Wanek, president and chief executive officer, described this period as a perfect storm of issues ranging from Singapore port congestion to the Red Sea turmoil and peak season timing.

“All those things are kind of hitting at the same time,” he told Home News Now.

“There is really no choice,” Wanek added of the price increase. “The fact of the matter is the spot market has gone up so much. We are a contract-based company, but we are just not getting enough ships. There is not enough capacity out there so you end up on the spot market trying to buy freight, and that’s what we are doing.”

Despite the massive capacity constraint, he said, it’s important to do what’s needed to get furniture to the marketplace.

“Our responsibility and everybody’s responsibility is to keep supply chain moving,” he said. “If somebody wants to buy a piece of furniture, it’s our job to make sure that piece of furniture is available quickly to satisfy the customers.”

“So this is a temporary price increase,” he added. ” We hope this eases. We hope that within six months the capacity problem is gone and the price increase is gone as well or at least part of it.”

The increases in freight are impacting importers throughout the industry, effectively raising container prices as much as several times what they were earlier this year. This means that rates will be several thousand dollars higher, resulting in an increased cost of Asian-sourced products ranging from bedrooms and dining rooms to stationary and motion upholstery. One source said this has brought container rates to as high as $10,000, compared to a few thousand earlier this year.

Flexsteel is implementing a freight surcharge on all imported soft goods and case goods purchased from its warehouse. The charge applied to all new orders placed after 2 p.m. June 19.

“Ocean carriers are systematically cancelling sailings and are not providing consistent bookings at our contracted rates,” said Brian DesBiens, vice president of retail sales at Flexsteel in a June 10 letter to dealers. “This is driving us to the open market to ensure we keep inventory flowing to support our business.”

Yet rates don’t seem to be coming down even as those bookings are rescheduled. For example, Flexsteel told Home News Now that in mid-June, it received an increase that was $800-$1,000 higher than what its surcharge covers. On July 1, it is expected to increase another $500 to $1,000.

“Every two weeks we have an analysis,” said David Crimmins, vice president of sales and product management, adding that the company held off on increases earlier in the year only to see them level off then rise again — and potentially keep rising. “We don’t think we are at the peak yet. We don’t have any actions planned now, but if they keep climbing, we will have to raise it.”

Kuka Home told dealers it is adding a temporary freight surcharge of $2,500 on all landed shipments to the U.S., Canada and Mexico from its China and Vietnam facilities. It will be effective on shipments invoiced starting June 21.

Company President Matt Harrison said in a June 18 letter to dealers that the surcharges were introduced “earlier than usual due to various factors, including diversions in the Red Sea and trade imbalances necessitating the repositioning of empty containers worldwide. Additionally, major retailers are shipping their fall inventories earlier to avoid potential delays, further exacerbating the issue. The resulting lack of capacity and equipment has even compelled us to rent temporary warehouse facilities at exorbitant rates to store finished goods awaiting shipping documents.”

“It’s an unavoidable situation, whether it’s a landed customer or FOB customer. They are paying more for freight, if they want to get their furniture shipped,” Harrison told Home News Now. “I can tell you for a fact that major, major retailers are paying significantly more than they were in the past because they understand what they have been through in the past during Covid, and they need their furniture. They need their containers. So they are securing inventory at a much higher rate than you would dream they would pay right now, because we are grabbing capacity on our freight lines that we have contracted with.”

However, Harrison also noted that the surcharge the company has imposed is less than the charges the company is incurring. In the letter, he said that the company has been absorbing the additional charges for the past few weeks, but that “the latest increase has made it unsustainable for us to continue for our landed customers.”

“We are sharing that and that’s even at a loss,” Harrison said, noting that everyone got an increase on their contracts which expired in May, followed by a peak season surcharge June 1, with another one slated for July 1.

“It’s an unavoidable situation for everyone buying out of Asia,” Harrison said. “Furniture is a higher cube percentage than shipping clothing or something else where it affects us more for the cost of goods. It’s the reality.”

In the letter, he added that the company is “actively monitoring the situation and doing everything possible to mitigate this burden. As soon as conditions improve, we will adjust or remove the surcharge. Your business is greatly valued, and we appreciate your understanding during these challenging times.”

Other furniture companies interviewed this week also said they likely will raise prices or issue container surcharges sooner than later based on current and future container rates should they continue to rise.  

Others still are taking steps to cut costs. Malouf, for example, announced a restructuring that took place last week that resulted in an unspecified reduction in force at its Cache Valley, Utah, headquarters. The company said this was related to external forces, including competition from online resources selling apparel and other fashion and home-related products including furniture.

“Through the years, we’ve prided ourselves on our nimbleness, innovation and early arrival in the bedding industry,” said CEO Sam Malouf. “However, the company must begin shifting focus from certain categories due to circumstances largely outside of our control. As a reflection of these category shifts, our senior leadership team made the difficult decision to reduce the workforce at corporate headquarters.”

“The playing field is no longer level or fair with the rise of platforms like Temu and Shein, which are decimating American companies,” he added. “We needed to make changes to thrive in today’s market. By increasing clarity and focus, we expect to improve market share and drive long-term success.”

Also, Hooker Furnishings recently announced in its latest earnings report that it plans to cut costs by about 10% in order to regain profitability.

And Hillsdale Furniture announced to the Vietnam government in late May that it was closing its Vietnam office effective June 1.

“Due to the difficult business situation of the parent company, leading to the inability to maintain the management and operation of the representative office in Vietnam, we have decided to terminate the operations of the representative office in Vietnam and are carrying out other procedures for dissolution/termination of operations according to Vietnamese law,” the company told government officials in late May.

The state of the company’s U.S. operations is unknown at this stage. Sources have said that the company also has closed its U.S. offices, but Home News Now has not been able to verify this as company officials have not responded to repeated calls or emails.

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