In light of three phone calls I received recently, I would like to challenge that statement. In fact, based on the calls I got, I’m thinking terrible things come in threes. And, for sure, no good deed goes unpunished.

Here’s why: I got calls from three different reps (each representing different factories) who said they had lines that they cultivated, grew and continued to grow, taken from them as house accounts.

And as someone who has worked with the International Home Furnishings Representatives Association for the past five years, this news, sadly, is becoming more and more commonplace, especially as the economy struggles and business for relatively high-ticket, often-postponable items like ours remains challenged.

Sadly, in the wake of economic downturns, the plight of independent sales representatives often goes unnoticed or worse, swept under the rug. These individuals, who tirelessly build relationships and accounts, are now facing a harsh reality: having their hard-earned accounts taken away by the very factories they represent. This practice not only undermines the efforts of these reps but also highlights a fundamental injustice in the business world.

Independent sales representatives who do it right play a vital role in the economy. They serve as a strong and reliable bridge between manufacturers and consumers, leveraging their expertise, networks and dedication to drive sales and promote products.

Many of these reps invest significant time and resources in nurturing client relationships, understanding market dynamics, providing marketing intelligence and advocating for the brands they represent.

However, amidst economic turbulence, some factories certainly appear to be utilizing drastic measures to cut costs and maintain profitability. One such measure is the termination or reassignment of accounts from independent reps to in-house sales teams or larger distributors. While this may seem like a strategic move from the factory’s perspective, it’s a devastating blow to the independent reps who rely on these accounts for their livelihood.

The decision to strip away accounts from independent reps is not just about reallocating resources; it’s a betrayal of trust and a disregard for the value these reps bring to the table. These individuals often serve as the face of the brand in their respective territories, offering personalized service, localized expertise and a deep understanding of customer needs. By severing ties with independent reps, factories risk alienating loyal customers and sacrificing the competitive edge that these reps provide.

Furthermore, and equally as dangerous, this practice perpetuates a power imbalance in the business ecosystem. Independent sales reps operate with limited bargaining power compared to large corporations. They lack the resources and leverage to challenge unilateral decisions made by factories. As a result, they find themselves at the mercy of these factories, vulnerable to sudden changes that threaten their livelihoods.

Moreover, the repercussions extend beyond the economic realm. For many independent reps, their work is not just a job but a passion. They take pride in building long-term relationships, supporting local businesses and contributing to the success of the brands they represent. The abrupt loss of accounts not only impacts their financial stability but also takes an emotional toll, shaking their confidence and sense of purpose.

In light of these challenges, and in light of what appears to be an uptick in this power imbalance, I think it is time for factories guilty of this practice to rethink their approach to managing independent sales reps, especially during times of economic hardship. Rather than viewing them as expendable assets, factories should recognize the value of these reps as strategic partners in driving sales and fostering brand loyalty.

Moreover, a more equitable and transparent relationship between factories and independent reps is essential. This includes providing clear communication, fair compensation and opportunities for collaboration and mutual growth. By fostering a culture of respect and reciprocity, factories can harness the full potential of independent reps and navigate economic challenges more effectively.

I know for a fact that many independent reps are out there every day representing their respective factories based just on goodwill, a verbal agreement and a handshake. From where I sit, factories that suddenly decide that profitable accounts cultivated by their reps should suddenly become house accounts, send a message that integrity takes a back seat to bottom-line results.

In the spirit of balance, I will also say that not every rep has or brings an A-game on to the field. As with any group, you will have overachievers, achievers, just-enoughs and, yes, some who should really find another line of work that they might be better suited for.

But to penalize a rep who has built up a line and consistently hit his or her numbers is just wrong.

In conclusion, the practice of taking away accounts from productive, engaged and successful independent sales reps amidst economic hardship is not just unfair; it’s short-sighted, counterproductive and destroys trust, not just between the rep and the factory, but within the industry as well.

My message to the factories is this: If you’ve developed a team of successful, loyal and productive independent reps, my hat is off to you.  If you’ve hired reps who are not meeting your expectations, find reps who will. And if you are punishing successful reps by bringing their accounts in house, there is probably something that needs fixing in your house.

It undermines the contributions of these reps, perpetuates inequality in the business landscape and erodes trust within the industry. To build a more resilient and inclusive economy, we must recognize and respect the invaluable role played by independent sales reps and ensure that they are treated with the fairness and dignity they deserve.

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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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WASHINGTON — The U.S. Consumer Product Safety Commission has announced the recall of a bookcase unit that was involved in a tip-over incident last summer that caused the death of a 4-year-old child.

Dania Furniture of Boise, Idaho, is recalling 940 of its Hayden bookcase units that the CPSC said are unstable if not anchored to the wall, posing a tip-over and entrapment hazard that can result in death or injuries to children. The company received a report of one tip-over incident in August 2023 that involved an unanchored bookcase unit that resulted in the death of the child.

The CPSC said that these bookcases, made in Italy, were sold exclusively at Dania Furniture stores nationwide and online at www.daniafurniture.com from November 2017 through February 2024 for about $370.

The recall involves the wooden Hayden bookcase, which has six storage cubbies and three sliding white doors. It is 35.5 inches wide, 16 inches deep and 73 inches tall. A label on the back of each unit contains the product name and SKU number LB2225/A.

The CPSC has advised consumers to immediately stop using the recalled bookcase if it is not anchored to the wall and place it in an area that children cannot access.

Consumers also have been advised to contact Dania Furniture for a free, in-home installation of a tip-over restraint kit. In cases where the units cannot be anchored to the wall, or if consumers prefer a refund, the CPSC said, Dania Furniture will provide a full refund of the purchase price and arrange for the pickup and disposal of the units. The company also is contacting all known purchasers directly.

For additional information, consumers can contact Dania Furniture toll-free at 844-722-6347 from 9 a.m. to 6 p.m. PT Monday through Friday, via email at ProductSafetyHotline@interline.com, or online at https://daniafurniture.com/pages/safety-recalls. Or they can visit https://daniafurniture.com/ and click on the “Safety Recalls” tab at the top of the page.

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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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HIGH POINT — A former executive with Crate & Barrel, RH and Williams Sonoma has acquired antique reproduction specialist GJ Styles from GJ Styles Holdings Inc.

Doug Diemoz closed on the purchase of the company on Friday. Officials did not reveal a purchase price or other terms of the agreement, but noted that the deal represents an acquisition of non-real estate assets that include inventory and intellectual property.

Diemoz also has taken over the leases of the company’s showroom and distribution center in High Point.

Formerly known as G&J Styles, the company produces a line of reproduction dining and occasional furniture, as well as accent furniture, desks and storage pieces.

It was founded in 1985 by Glyn and Jill Styles in Leominster, a town in the county of Herefordshire, England, in 1985. It moved to High Point in 1997 to help fill the demand for antique reproductions in the United States.

In 2008, it entered a joint venture partnership with its primary vendor, Halo Asia, which created Halo Styles, according to the company website. In January 2014, Glyn Styles purchased the company from its partners at Halo but the company continues to distribute Halo products in the U.S. at GJ Styles.

The company website went on to note that the company has a permanent showroom in High Point, which houses its corporate offices. These locations are open year round to retailers and designers.

Diemoz is the chief executive officer, co-founder and executive chairman of the former Fairfield, California-based upholstery manufacturer Made and Modern, which Diemoz told Home News Now closed this past fall.

Before this, he was president of Pier 1 for a short period and prior to this was chief executive officer of Crate & Barrel and chief development officer of RH.

He also previously was senior vice president of financial operations and vice president of finance and director of finance at Williams-Sonoma.

 “I have been blessed to grow up with great brands, leaders and colleagues, and I am excited to meet all our customers and bring everything I’ve learned over my decades in the industry to help them grow and achieve their goals,” Diemoz said. “It has been a privilege to get to know Glyn and the team through this process and I am honored to be leading the next chapter of GJ Styles to build upon the incredible foundation laid before me.”

The company said that GJ Styles will continue in its current distribution center, showroom and corporate office. It also noted that all current staff are being retained in their existing roles.

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The spot market is the global trade equivalent of seeking out a loan shark to tide you over until your next paycheck; it is merciless, expensive and simply not a sustainable financing strategy.

The Bloomberg report has A.P. Moller-Maersk warning that the world’s supply lines have and will continue to be more disrupted by congestion in the Red Sea than has been previously acknowledged. Out of the other side of its sizable mouth, the shipping giant raised its profit outlook. This is the difference between, on the one hand, container carriers and oil companies and, on the other, businesses that have to rely on persuasion to win the customer’s hard-earned disposable dollar. The message? “You need us, so suck it.”

The Danish company cited the now 6-month-old problem of Houthi “pirates” for the decline in container capacity, which in the world of shipping means ever-higher prices to secure a diminishing resource. Supply is reportedly down; prices are way, way up. Spot rates for full-size containers coming here from Asia are north of $6,000 for a 40-foot unit or its equivalent, according to the Drewry World Container Index. That’s three times the rate as recently as December. Editor’s Note: Industry sources have told Home News Now that they are paying as high as $10,000.

The Maersk announcement, which predicted “strong” demand for its containers for the foreseeable future, also cited what the company calls Red Sea “ripple effects” for the declines in capacity. These effects include bottlenecks at some of Asia’s biggest ports and major customers’ willingness to pay big up front to secure shipping capacity for the all-important holiday selling season. 

What the announcement doesn’t mention are the ripple effects of the ripple effects. Another news item, this one from the South China Morning Post, warns that shipping costs even from the interior of the country also are on the rise because of traffic jams on the Yangtze River, Asia’s longest waterway and the functional equivalent to the Mississippi River. The cause of the choke points also is a decline in capacity, increasing wait times and delays. The ripple effects of the ripple effects, therefore, are the difficulties getting raw materials and even fuel into the country in order for goods to flow back out of the country. These delays inevitably affect the international trade routes, as well. 

Vietnam v. China

Meanwhile, over in Vietnam, there is more than deep concern. You can go ahead and call it alarm. 

Higher shipping costs and increasing delays trigger contract penalties and threaten already thin margins, putting billions of dollars at risk, according to Vietnamese state media. And at least from the view of Vietnamese logistics experts, this is a situation that shows no signs of improving any time soon. 

For these experts, add to the Red Sea disruptions the escalating tensions between the United States and China and the recent round of tariffs on Chinese goods levied by the Biden administration. The run-up to these tariffs that take effect in August has spurred U.S. importers and Chinese exporters alike to expedite shipments before that deadline. This puts many if not most Vietnamese exporters at a competitive disadvantage. 

Chinese companies can pay up to $1,000 to secure a shipping slot, whereas Vietnamese companies can only offer perhaps $600, according to the Vietnam Ship Agents, Brokers and Maritime Services Providers Association. Add to this the fluidity of pricing from the container carriers. Typically, rates are good for 15 days to a month; in today’s environment, they can change daily. And sea freight rates for Vietnamese producers to ship to the U.S. have reportedly doubled this year already.

Danish danger

As inflation at least loosens its grip, the container carriers seemingly couldn’t care less. They are proving yet again that they will seek maximum profits even as their customers buckle and break under yet another sustained period of uncertainty with respect to supply chains. The revised profit outlook from Maersk is the second this month. 

The Red Sea-caused re-routes are “expected to contribute to a stronger financial performance in the second half of 2024,” according to Maersk’s self-serving statement. Stronger for the carriers. Not mentioned? The weaker financial performance presumably for nearly all of its customers.

For those scoring at home, Maersk revised its profit outlook to $7 billion to $9 billion this year over the previous estimate of $4 billion to $6 billion, or a nearly 30% to 50% markup. Are you kidding me? Of course, Maersk shares rose nearly 4% on the news of the revised forecast.

The Copenhagen-based company also stated that congestion will continue to cause disruptions in ports in Asia and the Middle East, which sets the company up nicely for yet another revised outlook and yet higher quoted rates in the near future. Maybe tomorrow.

La La Land

A quick check on some of the bigger ports finds congestion at all of them, including Singapore, Ningbo, Shanghai and Qingdao. The Port of Los Angeles, the busiest port in the country, remains above the pre-pandemic peak, according to Bloomberg.

Returning to Drewry’s data, the cost of a 40-footer to L.A. from Shanghai saw six straight weeks of price increases, including a nearly 1% hike two weeks ago to bump the container cost to $6,025. That’s a tick better than Shanghai-to-Rotterdam, which increased 2.4% to $6,200, the highest that route has been since September 2022 coming out of the pandemic.

The routes hardest hit? Shanghai to Genoa, Italy, now at $6,900, or 3% higher than the first of the month and also the highest since September 2022, according to Drewry. 

As reporting by HNN’s Tom Russell uncovered earlier this month, yet another disrupter is the lower average vessel speed, which has dipped to an average of 17 nautical miles per hour from a high of 24 knots, a drop of nearly a third, according to Statista. 

The ships keep getting bigger and, therefore, heavier, turning an idiom into description: the slow boats from China. 

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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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