High Point Market Newsletter

October 2008

Here’s our report for this market. We are generally optimistic people, but we are cautious today given the industry slump, the US economy, the credit crisis and the general consumer gloom:

• Credit: We continue to see many retailers have trouble surviving, and our wholesalers are increasingly having trouble finding anyone to sell that has credit. Many well-financed companies are shifting to factoring or insuring their receivables, as a built-in protection and added discipline in these difficult times. Credit managers are valuable employees right now.
• Sourcing: While China will remain a major player on the world stage, our clients are reducing their reliance on Chinese goods due to concerns over lead times, freight costs, and reliability. We believe Mexico will return to favor as a low-cost manufacturing destination for furniture, and US upholstery plants will re-emerge as a growing business. Retailers have been burned by having too much inventory in the import pipeline, and will rebalance their purchases to more US inventoried goods and lessen the container-direct model.
• Las Vegas: The Vegas Market has announced that they will shift their market dates to late September 2009, effectively moving on top of High Point, from a product development cycle viewpoint. So beginning next Fall, where will retailers and designers go to view new product introductions? The debate continues and the stakes are getting higher!
• Valuation: The US economy has faltered these past few months and the credit crisis has shown that stock and home values are not as steady as we thought. This is true for companies as well, and we encourage every business owner to focus on their business value and work to create long-term shareholder value. We all tend to place too much reliance on EBITDA, and forget the burden of debt. We encourage owners in this time of lower revenues to reduce.
  1. Survival: Business owners need to decide if they want to stay the course and survive this economic cycle. If they do, then they need three things:Energy to stay the course
  2. A strategy to build the business
  3. The skill to execute the plan

Please remember that “hope is not a strategy.”

Come see us in our new offices in Charlotte! We look forward to discussing these topics with you.