Las Vegas Market Update

February 2009 Charlotte, NC

We knew this would be a different Market, given the economic turbulence and the severe credit crunch facing our commercial landscape. We arrived in Las Vegas on a half empty airplane, no lines for a taxi, and deep discounts at luxury hotels. The World Market Center continued to look good, act professionally and put a positive spin on things, but attendance was poor, and attitudes were worse. Official records would suggest a 2-3% attendance decline, but the real numbers will reflect a larger decline. Lots of people stayed home and saved money.

Controlled Liquidation

Our industry has shrunk 20-30% in the last 100 days. This is a huge decline in a very short period of time, and most companies are reeling from this violent, high velocity impact. Most managers are attempting to re-gear their companies to this smaller sized market. While losses are mounting, cash flow is manageable due to reduced receivables and inventory levels, and stretched payables. At some point, many companies will shrink too much and disappear. Banks are nervously watching the controlled liquidation, and will soon begin foreclosures as we approach the bottom of the cycle. Many of our industry friends will not survive 2009.

For those who can survive, the new reality will be a smaller market to pursue, but fewer competitors. From suppliers to manufacturers to retailers, the strong will join together and emerge as a dependable, reliable and financially sound elite group to serve the home furnishings consumer.

Stump Position

We are active in helping the strong and the weak address these issues. Over the next twelve months, we will see liquidations, mergers, alliances, joint ventures and OEM supply agreements. Very little cash has changed hands in the last 100 days due to constraints in all the capital markets. We expect that to change in the next 30-60 days. Deals will happen as confidence returns to the system.

We encourage all private companies to revalue your company now and establish a new basis for your shares for estate planning purposes.

Survive to play another day. Call us if we can be of assistance.

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.