Las Vegas Market Update

February 2010 - Charlotte, NC

The Las Vegas Market was a very positive and upbeat three days for us, and most exhibitors and attendees left with good feelings about their business and an improving furniture economy in 2010. Clearly, there was more energy in halls than last year, and attendance seemed better, particularly on Monday. Leaving the building Monday night and entering the huge party in the open courtyard between the A, B and C Buildings, one could feel the sense of permanence of this market and its rightful place in the rotation of furniture industry shows. Yes, the market still needs to establish better building density and a consistent and affordable price/value proposition or its showroom clients, and we are hopeful this will occur in 2010.

Where are we now? Where are we going? - The world, our businesses and indeed our own lives have been humbled by the economic tsunami of the past 18 months. As one client opined, "our weakest performance areas were exposed during the recession, and we were forced to confront them head on." How we learn from past mistakes will determine our success in the future. Most companies are humbly, yet strategically, re-addressing their core competencies, setting their course, and deploying their team to the marketplace with a new sense of focus and purpose. Since we know the industry will not grow much for a while, we must take market share to "move the needle" (I heard this phrase over and over all market.) The best line of the market was "it's time to put on our big boy (girl) pants and get to work." I am anxiously watching to see which companies truly get to work and move their needle in 2010.

China - Our industry is totally intertwined with China at this point, with well over 70% of wood furniture coming from Asia and approximately 50% of upholstery (kits or finished goods.) Prudent owners are continuing to seek a balance in their sourcing plans, due to FX concerns, container ship freight rates, Chinese employment issues, and the annual shut down for Chinese New Year. These are complicated risk factors which make our global industry increasingly difficult to manage.

M & A Activity - We are very busy with a healthy mix of buyer and seller interest. Our recently announced sale of PRI to Home Meridian signals to all of us that capital is beginning to flow again and valuations are stabilizing. We expect to see a continuation of Asian-U.S. cross-border transactions, and larger companies selectively buying brands, channels, product lines and distribution. Smart companies will also make strategic high level management hires to bolster their ranks.

As always, we welcome your comments and look forward to working with you in the future.