NEWSLETTER  April 2008 -Charlotte, NC

The High Point Market Report

We have just completed eight days at the High Point Market and offer the following observations:

The Economy: The industry and the general economy are just not strong, and no one is really expecting an up-tick anytime soon. The federal stimulus checks should be hitting taxpayers’ homes next month, and that may spur a bit of activity. S&P has declared that the sub-prime lending bust is now over, so perhaps the mortgage industry can recover and home sales/purchases can return to a decent rate of sale pace.

Strong vs. Weak: The furniture industry is diverging into strong companies that can stay the course, and the weak ones that are struggling to survive. We believe this business cycle will bring a host of company failures (it already has) and market share gains will be rewarded to the strong companies. We are already seeing retailers and vendors paying extra attention to the credit worthiness of their business partners to assure they are strong enough for the long haul. If your business is strong, congratulations. If your company is weak, the goal is survival! Align your company with strong vendors, supply chain partners, and customers. The result will be a sustainable and successful business model.

 Is China the place to be?: We are hearing more and more stories of rising prices and other problems with China manufacturers (particularly in southern China), and our clients are telling us they are looking to balance their sourcing to a broader Asian platform, as well as looking at Mexico and other Central and South American alternatives. We are even seeing some clients, particularly in upholstery, look to expand U.S. production.

High Point vs. Las Vegas: More exhibitors are voicing concerns with the high cost of Las Vegas and the unsustainable 90 day cycle of new product introductions by attending both Vegas and High Point markets twice a year. We were pleased at this Market with the progress High Point continues to make with logistics and ease of doing business. The debate of who the eventual winner will be continues. Be on the lookout for new Las Vegas market dates for 2009.

We are very busy in the M&A arena, both in the U.S. and in Asia. We look forward to announcing several transactions in the coming weeks and months. We also will see some of you at the HD Las Vegas (hospitality & design) Show in May and NEOCON (office/institutional furniture) in Chicago in June.

As always, we look forward to working with our furniture industry friends, and would welcome a chance to talk with you on a confidential basis.