HD Market Update   

May 2008 – Charlotte, NC

We are pleased to announce the sale of Mark David, Inc. to the Kohler Co. We initiated this transaction and exclusively represented the selling shareholders.

Mark David, based in High Point, NC, is a designer, importer and marketer of luxury furniture sold to the hospitality industry. Kohler Co. is one of the largest privately held businesses in the US and is based in Kohler, Wisconsin. Kohler’s Interiors Group is a premier luxury furnishings supplier to the home and hospitality industries, with global reach and influence. 

HD Market in Las Vegas

The HD Market in Las Vegas was very well attended and energy was high. We were pleased to see upbeat attitudes, particularly in light of the soft residential furniture industry. Most of our clients in the hospitality industry are registering 10%+ sales increases this year and believe the future is bright for this segment of the furnishings industry. With global business travel expected to grow in the next 5 years, particularly with Chinese and Indian businesses, US hospitality companies should prosper in the coming years. Some other observations:

• Inflation: the furniture industry is now dealing with inflation, instead of the deflation we have experienced with the past 10 years. Inflation requires a different set of management skills, so we are carefully watching companies’ abilities to deal with this new reality.

• Green: the furniture industry is desperately trying move towards LEED and green products, however, there are many shades of green. This is an important topic, and we look forward to watching the definitions and business practices emerge in this arena.

• Residential Players in Hospitality: we saw many of our residential friends walking the aisles in Las Vegas, seeking to enter or expand their hospitality business in a time of weak residential sales. Given excess US factory capacity and offshore sourcing skills, we believe many of these companies will become major players in the HD sector in the coming years.    

• China: clearly there are rising costs and issues with doing business in China. We continue to be bullish on Asian sourcing, and are encouraging our clients to build a balanced sourcing strategy. China will remain an important partner for our industry, and Vietnam and Malaysia will grow in importance. We also believe North American production will re-emerge as an important part of the total production solution.

Call or email us with your thoughts on these important topics.