NRF sees softer second half
Carole Sloan -- Furniture Today, January 30, 2005
New York — A softening housing market will affect sales of furniture and home furnishings, most likely beginning in the second half of this year, according to the National Retail Federation.
Rosalind Wells, the NRF's chief economist, also said during the group's annual conference here that consumer spending is expected to grow more slowly this year.
She projects sales growth of 3.5% this year in the GAFS category, representing general merchandise and specialty stores selling apparel, furniture, home furnishings, electronics, appliances, sporting goods, hobbies, books and music. That's down from the robust 6.7% gain in 2004, the highest retail sales growth since 1999.
Why the slowdown? Wells cited a softer economy, higher energy costs, a lack of economic stimuli and higher interest rates. Last year's strong performance also is harder to beat, she said. GAFS sales growth in the first quarter of 2004, for example, was a vigorous 9.9%. In the same period this year, the NRF projects 3.7%.
Home furnishings and furniture sales strength usually follow housing gains by some six to 18 months. While sales in these areas may remain strong for the first half, Wells sees a slowdown in the second half.
"If the entire economy is slowing down, all areas will have to take a hit, and home will taper off gradually," she said.
Wells added that sales in the 2004 holiday period in November and December increased 5.7%, the best since 1999 and ahead of the NRF forecast of 4.5%.
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NRF sees softer second half
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