Top 100's sales jump 7.6% in 2004
By Clint Engel -- Furniture Today, May 22, 2005
High Point — The nation's largest furniture stores posted a 7.6% increase in furniture, bedding and accessories sales last year — a respectable gain, but not enough to beat the growth of all U.S. furniture stores.
Sales for Furniture/Today's Top 100 grew to $26.9 billion, up from $25.0 billion for the same companies in 2003. Their market share dropped one percentage point to 53%, versus the market share of the same companies a year ago as well as the market share of last year's Top 100 companies.
It was the first time that the group's share of the furniture store pie went down instead of going up or remaining flat.
The 7.6% sales increase also fell below the 8.7% sales increase for all U.S. furniture stores, which did $50.5 billion in furniture, bedding and accessories last year. That's the first time the Top 100 has lagged furniture stores as a whole since Furniture/Today began reporting on the group 21 years ago.
"Several things are at play," said Jerry Epperson, industry analyst and managing director of Mann, Armistead & Epperson. "First, I think we're in a period where we're seeing these outsiders — non-furniture stores (that sell furniture) — continue to grow a lot faster."
Epperson added that the industry also saw a lot more of the small stores and the specialty stores that did not grow during the recession step up the expansion pace last year. They opened new stores or moved to better locations last year, he said. That doesn't mean industry consolidation is over. Indeed, Epperson believes it is continuing. But last year there was a "sort of pent-up need to expand," among the smaller companies, while some of the bigger boxes contracted.
That aside, there were bright spots for many of the nation's largest furniture chains. Forty companies had double-digit sales gains. Half of the companies on the Top 100 this year boosted their store counts — 14 did it by double digits — and two-thirds have expanded or have plans for more expansion this year.
Ashley has biggest gain
For the third consecutive year, Ashley Furniture HomeStores recorded the highest sales gain, reflecting its hot stature with both large and small retailers. The fast-growing dedicated store network, which moved up two notches this year to No. 8, had the greatest percentage gain — up 52.2% to $913 million — as well as the largest net gain in volume (up $313 million).
Two stores in the Top 100 had double-digit decreases, led by No. 19 Rhodes. The Atlanta-based retailer, which filed for Chapter 11 bankruptcy protection last year and subsequently closed 27 stores, fell from the No. 13 spot last year as 2004 sales declined nearly 18% to $439 million. That $95 million decline may have been a key factor in the Top 100's overall lagging performance along with the loss of more than $300 million in volume from the now defunct Breuners Home Furnishings Corp.
Seffner, Fla.-based-Rooms To Go took the No. 1 spot for the fourth year in a row, though its sales grew only about 3% to $1.4 billion. Regardless, RTG maintains one of the best inventory turn averages of any Top 100 company and the third-best rate of sales per square feet ($850) of any company for which an estimate is available. This year, the retailer should get a boost as it picks up its expansion pace, opening about 10 Rooms To Go and Rooms To Go Kids stores over the 12 to 18 months in addition to eight or so bedding specialty stores opening by the end of the year.
Four newcomers to list
This year's list has four newcomers, including America's Mattress, which jumped into the ranking at No. 37. The Serta-only network of independently owned sleep shops only recently came into focus as a result of changes at Serta. Late last year, management of the Serta brand was taken over by the licensee that oversees the specialty store program.
Operating under various names, the Serta network ended the year with 390 stores and estimated annual sales of $195 million. Serta International has noted plans to open more than 100 more sleep shops this year.
The remaining three newcomers joined the Top 100 with the best percentage sales gains behind Ashley Furniture HomeStores. San Francisco-based Design Within Reach, a multi-channel retailer of modern furniture and accessories, was No. 98 with a nearly 45% gain in furniture, bedding and accessories sales to $63 million. The company, which went public in July and has stores in such big city markets as San Francisco, Los Angeles, New York, Boston and Chicago, more than doubled its store count to 33 last year and has plans for 18 to 20 more stores this year and next.
PMD Furniture Direct of Columbus, Ohio, jumped in at No. 90 with a sales gain of more than 43% to $69.4 million. The unusual company, owned by Power Marketing Direct, is a chain of more than 100 small warehouses in 35 states selling promotional to midpriced goods by appointment only. It's fast growing with 110 warehouses in place at year's end and plans for 20 more this year.
Treasures Furniture entered the Top 100 at No. 91 with a 36.4% jump in sales to $66.6 million. That's a variation on the mark of the beast for some, but for Treasures owner Alan Glass, it's the mark of a successful alliance with Furniture Brands International.
Last year, the high-end Poway, Calif.-based company opened its first Drexel Heritage-dedicated store and its second Henredon store. This year, it already has opened a Lane Home Furnishings store with attached Lane Venture patio store in Irvine, Calif., and this month it's opening a second Drexel store next to its Treasures store in San Diego.
Off the list this year — and taking a big bite out of the Top 100's overall volume — is the former Breuners Home Furnishings Corp. of Lancaster, Pa., which filed for bankruptcy in July and subsequently closed all of its Huffman Koos, Goods and Breuners stores. The retail conglomerate was No. 23 on the previous year's list with 2003 furniture, bedding and accessories sales of $323 million.
Also falling off the list is Benchmark Home Furnishings of Olathe, Kan., which saw sales decline 11% in 2003 to $87 million after Nebraska Furniture Mart entered the greater Kansas City market. Benchmark has put its three-building complex up for sale, though founder Bob Davidow said the retailer would continue to operate from another location. A reliable estimate for Benchmark's 2004 sales was not available.
America Group of Vancouver, Wash., and Columbus, Ohio-based Big Lots Furniture also dropped off the list. Big Lots, No. 99 the previous year, is measured solely on the volume of its furniture stores, though its focus has been on building the furniture business within its main stores. So while the company's furniture store count and sales declined enough to drop Big Lots to the "Stores to watch," list, that's a bit misleading. Big Lots' overall furniture business grew 8.3% to $546.9 million, which puts it among the Top 25 furniture retailers (as opposed to furniture stores). Watch for that report in August.
Moving back up to the top of the list, within the Top 10, the largest four companies — RTG, Pier 1 Imports, Ethan Allan and Berkshire Hathaway's furniture division, respectively — maintained their ranks from the previous year. No. 5 Ikea, and No. 6 La-Z-Boy Furniture Galleries each moved up one spot, while No. 9 American Signature and No. 10 Havertys each moved down one spot. No. 7 Levitz Home Furnishings — the only retailer in the Top 10 to post a sales decline — fell two notches.
Ikea and Ashley were the only companies in the Top 10 to post double-digit gains (Ikea was up 13.2%). Still, Berkshire — which owns Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan's — also beat the Top 100 average and the average for all stores with a 9.4% sales gain to $1.09 billion.
Unlike last year's list, which featured six companies leaping double digits up the Top 100, this year none — outside three of the newcomers — managed that feat. Two companies, did move up nine spots, the largest being No. 61 Norton, Mass.-based Bernie & Phyl's, which grew 21.6% to $105.8 million. No. 87 Homestead House moved the farthest down the list (12 spots) with an estimated decline of 11.3% to $71 million.
Keeping true to form, growth for the 32 specialty stores in the Top 100 exceeded the rate for their conventional store counterparts and beat the growth rate of all U.S. stores, too. The specialists — working from a smaller sales base, grew 9.5% to sales of $9.8 billion, while the 68 conventional stores grew 6.5% to $17.2 billion.
For the second consecutive year, the specialists also opened more stores than the conventional retailers — a net 345 units to 74 for conventional stores.
They got a big assist from No. 2 Pier 1 Imports (which grew by a net 60 stores), No. 26 Sleepy's (up 42 stores) and No. 90 PMD Furniture Direct (up 36 stores).
Of the seven stores that opened more than 25 units last year, only Ashley is categorized as a conventional furniture store.
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