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Furniture retailers say Memorial Day sales up

But aren't sure if it's a trend

HIGH POINT — Furniture retailers reported decent to excellent sales during the long Memorial Day holiday weekend, but just how this bodes for future business still appears up in the air.

 KittleIndianapolis-based Kittle’s reported stellar Memorial Day weekend results with an offer of half off everything and two years of no-interest financing.

For some, the strong results were a welcome change to an otherwise weak May, while others saw it as a continuation of positive momentum that has been building this year. However, rising gas prices and the recently reported double dip in home values has some wondering if the holiday gains will be short-lived.

Sales were up about 7% for Jackson, Miss.-based Miskelly Furniture during a three-day event (excluding Sunday when the store is closed), and that came as a relief to Oscar Miskelly, a partner in the business with his brothers Chip and Tommy.

"We were kind of concerned because the month hadn't been that strong," Miskelly said. He added that retailers across the country also now have to worry about a recent report indicating a double-dip in home valuations that's "a little discouraging."

Despite the poor economic backdrop, Miskelly's promotion - which included "$150 off at the door" Monday on a purchase of $699 or more and 12-months free interest financing - seemed to do the trick. The retailer also threw in a couple of popular free television offers with certain $999 or $1,999 purchases "that definitely added a little shot in the arm as well."

Miskelly said Memorial Day used to be a harbinger of what retailers could expect for the summer, but not anymore. If anything, it speaks to consumers' changing shopping and buying habits and "how they are waiting for holiday weekends when they get the best deals," he said.

San Diego-based Jerome's reported solid holiday weekend results.

"We needed it because May was not performing well," said President and CEO Lee Goodman. Total sales were up about 18% from the same period a year ago, and same-stores sales increased about 13.5%, he said. Jerome's is known for an everyday-low-price strategy and, as usual, didn't run a special holiday promotion.

Despite the strong showing, "we still didn't get out of May with an increase," he said. "It was the first decrease in same-store sales in 20 months."

While higher gas prices and a still shaky economy may have played into the month's results, Goodman said the bigger explanation for the decline was probably an atypical VIP customer event Jerome's ran last May that brought business forward from June into May 2010. So May sales the year before were tough to beat.

First quarter sales were very strong for the retailer but softened in April and moved down in May, which Goodman said seemed to be in line with the timing of rising gas prices. But there were other factors, too, including supply chain issues as overseas factories weren't able to produce what they thought they could coming out of the Chinese New Year, he added.

Gas prices could affect sales going forward, Goodman said, but are "not enough of an issue" to lead to more same-store sales declines.

Jeff Bacon, general manager of Port Charlotte, Fla.-based Bacon's Furniture & Outdoor Living, said traffic and sales at the company's three stores were about double what they were last year for the holiday event.

He also said the higher gas prices were having a positive effect, attributing the strong results in part to people wanting to spend more time at home due to a number of factors, including steep fuel and restaurant prices.

"People are having more in-home fun than out of home experiences," he said. "That is encouraging people to make their homes more comfortable over the last several months."

Bacon's Memorial Day sale promotions started May 18 and continued through the holiday weekend. As part of the promotion, customers received an additional 10% off sale prices if they purchased 10 items.

"It helped increase the average ticket and was a win-win for the customer and for us," he said.

Steve Harmon, director of sales and marketing at Tigard, Ore.-based Paul Schatz Furniture, said Memorial Day weekend traffic was up 10% and sales were up 20% compared with last year.

Helping drive that traffic was a combination of television, print and e-mail ads that offered discounts on major brands and special financing offers, as well as in-store coupons for additional discounts.

Harmon sees the weekend's activity as a continuation of the positive momentum that has been building in recent months.

"We just seem to be reaching our goals every month," he said, noting that the Schatz family also has made investments to keep the retailer fresh and up to date. "We are in a good place.... We are moving through the recession in a position of strength rather than looking like we are standing still."

Charlotte, N.C.-based Broad River Furniture's Ashley Furniture HomeStores also used coupons - and in a big way for the first time. The retailer played on Apple's "There's an app for that," slogan, advertising "There's a coupon for that." It ran dozens of discount coupons across all categories, promoting heavily in newspapers, online, via direct mail as well as on television and radio.

Among the coupon offers were a $249 queen sleigh bed, a $299 sofa and a $499 "blended leather" reclining sofa. The stores in the Carolinas and Georgia also ran a 48-month no-interest financing offer, and showed how consumers could use select coupons combined with the financing for low monthly payments (a bedroom group under $1,000, for instance, for $19.99 a month).

"We were mildly pleased with it," said Charlie Malouf, a partner in the business with Jonathan Ishee. "It was better than last year. We comped up, but it wasn't spectacular."

Results also varied by market. Augusta, Ga., struggled, for instance, while the Charlotte stores were flat and neighboring Gastonia, N.C., was up big as were Broad River's South Carolina stores in Greenville, Spartanburg and Anderson.

Malouf said the first four months of the year were up from 2010 and that the company, like others, was looking for the Memorial Day promotion to lift May results. Instead, the month turned out "a little better than flat," he said.

Part of the problem may be some waning interest in television-and-furniture promotions, which had been driving sales for quite a while.

"We've got to find the next big hook," Malouf said. "We were hoping it would be coupons. And we're going to go back to (a coupon event). We learned some things and we'll refine it."

Mike Forwood, president of Austin, Texas-based Louis Shanks, said his stores beat last year's Memorial Day sales by about 10%.

"It's not the business we did in our heyday, but it's better than last year," he said.

He attributed the sales increase largely to an aggressive advertising campaign that started about 10 days before the holiday and included direct mail, TV, radio and print media and e-mail blasts to its core customer base.

"These days you have to cover every single avenue to extend your reach," he said.

Forwood added that there is still some pent-up demand for high-end consumer goods, and said consumers remain conservative in their purchases. However, he is starting to see spending increase amid rising consumer confidence.

He also believes there are excellent values for consumers shopping for furniture. Thanks to those values, he said, Shanks has strong inventory levels and is experiencing healthy margins.

"We are real upbeat," he said. "I am still cautious in the way we manage inventory dollars, but we will maintain a good conservatively aggressive approach to the business."

At Indianapolis-based Kittle's, CEO Eric Easter said the Memorial Day weekend event was the biggest in the company's history.

And unlike some others, "The rest of month gong into the holiday weekend was outstanding," too, he said. "We expected the holiday to be good, but the most satisfying thing was that even prior the holiday our business has been very good."

Kittle's key offer was savings of at least 50% plus no-interest financing for two years. Sales were up over plan, and same-store sales increased more than 15% for both the long weekend and the month, he said.

Like others interviewed for this story, Easter has heard reports of mixed results from peers and believes Kitts results are probably due in part to the many changes its been making in recent years - including broadening its assortment to appeal to a broader consumer base - and its aggressive promoting.

"It takes extremely strong promotions to get people to wake up and buy furniture," he said.

It has been a good year for Kittle and last years was the best year in many, Easter said, but he isn't ready to tie too much of the future to the retailer's strong Memorial Day showing.

"We just take it day to day," he said. "We don't expect the economy to be any better so it's all about taking share."

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