Cost pressures lead leather sources to hike prices
By Joan Gunin -- Furniture Today, February 3, 2008
Las Vegas — Most leather upholstery producers showing at the Las Vegas market last week said they're no longer in a position to absorb cost increases they've seen, and are now implementing price hikes.
"We are seeing price increases on everything," said David Beckmann, president of Emerald Home Furnishings.
"We haven't seen increases like this since the 1980s. Everyone has held off for so long, they've got to do something."
Emerald will implement small price increases each quarter, he said. Some prices were changed this market and more will come in April.
Lee Fautsch, vice president of residential upholstery, said Flexsteel was feeling "relentless pressure" from suppliers, especially on base-grade leathers and polyurethane. Flexsteel will make "modest" price increases across its U.S. line this spring.
Sourced product for now remains unaffected.
Despite rising cowhide costs, Vice President Gary Harmon said Hamilton Spill has had success at the higher end. But he said the company also is approaching mid-tier price points with bonded leather, which he said will be accompanied by hangtags to explain its composition.
Ashley also added bonded leather at this market, introducing its own "leather blend, high-performance fabric" that it calls UltraHide.
Despite the company's criticism of bonded leather last year, President Kerry Lebensburger said Ashley was not against the product, only against identifying it as leather.
Hence UltraHide, which features 17% leather and is identified in a hangtag as ground, pulverized, shredded, reconstituted or bonded leather."
At Cheers U.S.A./Man Wah, the company has weeded out some models to focus on "building the best possible product" by incorporating better leathers, larger frames and greater comfort, said Sam Contreras, vice president.
"We're not high-end, but we are giving customers more for every dollar spent," Contreras said.
"Everyone has to pass on some pricing because of things outside the (furniture) marketplace we can't control," Contreras said.
"We're doing our best to hold off, but we have started to institute increases on some leathers and fabrics."
John Hoff, president of Palatial Furniture, said operating out of a vertically integrated facility in China helps keep costs low.
"We have our own tannery and make our own cushions," said Hoff.
However, he expected some price adjustments to come about in July due to foam and labor issues in China.
"We've had one price increase in our four years in business," he said. "We work on such low margins, we can't absorb too much."
David Wormald, who recently returned to Lane Home Furnishings as leather merchandise manager, was buoyed by retailers' response to four new sofas.
"It shows me I am on the right track for April in terms of design and covers," said Wormald.
As for increases, he said, "Suppliers are bombarding us across the board. Even China is taking increases."
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