Labor Day sales strong

Despite lift, retailers still cautious

Clint Engel -- Furniture Today, September 5, 2008

HIGH POINT — Furniture stores reported strong results from their Labor Day weekend events, with many saying sales were up double-digits from the year before.

That's the good news. The bad news is that no one seems to think the strong holiday is a sign that the worst is over for the industry.

With the lure of deep discounts and no-interest financing promotions that, in some cases, pushed interest payments out five years, consumers came out in droves during the holiday weekend. And the payoff was great, if short-lived.

"Labor Day weekend has been our No. 1 event of the year for the last probably five years," said Bruce Berman, CEO of Lombard, Ill.-based The RoomPlace. "We had very high expectations and we did do very well."

The main components of RoomPlace's promotion were five years free financing or up to $500 off with a minimum purchase requirement.

The RoomPlace in the Chicago suburb of Lombard, Ill., scored large crowds and double-digit sales increases Labor Day weekend with a promotion offering $500 cash back or free financing until 2013.

 In addition, RoomPlace tied the event to the Muscular Dystrophy Assn., as it has for years, contributing a percentage of sales to the organization.

Berman said sales were up "double digits" over last year, but that didn't change his view that the market will remain "challenging."

"We're looking for more of the same," he said. In recent years, big holiday sales have produced strong results, but business before and after the sales has been weak.

"Consumers seem to wait for holidays to make big purchases. In certain ways it's actually a danger," he said. "You get all these people in the store that you can barely wait on them." But the next week, he said, the stores are too quiet.

"You have to give the customer what they want," said Berman, and right now that's powerful holiday promotions.

Jeff Seaman, CEO of Seffner, Fla.-based Rooms To Go, offered a similar assessment. The long weekend business was "pretty strong, especially relative to August, but not really that surprising."

In most of its markets RTG promoted no down payment, no minimum purchase and no interest until January 2013. Its Labor Day circular included coupon for $500 off a particular bedroom group or leather sectional, buy-one, get-one-free gift cards and other coupon offers, including a free trundle bed with the purchase of a Hannah Montana sleigh bed or day bed.

While Seaman was pleased with the results, he added that "it felt like Memorial Day in the sense we had a very good Memorial Day but the business around it — in May and June — wasn't that good. There are slightly less buyers and they're waiting for the big weeks to shop."

Simon Kaplan, CEO of Dayton, N.J.-based Value City Furniture, operating Value City and Ashley Furniture HomeStores, said business was "better than last year" with sales on Labor Day up 30% to 35%.

Kaplan said the spike occurred because "we burned the prices in our circular to come in a lot sharper and extended the pay period to 48 months (to 2012)."

Value City emphasized "a broad range of products" in a four-page broadsheet featuring bedroom and living room, plus a single page devoted to bedding. In addition, the seven-unit retailer featured a direct mail piece and advertised on local cable TV, offering a $50 instant rebate.

But Kaplan remained cautious, saying the weekend blip "was not indicative of anything other than that you did well that day."

"It was an exceptional sign, yes, but let's not be complacent," he added. "We've got to work on being aggressive and stay aggressive. Just because it's a homerun this time, we can't be complacent."

Business for Bellwood, Pa.-based Wolf Furniture was up about 15% for its three-day promotion over last year's holiday event, said Gene Stoltz, vice president of merchandising. It came on the heels of a "decent" August, although the season up until that point "was pretty brutal," he said.

"We did jack up our advertising in (recent) months, especially in our TV markets, to get a little extra going on," he said. "What we see is that the small guys are backing off. I'm not sure there's more business out there. I just think we're grabbing business from other people."

And like others, Stoltz isn't so sure the recent improvements will be long lived. Among other things, he is concerned about Pennsylvania's role in the coming election as a swing state. For that reason, he said, Wolf can't buy all the television advertising it wants because the swell of political ads takes priority.

On the other hand, consumers are traveling less and hopefully spending some of their vacation money on fixing up their homes, he said. Fuel costs also have been coming down in recent months, which Stoltz said should be a bit of a consumer-confidence builder.

Gary Steinhafel, president of Waukesha, Wis.-based Steinhafels, said sales were up in the high single digits for the retailer's five-day holiday event. But he concurred with other retailers in saying that while high-impact sales and holiday weekends remained strong, "daily business between these events remains challenging."

Leather Editor Joan Gunin contributed to this story.