Hope springs eternal
Jennifer Marks, editor-in-chief -- Home Textiles Today, 4/8/2002 12:00:00 AM
Could it be that spring has finally sprung for the home textiles industry?
The home textiles sector has traditionally slid into economic slumps ahead of other businesses and tends to climb out slightly before the others as well, although it may feel more like the industry is stumbling out of recession this time around. Still, suppliers large and small are reporting that business during the first quarter has been encouraging, even while many execs remain uncertain as to whether they should credit a nearly empty pipeline or consider this a true recovery.
Nonetheless, there are hopeful signs poking their heads up like early crocus to suggest that a season of renewal may be at hand.
Contrary to popular belief, the four major mills are not dead. Three of them, in fact, are looking likely to log double-digit sales gains during the first quarter. Granted, a single sunny quarter won't be enough to address profitability and debt load concerns. But if 1Q turns out to truly be a harbinger of what's to come for the remainder of the year, it's a welcome sign.
In broader terms, more good news was delivered last week by the Purchasing Managers' Index, considered by many to be one of the economy's more reliable bellwethers.
Although overall production growth lost a bit of steam in March, the New Orders Index rose to 65.3, up 2.5 percentage points from 62.8 in February — a level not seen in 16 years. Further, textiles and furniture were among the 15 of 20 industry segments reporting growth during the month, a finding that supports evidence at retail that home-related businesses have done a good job of holding their ground.
There was more good news out of Union, NJ, last week as Bed Bath & Beyond projected that its first quarter profits would exceed analysts' expectations by a penny and that its fiscal year profits should outstrip expectations by two cents.
Of course, Bed Bath is also one of the few retailers that managed to chug through recessionary 2001 consistently throwing off enviable profits, so one could be excused for asserting that its rosy outlook doesn't necessarily portend good times for everybody else.
On a more anecdotal level, one can look at the level of activity surrounding the upcoming market week and see further cause for hope. The flurry of new showroom openings and expansions seems to be on the rise again, and the number of companies planning after-hours cocktail parties and events is bouncing back after three steady markets of decline. If nothing else, that speaks volumes about the mood of the market.
Certainly there will be more consolidation ahead on both the vendor and retailer sides of the aisle. Larger players will continue to demand sometimes grueling concessions from those that supply them. That, quite simply, is the order of the day.
Does any of this tell us absolutely that the home textiles industry has turned the corner? Of course not. But it does suggest that it could be in the process. Only hindsight will determine whether April market was the pivotal moment.
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