Gray Dawn: Textile makers search for answers in 2nd half

By HTT staff -- Home Textiles Today, 8/20/2001 12:00:00 AM

NEW YORK —

Have we hit bottom yet? Executives in the home textiles industry will reply variously yes, no and maybe.

In the midst of the 2001 muddle, some vendors report strong results. Even so, many acknowledge that in the prevailing retail environment the air remains mighty thin.

Utility bedding maker Carpenter Co., Richmond, VA, has been experiencing "record numbers and record growth — and we expect to see that all the way through the fourth quarter," said Dan Schecter, vp, sales and marketing. Although Carpenter itself has not been hit with order cancellations, Schecter noted that some of its retailers are bumping up against their credit limits.

"Guys [retailers] that never used to be a problem are a little slower than usual," he said. "I think they're going to have a tough time in the third and fourth quarter."

At Montreal-based Sheftex, the U.S. business remains "relatively strong," and president Lee Sheftman anticipates steady going in the third and fourth quarters. However, he also sees retailers pulling back on bigger items and has had one serious cancellation.

"We have seen a tightening of credit, no doubt about it. In lots of cases, companies' inventories are collecting dust," he said. "Our outlook is good, but it's a tough retail landscape out there."

It's a situation that has prompted most vendors to keep a sharp eye on inventory levels and their production schedules.

"We've seen a slowdown in orders, and we're trying to keep our inventories down at a minimum," said David Record, vp and national sales manager, Georgia Tufters, Calhoun, GA. "We run our fiscal years from July to June; so we just started our new fiscal year, and we ended it in a whimper. June was very soft, but we've seen a pick-up in orders since then."

Orian Rugs, Anderson, SC, also anticipates an uptick but continues to mind the business carefully.

"You basically have to be prudent with who you deal with and that you don't overproduce for certain promotions," said David Starr, national sales manager.

Retailers are reacting with shorter lead times, said Dale Talbert, vp, sales for Veratex, Industry City, CA. "Our inventories are really in line. Our orders are picking up. I get the feeling our business has been better than most," he said. "We're okay, but we're not cocky about it because it's not a time to be cocky."

CMI (Colonial Mills Inc.), based in Pawtucket, RI, also has kept its inventories in check, according to Don Scarlata, president and ceo.

"We are definitely seeing the effect with cash flows [from retailers] coming in more slowly. Collections from some of our retail partners are slower lately," he said. "We are pleased in that we are up over last year — even though not as much as we had expected. We're up 15 percent. We were projecting to be more in the 20 to 25 percentiles; so we are at a point that's less than we'd hoped for, but where we're at is not so bad."

At Perfect Fit — which had "a good first quarter and a not-so-good second quarter" — the Charlotte, NC-based company has cut back retailer credit in some instances and cut off shipments in others, said president and ceo Lou Morris. "Usually, we try to get credit insurance, or we limit the amount of credit," he said.

The credit department has also become more cautious at Design Network (an affiliate of the Cecil Saydah Company), based in Los Angeles. "The retailers you feel could never possibly have credit issues suddenly start to have them. But we are still extending credit where we feel comfortable," said Deborah Powell, director of marketing. "We haven't seen the increases we saw last year, but we've managed to maintain business."

New placements have been driving sales this year at Arley Corporation, based in New York, said executive vp Jerry Pittman. "Our re-order business is not what we would like it to be," he said. However, he added, the company knew business would be tough this year and prepared accordingly. "We are holding our own against last year's figures."

High-end bedding company Matteo Fine Linens, Los Angeles, CA, also is bird-dogging its financial arrangements with the trade.

"We're somewhat cautious with our credit since the retailers are cautious," said president Matthew Lenoci. "The retailers that are faring well in this economy are the ones that are doing a lot of special orders; they don't carry a lot of inventory."

Capel Inc., Troy, NC, began to get more aggressive with collections in late 2000 as it saw credit beginning to tighten, said Kea Capel, director of marketing and creative services.

"Understand that the greatest challenge right now is risk assessment. Our current retail partners are strong and smart and savvy buyers, and we think what we do with them now will bode very well for business next year," she said. "Our major retail partners have depleted their inventories; so we are looking for increased orders, and we are seeing those come in for fall. We are very optimistic."

Capel is not alone in her sense of optimism. Yes, vendors said, the business has been, and remains, difficult. But the downturn won't last forever.

"During the first half of the year we had a bit of struggle. We're starting to see things open up, and I think they'll improve by the third quarter," Dianne Weidman, vp, design and sales, Saturday Knight Ltd., Cincinnati. "We're talking to retailers more."

"We're very fortunate in that we picked up some new customers," said Bob Altbaier, senior vp, Down Lite International, Loveland, OH. "But we're looking at a weak economy through the third quarter in hopes for a turnaround for the fourth quarter and the holiday buying season."

Richloom, New York, has managed to capture greater market share in the midst of the industry consolidation, according to Wendy Keryk, president, window division. "Programs do seem to be somewhat promotional. Overall, things are looking good."

At Ellery Homestyles, Mineola, NY, the novelty tier business is on the upswing and the sheer business looks promising going forward, said president Bruce Garfinkel. "I believe going into the first half of next year we'll see some increase in the single digits," he said.

Business at New York-based Croscill Home is ahead of last year, said David Kahn, president and ceo. "In the last three weeks we've had the largest orders ever placed by lot," he said. "In fact, we are struggling to add capacity to embroidered towels, sheets and some other areas, like windows."

Ashford Court president Neil Zuber described his company as "a special case" in that, as a relatively new operation, it has already surpassed its projections. The two-year-old company, based in New York, is doing double last year's plan, he said. "But growth is almost at zero right now in the industry," he added. "There's no question that it's difficult out there."