Lighting manufacturers report strong mid-year sales, predict bright future
June 29, 2013-- Home Accents Today,
Thanks to a gradually improving economy and an uptick in sales at the winter and spring markets, lighting manufacturers are reporting 2013 is off to a strong start, and they expect the momentum to continue throughout the remainder of the year.
The unemployment rate has declined slightly each month since January, while the Consumer Confidence Index rose in April and May following a drop in March. The housing market also appears to be recovering, with data and analytics resource Core Logic's April home price index showing 12.1% price gains over the same period last year.
"At this point of the year the industry indicators (housing starts, existing home sales, remodeling business, etc.) seem to point to a strong finish for the year," said Rick Spicer, vice president of sales and marketing at Pacific Coast Lighting. "Depending on the day and what resource you're looking at, there are some signs of business possibly softening before the end of the year, but we feel that regardless of any fluctuations the year will finish out well ahead of 2012."
Couture President and Creative Director Todd Sawvelle said he estimates the company's growth for the first half of the year will be about 20% or more over last year. He attributes part of the growth to Couture adding the Las Vegas Market to its winter trade show schedule.
"We went to Las Vegas on the new C3 floor and it added a whole new dimension for us, exposing us on the West Coast to a wide range of retailers, the design trade and hospitality," Sawvelle said. "The show exceeded our expectations. For the second half of the year, we feel that there is a lot of momentum to build on from the first half - and are planning the second half considerably higher than 2012."
The spring High Point Market was a successful show for Thumprints, and CEO and designer Allison Davis said she views it as a promising indicator for what the next six months will hold.
"During markets in the past few years, buyers have seemed anxious about their choices and were not looking to carry much inventory," Davis said.
"However, this April High Point Market, people were more open to buy and order sizes were up tremendously from last October. We hope this is a direct response to the end user seeking out and requesting more products, meaning the cycle is on an upward turn."
Overall, improvements in the housing market have consumers feeling more confident and ready to buy. Spicer said he thinks as consumers acquire new homes or the value of their existing homes rise, they are gaining the confidence to remodel their living space, particularly by adding new lighting, mirrors and accessories.
Sawvelle agrees the rebounding housing market is translating to an uptick in sales for Couture.
"The improved housing situation is evident in the design trade, not only with new construction and model homes, but in the scope of renovation work that our designers are seeing," he said. "This is also evident for us on the retail home décor and furniture side. Some of the geographic areas where we have seen exponential growth in orders and reorders are areas that really felt the housing market hit. California, Florida, Arizona - those are three really bright spots for us at the moment."
Light & Living only began selling its lighting and accessory products in the United States in January, but with a few large decorating and hospitality projects already on the books and a successful launch at the winter markets, CEO Ramsey Davies said business is going strong.
"We had to go back to the drawing board, in February after the dust had settled from the shows, totally revamp the budget and double our sales projections for the year based solely on the incredible sales results and the very positive attitude of the buyers and the reps who represent our line," Davies said. "Now we are in the second quarter and totally on track with our projections, so our outlook for the rest of the year is very positive."
The year also appears to be off to a healthy start for retailers. Davis, Sawvelle, Davies and Spicer said overall, their customers are reporting solid business.
"Customers have shared that business is picking up and what has helped is the streamlining of their vendors, building relationships with current or new vendors that offer custom choices, strong lead times, quality materials and unlimited selections," Davis said.
Spicer said Pacific Coast Lighting's customers are changing their product mix and merchandising to appeal to today's consumer, and the tactic is paying off for them. "We're also seeing many brick-and-mortar retailers utilizing their websites, email and social marketing to reach out to a changing consumer and seeing these efforts bring in new customers," he said.
Davies said he's heard a few negative comments about the market from some of his customers in eastern Canada, but most seem happy. "In the U.S., they seem very positive," he said. "They are selling through our merchandise quite well, although my price points are very aggressive which seems to be why my customers are enjoying the fast sell through."
Heading into the second half of 2013, Sawvelle said he sees plenty of reasons to be optimistic. Couture will show in Atlanta for the first time in July in the Codarus showroom and will also return to Las Vegas.
"Our booked orders for future ship dates are much higher than in 2012," he said. "That, coupled with our entry into Atlanta - and our first summer show in Las Vegas - make us optimistic that the second half of 2013 is going to be a huge improvement over the same time period in 2012."
Spicer said his reasons for optimism in the second half of the year include "improving consumer confidence, dropping unemployment numbers (albeit slowly dropping) and the return of some stability in manufacturing resources, raw materials and freight costs (not necessarily completely stable but far more so than in prior years)."
One concern Davies and Sawvelle both feel regarding the next six months is maintaining high enough inventory levels to accommodate demand. Sawvelle said sometimes new items exceed expectations, which can potentially lead to limited growth if proper inventory isn't sustained.
Davies said Light & Living is already receiving orders in advance of the summer markets. "With the summer shows just around the corner, ordering is usually slow, but demand is still quite good and we are still receiving good orders every day even though the Dallas show starts in just a few weeks," he said. "Customer feedback is also very positive as our products continue to sell through in their stores."
Though business is going well for Thumprints, Davis's chief concern in the third and fourth quarters is maintaining focus, something she said is critical for future growth. "Although most of us are beginning to see a light at the end of the tunnel, it is important to remember that we are still in that tunnel," she said. "It is important to consistently introduce new and exciting products into the marketplace - companies that do will persevere."