Feb 6, 2007
By GINNY WRAY - Bulletin Staff Writer
Despite lagging sales, a plant closing and what local furniture manufacturers call “challenging” business conditions in recent months, an industry analyst is bullish on the future of Bassett, Stanley and Hooker furniture companies.
Jerry Epperson of Mann, Armistead & Epperson Ltd. in Richmond complimented all three in an interview last week.
On Stanley: “Stanley came up with a business plan five or six years ago that has worked very well,” he said. “Stanley has a great program of youth furniture that makes it stand out.”
On Hooker: “Hooker has a fabulous future,” he said. Its management “is among the smartest people in the business. ... I’m a big fan of Hooker.” He also praised Hooker’s Bradington-Young upholstery division.
And on Bassett: “Bassett is doing fine. Bassett has got real estate, a portfolio and is making money from its furniture.” Epperson added that he is looking forward to seeing the new Bassett Furniture Direct store prototype and with 134 stores, it can “get good leverage in the marketplace.”
The three furniture manufacturers have taken different approaches to the growth of imported products that are replacing domestic lines and jobs at many companies.
Bassett Furniture Industries has become a retailer of much of what it manufactures; Hooker Furniture has stopped wood furniture production and is becoming an import-logistics company; and Stanley Furniture is continuing to manufacture a majority of its lines at domestic plants.
“I don’t know that one (approach) is better than the others,” said Stanley President and CEO Jeff Scheffer. “Hopefully all three will work.”
Epperson said there are other strategies as well, but he noted that Stanley’s strategy has paid off. The company “spent a tremendous amount of money on equipment and factories, and used imports to complement what they do,” he said, adding that Stanley and Vaughan-Bassett Furniture have done the best jobs of spending to keep their plants modern.
Also, its blending of imports with its domestically manufactured products “is quite a distinction,” Epperson said.
Stanley manufactures 65 percent of its products and imports 35 percent. Scheffer said he expects local production to increase as Stanley works to streamline processes and eliminate waste.
Another key to Stanley’s success is the narrow price range it serves. “It is high end for a medium-price store and low end for a high-price store,” Epperson said. It also “has as good quality control as the industry has” and fast delivery, within 14 days of receipt of an order, which eliminates a retailer’s need for much inventory, Epperson said.
“You (a retailer) can buy similar product but you have to buy huge quantities, pay ahead and wait for it, and the quality isn’t as consistent,” he said.
While some in the industry estimate that 60 percent of the wood furniture sold in this country is made elsewhere, Scheffer puts that figure at 80 percent.
Epperson said he “hated to see” Hooker Furniture announce plans to close its last wood furniture plant, in Martinsville, in March due to increasing demand for imported products and declining demand for domestic lines.
“I hated to see it because of their heritage in Martinsville and their ties there,” Epperson said of Hooker, which started in Martinsville in 1924. “I know the decision was agonizing.”
Andy Counts, chief executive officer of the American Home Furnishings Alliance, said he thought the Hooker decision was a “consequence of the global balancing act that furniture manufacturers are faced with today. Depending on their price point, product niche and value equation, you have to find a balance between domestic production and importing.”
Counts said as more companies strike a successful balance between domestic and imported production, there will be fewer plant closings. “The trend has slowed considerably,” he said.
He also praised Stanley’s commitment to domestic manufacturing.
“The business model focuses on domestic (production) and the value it brings to the market,” he said.
Scheffer said its business model — giving the customer what she wants at a price she is willing to pay, with domestic plants that produce good quality furniture delivered quickly — was not universally accepted at first.
“Five or six years ago no one knew how the dust would settle. There were not many who thought we would be successful,” he said, referring to Wall Street and others. “They have been proven wrong.
“I think the dust has begun to settle now, and our mission is more relevant than it used to be because of all the furniture that comes in from offshore,” Scheffer said.
“I like our strategy, I like our position in the marketplace. I’m optimistic about the future. We have to continue to get better and to strive to be the best on the planet,” he added.
