Suppliers Cautiously Optimistic for First Half of 2011
January 24, 2011,
NEW YORK - Home textiles suppliers are hoping not to stumble on their way in the door to 2011, and so far they're feeling largely cautiously optimistic about their prospects for this year, especially coming off a promising fourth quarter holiday season.
But "cautiously" is the operative word here, as everyone is bracing for the continuing and steady climb of cotton and raw material prices, which affects the industry at a variety of angles, from manufacturing to product development to shipping and beyond.
In their own words, here is what some suppliers had to say in response to HTT's recent survey that asked them:
What is your business outlook for the first half of 2011 - considering the impacts from rising cotton and raw material prices, and recent reports that some retailers were delaying buying due to these cost increases?
Alpha Home Fashions
Elaine Pankowicz, ceo
We are very positive about the first half of 2011, even though there are increases on raw materials, labor and finished product. We are still optimistic that the new pricing is reasonable and will not slow the growth in our categories. Realistically, pricing has been artificially low for the last ten years, and now, it is normalizing. The bottom line is that the value is still there and the consumer will recognize it, even at slightly higher prices.
Sean Frankel, national sales manager
Our outlook for the first half is upbeat. Retailers are expanding their creative boundaries and experimenting with higher price points, both of which convey confidence in consumer demand.
Patrick Moyer, president
We are cautiously optimistic about the first half of 2011. We are encouraged by signs in the marketplace that consumers are willing to spend again. However, with unemployment still hovering above 9.5% and the housing market still struggling, we fear this may only be temporary. The companies that will win in this unpredictable environment will be those that focus on product innovation and product value. That is where we are focusing at Balta as we prepare for 2011.
Loren Sweet, president
I am optimistic about the first quarter and we are close enough to be able to feel pretty good about it. All I can address is from the top line sales standpoint. Obviously, the volatility in pricing is challenging to the bottom line, but I feel business will be good. However, one quarter out is as far as I would want to go. The second quarter of 2011 is just too far away to have any comfort level with.
Dan Schecter, vp, sales and marketing
Our outlook for 2011 is positive - the No. 1 issue we think about is the New Reality on consumer spending patterns and how they execute transactions at point of sale. The features and benefits communicated to consumers and how they are communicated are top of mind. She will spend but she has to understand what the benefit is - how her problem is solved or needs met and the value she sees in the product. By value I do not mean price but rather how her expectations are going to be met. She will spend a penny but she will not waste a penny.
Creative Bath Products
Bob Weiss, president
Creative Bath will have the best first quarter in company history because of our domestic manufacturing capabilities. This increased volume will have no correlation with any textiles whatsoever. The increase will be all injection molded items made right here in the U.S.A. Textiles will see a minimum increases.
Elrene Home Fashions
Bryan Siegel, chairman and ceo
Our business outlook for the first half of 2010 is cautiously optimistic. We think it is good that Easter is coming a little later this year. This will give retailers more time to maximize their seasonal selling. While we have been dealing with rising cotton and raw material prices since the middle of 2010, I think the direct effects to the consumer will start to show very soon.
Joe Blazar, director of marketing and product development
We're right where we expected. As a matter a fact, on the high end of the market, we had some stronger than forecast pillow sales right after the holidays. I've been working to get raw materials and production going to meet the demand. We anticipate a good year. There is a lot of pent up demand and our and mattress toppers show signs of doing well in all price categories. We're not raising prices, but we have re-merchandised a lot of programs.
Neil Zuber, evp
We are looking at good business growth for decorative pillows during the first half of 2011. We have already booked large placements with several major retailers and have ongoing replenishment programs with many of our customers. Our core decorative pillow business is very solid, with reorder-able placements for spring/summer 2011. We started a quick-ship" stock program during the September 2010 market, [and] based on its tremendous success, we have expanded it to more than 40 styles. The quick-ship program's success has now crossed over to our pet bed classification. We have put together a quick-ship pet bed program of more than 30 styles. [It] became an immediate success and we are expanding the program for the March market.
Our table fashion business continues to grow and we are contemplating stocking some of our best selling styles in placemats and table runners.
Regarding rising cotton prices, this will have a minimal effect on our overall business because the fabrics we use are primarily not made with cotton yarns. However, we will be affected by the increase of polyester prices because of the polyester fiber we use to fill our decorative pillows and pet beds. We do anticipate having some price increases in both pet beds and decorative pillows based on raw material cost increases.
Hudson Industries Inc.
Lonnie B. Scheps, svp
[We're] quite bullish for the second half of 2011 with a lot of positive buzz with increasing SKU counts for many retailers and e-commerce. A few majors seem to want to do more with some slight SKU reduction-but they are anticipating heady dollars for the 3rd and 4th quarters. We see more positive economic indicators meaning a more positive consumer mood ...We are seeing few if any delays on the retail side as most clients were well prepared for this issue [of raw material costs]. We massaged these increases in late ‘09 so their impact would be minimal.
John Ritzenthater Co.
Elissa Vogt, vp, sales and marketing
Challenging, to say the least, due to the significant increase to the price of cotton. However, Ritz will continue to seek out opportunities to help grow our business.
M & Z Marketing
Clyde Zucker, president
Everyone is doing business in a different way. We can only commit [to a price] as far out as we've committed. There are factories that don't want to commit too far out themselves - only to what raw material they have in hand. Some retailers will have to bite the bullet and raise their prices.
Arnold Stevens, vp
The outlook probably is even to a little better than last year.
Jeffrey Seagle, director of marketing and product merchandising
We still have uncertainty in the market, but we do feel retailers pulled back on inventories to close out 2010, which should present the opportunity for a correction and upside potential later in Q1, compared to the order flow of Nov and Dec. and January. However we do feel both Q1 and Q2 will lag behind the 2010 levels which were strong across all of our businesses. Continued deterrents in the market center around inflation across all retail products - not just home. Increased retail price points across the retail spectrum have limited overall open to buy dollars, and restricted growth compared to LY at many retailers.
Rita Karmiol, evp of sales
The mood is good, [our] introductions plentiful. New qualities make everything upbeat - inexpensive decorating for immediate gratification. In area rugs, we are working on lower price points, on newness, and on reacting to retailers needs and making them need us newness at a price for customers.
Perfect Fit Industries
Jeff Chilton, svp, sales and marketing
In the basics area [retailers] are placing orders. Raw material increases are pounding everyone's bottom line and no one can eat these types of increases. We are dealing with them on a case-by-case basis and there isn't one customer, vendor or supplier unaffected by this. In many cases we're looking at ways to change the product - without sacrificing quality - to soften the increase.
Revere Mills International Group
John Vanden Berge, president and ceo
We are cautiously optimistic for the first half. However, with the price of cotton at unprecedented levels it is extremely difficult to figure out how this will reflect on the business, particularly in the second quarter. As the inventories of lower cost cotton depletes itself from the pipelines and the high cost cotton flows into the supply lines it's a real "wild card" as to how it will effect business in towels.
Satya Tiwari, president of the U.S. division
We are very excited about the business prospect in the first half of 2011. We feel the economy is slowly rebounding and consumers will be more comfortable spending as job data improves further. Our business has continued to grow and have seen some strong signs of improvement across the board.
As global consumption of basic raw material as well as labor is increasing, we have no choice but to increase our prices to our retailers. The market has no choice but to accept the price increase. We now have two major countries - India and China - where the middle class is growing with a fresh appetite that didn't exist before.