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Rate of recovery still in question

Having officially entered into the second half of the calendar year and with the bellwether Back-to-School season just around the corner, the home textiles industry is hopeful that the next six months will bring a sustained recovery.

"The second half looks good. Business is strong and should remain okay, and we should have a good year," said Jeff Stewart, high-yield textiles industry analyst at Wachovia Securities, Charlotte, NC.

"The overall domestics business is very good, since so much capacity has been taken out of the industry," he noted. "The housing business continues to be good, and that helps to drive home furnishings sales. So between that and the capacity reduction, the industry looks to be in pretty good shape."

Several suppliers contacted by HTT confirmed that bookings for last year are ahead of last year, although that's hardly a surprise considering that the pipeline was already closing by mid-2001 while economists debated whether the country was truly in a recession. As Maples Rugs vp Arnie Stevens pointed out, "Right now, average growth would be a plus." New business and economic stability will be the key factors propelling sales in the second half, he said. "Consumer confidence has remained strong. This must continue."

There is an additional factor to consider, according to S. Lichtenberg senior vp Carl Goldstein — the financial condition of the retail community. "Wal-Mart continues to be successful, as are the big box retailers," Goldstein said. Sales at the window treatment supplier are running roughly 15 percent ahead of last year, and the company is on track for a record second half, he said. However, "I see problems continuing with regional chains. The ones that are suffering financially, I really don't see their fortunes changing."

Second-half bookings for towel supplier Revere Mills also are coming in ahead of last year, partly due to some significant new placements "and also due to a more positive outlook for the fall selling season compared to last year," said Dan Harris, vp of marketing and product development.

He sees the value proposition as a driving factor for landing the business, adding that Revere is pushing into better constructions and fibers, including Egyptian and Pima cotton. "The quality of import towels is continuing to improve to the point that most large retailers are confident enough in the product to buy both promotionally and in-line," he added.

Several vendors also pointed to the "nesting" phenomenon as critical to sustaining the pace of home textiles sales. Among them was Park Smith Jr., president and ceo of Park B. Smith Ltd., who believes that the second half "is right on track for good, steady, solid growth."

He, too, eluded to the price/value equation as a catalyst for consumer spending. "The consumer is looking for true value — great product at great prices. Promotions will always generate business, but I also see regular day-in, day-out business becoming more important as the consumer knows what she wants more than ever. We see retailers understanding this in a big way."

At utility bedding supplier Carpenter Company, where sales have doubled over last year, growth is coming from the mid to high end, said Dan Schecter, vp of sales and marketing, consumer products division.

"We think we just happen to be in a real good place right now," he said.

Down Inc.'s Terry McGuckin echoed that sentiment, saying that the down/basic bedding sector is doing well. "We finished off last year 15 percent or 20 percent lower than the year prior. Now we seem to be a little ahead of the pace of two years ago," said McGuckin, vp of sales.

The company has beefed up its hotel business and also sees growth from specialty retailers. "The smaller but better-quality people seem to be breaking out and seem to be doing pretty well," he said.

While suppliers overall sounded a generally optimistic note, their remarks were often tempered by caution. Cobra/Lintex president and managing director Kurt Hamburger said the current state of crisis in corporate America has compelled him to downgrade his assumptions about the second half. "I would be happy to see retailers holding their own," he said.

The view is similarly bearish at Hollander Home Fashions, where president and coo Jeff Hollander believes the economy will remain tough, "not just for the next six months but for the next 15 months." Although manufacturers will continue to pick up new business, he said, it will come at the expense of competitive suppliers. Hollander itself expects to end the year up 6 percent or 7 percent, "a new high," he said.

The growth segment ahead will be in step-up goods, he added. "I see the jacquard bed-in-bag at the mass merchant level doing very well," he said. "The opportunities today are better products at discounters."

Many suppliers had a fair first half, and some had a record-breaking one as retailers moved to quench parched inventories. The question now, as Wachovia's Stewart noted, is "Does it have legs?"

Stewart believes that "so far, it feels like it does," adding, "This industry has had its dark days, but it looks like we're finally seeing the recovery."

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