HFI Opens New Global Markets

Heath E. Combs, Carole Sloan, March 1, 2010

While business in this country is regaining strength, Home Fashions International (HFI) is looking off-shore for major growth opportunities.

The international business currently comes mostly from its decorative fabrics division, American Decorative Fabrics (ADF), but gradually manufactured products are becoming a part of the mix, said David Li, ceo.

HFI bought the Brazil operation of Quaker Fabrics for the ADF division when that fabric company closed and now has a major presence in Brazil, Argentina, Central and South America, and Mexico. There now is a facility in Spain to service the European market. “These markets are booming, we do eight figures overall,” Li remarked.

And with physical facilities in the areas, “we are looking to add finished products, like duvets.” Global business is very profitable, Li added, with ADF contributing half of the company's total profit even though “it was very weak here.” Still, now owning a warehouse in Tupelo, Miss. versus having a distributor has been beneficial. When everyone else backed off from export, “we stayed the course,” Li noted.

Brazil now has eight employees and “we're adding bedding and pillows,” Li said. In Mexico the company sells Sears Mexico bedding.

Looking at the company's product areas, evp of marketing AmyBell said accessories — decorative pillows, tabletop and dog beds — “are the shining star. They were up 40% and are improving market share.”

In window, “we now have a much wider assortment of product with a range from sheers to jacquards and the response to our chenille in window has been phenomenal,” she added.

Decorative pillows will continue to grow with product additions including indoor/outdoor styles, embroideries, and “we will continue to develop fabric for products including a range of performance fabrics,” she said.

In the face of a tough year in 2009, “our first negative growth year since we started in 1991, we cut expenses by 25%, as well as developing better inventory control, and we had a better profit year,” Li remarked.

This year he sees “as being tough but rewarding, we're narrower and leaner. I think there will be gradual increases, not jumbo increases. And we'll still keep an eye on expenses.”

Li anticipates a double digit growth in the United States with off-shore “at least 30% increase.”

In line with this approach, Bell commented, “We have to analyze each account. Increases will come from expanding each category into retailers where we don't have full category exposure. We have to get every category we produce into all accounts.”

As for price points, she noted, “We've become much more efficient, especially in the number of pieces we do in a set.” The range is 10 to 20 pieces “but the 20s are waning, and for the high end it's four-piece sets.”

But the company is keeping a tight rein on expenses. It also has added strength in its sales and its distribution operations bringing back Tom Healy as svp, national accounts and Al Whiten as vp, general manager heading up the Gaffney, S.C. operation.

“Our design team under Tom McElroy is based in Gaffney, so Tom will be part of the team there as well as working in window and bath,” Bell explained.

Looking at the team in place now, Li observed, “The one thing in common is that they're all good merchants. We needed experts, pros, and we spent 2009 improving our infrastructure and decision making processes. Now we added strong people. I'm a big advocate of team play.”

He added that the company has improved its distribution system in China.

As for China, he said, “We shrunk our workforce 20%. We overreacted, but today we're at full capacity.”

In fabrics, HFI is a vertical operation, producing wovens for each business segment, Li noted. “We emphasize technology and innovation and have new loom setups.” An important development, he added, is indoor/outdoor fabrics for windows.

For both fabrics and finished product, the company prefers China as the entry point, then point of entry in the United States “We now stock a lot of goods in China, with Gaffney only a satellite,” Bell commented. In fact, she added, only three accounts are served out of Gaffney in bedding.

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