Welcome to earnings call season. We’ve been digging into year-end and fourth quarter reports as home furnishings and sleep companies have been sharing results from the most recent quarter.
In listening to several earnings calls with industry analysts, two key factors have consistently bubbled to the top of the presentations: inflation and supply chain. Both inflation and supply chain have been top subjects as corporate management teams share ongoing challenges in running a business in such turbulent times.
No surprise there, of course; the discussion throughout the industry has centered around supply constraints, rising costs and challenging logistics for some time now. Companies — retail and manufacturers — have worked diligently to balance increased consumer demand with supply challenges and rising cost of materials.
Most of those conversations, however, have been more anecdotal and from privately held companies with no requirement to share detailed sales, EBITDA and the ebb and flow of business during quarters.
Online retailers, including Wayfair and Amazon, and bedding specific companies like Sleep Number and Tempur Sealy International, and components supplier Leggett & Platt have all highlighted the tight supply chain as a challenge to business.
Sleep Number said it was impacted by a shortage of a semiconductor that didn’t arrive in time to meet planned fourth quarter deliveries of its smart beds. The company says constrained demand for the electronic part remains high and is a global supply issue.
The bumpy fourth quarter for Sleep Number pushed the retailer to implement new digital consumer communication strategies coupled with direct contact from sales associates to keep buyers engaged and up-to-date on product availability and deliveries.
Tempur Sealy referenced supply challenges in 2021 that forced the company to turn away new customers, put existing customers on allocation and extend its lead times on delivery to consumers. The company said that it has righted the ship and has improved its position to meet the elevated consumer demand; customer allocations and lead times have returned to normal levels; and the Tempur Sealy says it is again marketing to target consumers.
Leggett & Platt pointed out that it saw its bedding business hit a slowdown at the end of October and November and carried through the end of the year.
Looking ahead, management teams remain optimistic that much of the drag from supply chain is in the rear-view mirror. Some of that is attributed to more stable demand that will result in more stable growth.
It’s fun to look ahead and see companies planning to spend on advertising and marketing campaigns and investing in those vital conversations. When consumer demand soared in the second half of 2020, companies across the home furnishings landscape pulled back significantly on advertising spends.
At the time, driving demand and selling more product that couldn’t be delivered within normally acceptable time frames didn’t make sense and only served to tick off consumers who wanted their new home furnishings and mattresses now, not in six months.
Looking ahead to the rest of the year, here’s hoping we have turned the page on the some of the challenges and built a firm foundation that allows the industry to weather more “normal” times with skill and agility.
I’m Sheila Long O’Mara, executive editor at Furniture Today. Throughout my 25-year career in the home furnishings industry, I have been an editor with a number of industry publications and spent a brief stint with a public relations agency where I worked with some of the industry’s leading bedding brands. I rejoined Furniture Today in December 2020 with a focus on bedding and sleep products. It’s a homecoming for me, as I was a writer and editor with Furniture Today from 1994 until 2002. I’m happy to be back and look forward to telling the important stories impacting bedding retailers and manufacturers.