Weak start of the year for furniture industry

Autor: Ioana David 31.03.2009

Mobexpert, IKEA and Elvila, which account for 20% of furniture retail, posted declines in sales in euros in the first three months of this year. These are the first companies to announce their results for the first quarter of the year, a period when players are seeing their businesses affected by the economic context.

In the furniture industry, manufacturers and retailers are facing stagnation or even decline in the volume of sales, although many of them have expanded the sales areas, after the last few years saw companies report two-digit rises, due to the growth of the real estate market.
"We are building our budgets on a quarterly basis, and for the first quarter, we intended to preserve the same sales volume as before. We have been able to meet our target in RON, but our revenues in euros are much lower than last year. The difference is partly borne by the suppliers, partly by us," Dan Sucu, owner of the Mobexpert group, the largest player in the furniture industry, told ZF.
Mobexpert has not published its 2008 financial results, but according to ZF estimates, turnover amounted to 170 million euros, similar to the 2007 figure.
"The first-quarter profit will probably be very weak. We could even see losses for the first time," explains the head of Mobexpert.
Furniture is among durable consumer goods that one is more likely to do without in a time when consumers are cash-strapped, so companies in this sector are some of the first to be affected by the economic crisis.
Players in the furniture industry are now reluctant to make forecasts for the full year ahead, and previously set targets do not seem to count for much any more.
The first to have felt the crisis bite into their own pockets were exporters, which faced the recession in the Western world as early as in mid-2008. Thus, although they would have been favoured by the euro's appreciation over the last three months, furniture exporters no longer had markets to export their products to. The Romanian market, which was expected to be the life jacket for the period to come, saw the first signs of a downturn in December, with the beginning of the year confirming fears of a market decline.
IKEA, the largest furniture retailer, reported a merely 5% rise in RON in the first two months of this year, after in 2008 sales advanced by 50%. More importantly, these results come in the wake of 20% increases in the last couple of months of 2008.