by ARCADIA, Wis. — Ashley Furniture Inds. is informing retailers of yet more price increases and surcharges coming next month to help cover the relentless rise in its own costs on everything from ocean freight to labor to raw materials and components.
In a letter to dealers sent this month, Ashley CEO Todd Waneck said the price increases it is implementing will be effective on all new orders placed on or after March 13, and that they’ll also be effective for all unfulfilled goods ordered or invoiced as of April 10, regardless of the order date.
While the letter devotes much attention to outlining increases on stationary and motion upholstery both through its U.S. warehouses and via direct container, it’s an expected bump in prices on imported case goods that seems to be concerning retail sources who spoke to Home News Now, but declined to be identified. They say the average price hike on case goods is expected to be about 30%. That’s the number, at least, that Ashley’ reps are preparing them for.
The letter to dealers obtained by Home News Now, however, does not spell out that increase. Wanek declined to address speculation on that estimate, but told HNN, “Container prices are going crazy. This impacts imported products of all types including case goods.
“Bottom line is the increase varies group by group dependent on the cubic feet of the product.”
In the wake of this broad import-related disruption, Ashley also is encouraging retailers to take a close look at its large domestic assortment. More on that later.
Here’s what the letter spelled out in terms of what to expect price increase-wise:
On Ashley stationary and motion upholstery domestic warehouse program, the company will implement a $20 per-unit increase to most U.S warehouses for domestic stationary upholstery and a $30 per-unit increase to most warehouses on domestic motion upholstery. In addition, West Coast customers will also see a per-unit incremental increase of $20 to $40 depending on the price point.
Wanek noted how Ashley recently started upholstery production at its new Arizona facility to serve the West Coast and “As we continue to ramp up production at this facility, we intend to lower the incremental increase on impacted items.”
Certain imported upholstery items through the warehouse program will see a $75 per-seat hike.
Ashley’s case goods, ready-to-assemble, bedding, outdoor and accessory divisions will see “item specific updates to their pricing as well,” Wanek said, adding that they are outlined in an attached price list that was not shared with HNN. He said the changes are aligned with the cost increase Ashley is facing for those products.
Upholstery through Ashley’s container direct program will see a $15 per-unit increase, and case goods, RTA, bedding, outdoor and accessory products will see a 2% increase under the container direct programs.
In addition, and also effective March 13, Ashley is increasing freight pricing for both delivered customers and those picking up from its four distribution facilities. These increases, Wanek noted, are due to cost pressures including labor, equipment and increased transportation demand nationally.
For delivered customers, any product in categories currently charged a fixed price per seat or per piece will see a 20% increase. For customers picking up, the new rate depends on where they are picking up — starting at 2% from Ecru, Miss., up to 7% from Leesport, Pa.
“Finally, due to the rising cost of fuel, Ashley Furniture will also be implementing a fuel surcharge to all delivered customers,” Wanek reported, adding that there will be no change for customers who already pay a fuel surcharge.
As has been the case before with some suppliers during the pandemic, retailers are likely to get dinged with these increases on many items that are already on order but yet to be delivered. As one source told HNN, goods ordered today (February 21) are not likely to reach retailers by that April 10 cutoff. Indeed, many goods that are months out already may not make it in time, the retailer said.
Some relief may be found in Ashley’s broad domestic production. Wanek pointed out to HNN that the company has a major investment in domestic bedroom production in the United States. “We offer a lot of promotionally priced bedrooms that retail at $999 or less for a dresser, mirror and bed. We are also the largest producer of U.S. upholstery and bedroom,” and offer U.S.-made RTA bedroom, and entertainment centers, he said.
“With the rising cost of containers and concerns about availability of containers, we encourage retailers to look at our domestic assortment and review the merchandising of their stores to make sure they have a proper assortment.”
In the letter, Wanek said the furniture industry continues to experience supply chain challenges caused by the pandemic.
“Persistent supply chain challenges are currently impacting shipping capacities and accelerating cost increases. Prices for ocean freight, labor costs, vendor finished goods, vendor components and raw materials have all increased dramatically.”
He said the company is working hard to eliminate or offset the increases, but that the recent challenges forced it to review its pricing structure. The increases are the latest in a string of hikes the company has implemented since the pandemic began more than two years ago. Ashley has not been alone in this round or the others, as several sources also have passed on additional hikes.
Wanek said Ashley continues to work to reduce the impact of the fluid issues leading to these hikes, or, at least, stabilize them, but warned it’s likely “costs will continue to rise for the foreseeable future.”
HNN Editor-in-Chief Thomas Russell contributed to this report.
