The spot market is the global trade equivalent of seeking out a loan shark to tide you over until your next paycheck; it is merciless, expensive and simply not a sustainable financing strategy.

The Bloomberg report has A.P. Moller-Maersk warning that the world’s supply lines have and will continue to be more disrupted by congestion in the Red Sea than has been previously acknowledged. Out of the other side of its sizable mouth, the shipping giant raised its profit outlook. This is the difference between, on the one hand, container carriers and oil companies and, on the other, businesses that have to rely on persuasion to win the customer’s hard-earned disposable dollar. The message? “You need us, so suck it.”

The Danish company cited the now 6-month-old problem of Houthi “pirates” for the decline in container capacity, which in the world of shipping means ever-higher prices to secure a diminishing resource. Supply is reportedly down; prices are way, way up. Spot rates for full-size containers coming here from Asia are north of $6,000 for a 40-foot unit or its equivalent, according to the Drewry World Container Index. That’s three times the rate as recently as December. Editor’s Note: Industry sources have told Home News Now that they are paying as high as $10,000.

The Maersk announcement, which predicted “strong” demand for its containers for the foreseeable future, also cited what the company calls Red Sea “ripple effects” for the declines in capacity. These effects include bottlenecks at some of Asia’s biggest ports and major customers’ willingness to pay big up front to secure shipping capacity for the all-important holiday selling season. 

What the announcement doesn’t mention are the ripple effects of the ripple effects. Another news item, this one from the South China Morning Post, warns that shipping costs even from the interior of the country also are on the rise because of traffic jams on the Yangtze River, Asia’s longest waterway and the functional equivalent to the Mississippi River. The cause of the choke points also is a decline in capacity, increasing wait times and delays. The ripple effects of the ripple effects, therefore, are the difficulties getting raw materials and even fuel into the country in order for goods to flow back out of the country. These delays inevitably affect the international trade routes, as well. 

Vietnam v. China

Meanwhile, over in Vietnam, there is more than deep concern. You can go ahead and call it alarm. 

Higher shipping costs and increasing delays trigger contract penalties and threaten already thin margins, putting billions of dollars at risk, according to Vietnamese state media. And at least from the view of Vietnamese logistics experts, this is a situation that shows no signs of improving any time soon. 

For these experts, add to the Red Sea disruptions the escalating tensions between the United States and China and the recent round of tariffs on Chinese goods levied by the Biden administration. The run-up to these tariffs that take effect in August has spurred U.S. importers and Chinese exporters alike to expedite shipments before that deadline. This puts many if not most Vietnamese exporters at a competitive disadvantage. 

Chinese companies can pay up to $1,000 to secure a shipping slot, whereas Vietnamese companies can only offer perhaps $600, according to the Vietnam Ship Agents, Brokers and Maritime Services Providers Association. Add to this the fluidity of pricing from the container carriers. Typically, rates are good for 15 days to a month; in today’s environment, they can change daily. And sea freight rates for Vietnamese producers to ship to the U.S. have reportedly doubled this year already.

Danish danger

As inflation at least loosens its grip, the container carriers seemingly couldn’t care less. They are proving yet again that they will seek maximum profits even as their customers buckle and break under yet another sustained period of uncertainty with respect to supply chains. The revised profit outlook from Maersk is the second this month. 

The Red Sea-caused re-routes are “expected to contribute to a stronger financial performance in the second half of 2024,” according to Maersk’s self-serving statement. Stronger for the carriers. Not mentioned? The weaker financial performance presumably for nearly all of its customers.

For those scoring at home, Maersk revised its profit outlook to $7 billion to $9 billion this year over the previous estimate of $4 billion to $6 billion, or a nearly 30% to 50% markup. Are you kidding me? Of course, Maersk shares rose nearly 4% on the news of the revised forecast.

The Copenhagen-based company also stated that congestion will continue to cause disruptions in ports in Asia and the Middle East, which sets the company up nicely for yet another revised outlook and yet higher quoted rates in the near future. Maybe tomorrow.

La La Land

A quick check on some of the bigger ports finds congestion at all of them, including Singapore, Ningbo, Shanghai and Qingdao. The Port of Los Angeles, the busiest port in the country, remains above the pre-pandemic peak, according to Bloomberg.

Returning to Drewry’s data, the cost of a 40-footer to L.A. from Shanghai saw six straight weeks of price increases, including a nearly 1% hike two weeks ago to bump the container cost to $6,025. That’s a tick better than Shanghai-to-Rotterdam, which increased 2.4% to $6,200, the highest that route has been since September 2022 coming out of the pandemic.

The routes hardest hit? Shanghai to Genoa, Italy, now at $6,900, or 3% higher than the first of the month and also the highest since September 2022, according to Drewry. 

As reporting by HNN’s Tom Russell uncovered earlier this month, yet another disrupter is the lower average vessel speed, which has dipped to an average of 17 nautical miles per hour from a high of 24 knots, a drop of nearly a third, according to Statista. 

The ships keep getting bigger and, therefore, heavier, turning an idiom into description: the slow boats from China. 

The post The soul-less profiteering of container carriers appeared first on Home News Now.

My name isn’t Marty, but now I can say that I’ve been to the future. And I want to go back. 

Upon hearing about Seestadt here in Vienna, I knew I had to see it for myself. One of the world’s largest social housing developments, Seestadt is part of Vienna’s drive toward carbon neutrality by year 2040 while continuing to grow in population. Seestadt sits on 800 acres that once served as the Aspern airfield.

Translating as Lake City, the Seestadt urban development project is a laboratory for testing “smart” living concepts, community-level sustainability efforts, and pedestrian-first city planning. Because cars are fewer, further and far less likely to be individually owned, Doc Brown was partially right: “Roads? Where we’re going, we don’t need roads.” Seestadt has surprisingly few roadways, with most of them on the perimeter, while car parks are pushed to the outer limits of the city to make room for walkways, parks, squares and open-air facilities. 

And monthly rents can run as low as $600.

The reasonable rents are explained by having a landlord that isn’t motivated by profit or pressured by investors. That landlord is the city of Vienna, Austria’s largest landlord, which precludes land or property speculation. Supporting the project is a 1% tax on all salaries for new construction, a tax that has a history of more than 100 years. Permanently affordable housing is part of Vienna’s DNA. 

Seestadt puts on rather impressive display that affordable housing can be accomplished without sacrificing quality of life and absent even the stigma that the term “public housing” carries in most of the West. In fact, Vienna has been named the most livable city in the world by The Economist magazine five times even though 60% of its residents live in some form of social housing, according to Eugene Quinn, an expat urbanist who has developed 60 different walking tours of the city. 

Quinn said he believes that walkability is a huge component of a city’s livability. 

“Vienna is thought about as this classical, walkable, chocolate cake city,” he said, “but it’s also home to the future. Seestadt is one of the smartest cities in the world.”

Quinn defined “smart” as collecting, understanding, then applying data, including geographic information system data. To define “social housing,” he said it begins with allowing the government to be the center of your life “in ways that aren’t true or customary in the United States.” 

The honor system

For Quinn, among walkability’s benefits for a community is trust, and trust is at the heart of civic life in Vienna. It’s one of the bedrock values that most surprises visitors from the U.S., and it explains the city’s astonishingly low crime rate and conspicuous quietude. I’ve never been to a quieter city. 

“Vienna has the best soundtrack in the world, but you can’t hear it,” Quinn said. He was referring to Mozart, Strauss, Beethoven, Schubert and so many others. 

Trust also explains why there are no turnstiles at the city’s train stations, tram stops and bus stops; passengers are just expected to have paid their way. When random checks occur, which is roughly twice per calendar year, only 2% of riders are tagged for not having a pass or ticket, according to Quinn. Seestadt residents share cars and bikes and even power tools.

In community, trust is built when people are in contact with another and connected, when socioeconomic classes aren’t walled off from one another, and where private interests don’t own all the spaces. To make Seestadt pedestrian-first, there are planned, gradual transitions between public and private spaces, with semi-public spaces throughout. Laundry rooms are adjacent to playrooms, small parks and playgrounds are found around every corner, and inner courtyards (called “canyons”) erase social boundaries and class divisions. 

Vienna has been “very intentional about identifying groups that need spaces and spaces that need groups,” Quinn said on a “Smart City” walking tour for my students here with me for a monthlong study abroad experience. “This is why a few of the city’s departments have offices in the national (soccer) stadium, which would otherwise sit empty almost the entire year.” 

Red Vienna

Seestadt didn’t emerge out of Austria’s famously fresh air. During the “Red Vienna” period between 1918 and 1934, the country’s socialist government prioritized affordable housing for workers, taxes on luxuries and improvements in health care. Seestadt can be seen as a modern day elaboration of that priority on general or communal welfare over individual autonomy. In “old” Vienna, the city center is notable for its walkability, emphasis on public transportation and social interface. Unlike the vast majority of “new” planned communities, Seestadt offers those same “old” or historic city center amenities but in a thoroughly modern context. 

Seestadt’s ratio for circulation is 40% public transit, 40% walking and cycling, and 20% for personal vehicles, and its infrastructure is built toward these goals.

I’m acutely aware that the terms “social housing,” socialist and “red” carry profound baggage for many Americans, with socialism having been weaponized by the hard right. I’m not advocating for socialism as that term is used in the United States, and neither is Austria. But, like the state assemblyman in California, Alex Lee, I am open to progressive solutions to what has become a rapidly growing housing crisis in America, a crisis that puts affordable housing out of reach for ever more numbers of would-be homeowners. Homeowners are, of course, furniture consumers. 

The Social Housing Act

“I think more people are coming around to the idea that the current system of housing we have is fundamentally broken,” Lee told De Zeen. “The free market is working as intended today, where sky-high rent prices and housing prices are driving people away from their home communities.”

Chair of the California State Assembly’s select committee on social housing and chair of the committee on human services, Lee likes to cite Vienna as a model for addressing the affordable housing crisis. This February, Lee again proposed the Social Housing Act. 

A huge barrier for Lee’s legislation and for public housing initiatives in America in general is the stigma attached to government interventions and, even more toxically, to “social housing.” 

“I’ve seen a lot of times where Americans have a deep-seated stigma or mindset when it comes to public housing,” Lee told De Zeen. Then they see something like Seestadt, and “they typically change their mind.” 

I’ve certainly been persuaded. After all, we don’t have a problem with our tax dollars going to libraries, public schools or social security, though we might very justifiably have issues with their administration and implementation. 

But politics isn’t at all the theme here. Architect and author Walter Jaegerhaus wrote that “experimentation and innovation are in short supply today. Bitterly fought battles between the defenders of single-family homes and those who want most of us to live in ever-shrinking apartments off long, multistory corridors make people believe in a zero-sum game for finite resources. What’s missing is a new creative spark that can elevate the discussion to a level where everybody can see themselves winning.”

My safari to Seestadt to see social housing in its very natural habitat was intended to be inspired, to glimpse the future of the home and to rethink how we do “life” and “living.” We need more “winners,” because winners buy more furniture and, more importantly, because it is good and right and true to “love thy neighbor as thyself.” 

The post The future of the home: Smart, sensible, sustainable appeared first on Home News Now.

You’re not going to believe me, but I had no intention of writing a column about sex furniture. Hand to heart, this column found me. And like a growing number of romances, it all began online.

A friend who works at the University of North Carolina at Chapel Hill, our alma mater, mentioned to me in passing a fairly new furniture company started up by a trio of fellow Tar Heels, the Butner, North Carolina-based Nugget Comfort. The company makes super-affordable foam “play furniture” in a range of vibrant colors that has proven wildly popular with moms and dads and on social media. 

Microsuede on all-foam cushioning makes for easy shipping, which has helped propel Nugget Comfort into being a darling of e-commerce. Easy manipulability by even tiny hands has made Nugget a darling among darlings, the children who get to configure Nuggets into beds, chairs or sofas, or, if they wish, slides, jungle gyms, castles and forts. 

In short, Nugget offers “toy minimalism for play,” David Baron, one of the three co-founders and CEO, told Axios in September. He said the company is premised on the belief that children’s imaginations don’t need an excess of toys. “A cardboard box or a couch that can change shape is enough,” Baron said. He’s not wrong. 

As you might expect, the company cashed in big during Covid, selling as many $249 play “couches” as they could make. (I still wince when I see or hear the word “couch,” industry insider that I am, but as my wife reminds me, “That’s what normal people call it!”) Demand was so high that hundreds of thousands of parents entered a Nugget-created lottery to try to score a couch or two for Christmas 2020. Inevitably, some lottery players sold their proverbial place in line or turned to after-market vendors charging two or three times the Nugget-direct price. In short, the dynamics of the sneaker market had come to furniture.

The company is prominent on Facebook (136,000 followers), Instagram (560,000 followers), TikTok (18,000 followers) and Reddit, but from the grass roots up. The company is so popular in social media that several Nugget-specific memes have popped up, such as the trending photos of parents sitting atop their Nugget shipments the moment they arrive.  

‘Baby, let’s put the X in sex’ 

But this is all foreplay because doing research on the company almost immediately led me to a market that I had no idea even existed, which is the apparently “hot” market for sex furniture. Stumbling onto and into this world felt like “discovering” the Mississippi River. De Soto just had to keep walking west, right? “Oh, wow, look at this enormous, millennia-old, 2,300-mile-long waterway that cuts from Canada down to the Gulf!” Of course, there is a huge sex furniture industry and all of the social media content related to it that you might expect. 

One of the first Google hits for a search on Nugget was a Vice Media story from earlier this year on “the best sex furniture for turning your living room into a horny playground.” I know it’s rather icky to think about something intended for children brazenly becoming a staple of what some might regard as kinky sex. It makes me uncomfortable as juxtaposition even writing the sentence. And if I feel this way, I have to think the fine folks at Nugget Comfort are experiencing more than a nugget of discomfort with their wild popularity in the sex furniture sector, however unintended that popularity might be.

‘Oops, I did it again’

To their credit, my fellow Tar Heels are clearly marketing only to parents, making any utility of their couches as sex enhancements purely coincidental and derivative. There is no mention of or connection to the sex furniture market anywhere in Nugget Comfort’s social media content or marketing literature, nor on its website. In this regard, Nugget is a bit like the manufacturers of shipping containers, who make and sell for a singular purpose, but who likely watch with amazement all of the interesting ways of repurposing those once-seaborne boxes. (Repurposed shipping containers is another industry that just hasn’t been on my radar.)

Judging by Reddit and the many subreddits devoted to sex furniture, it’s difficult to discern which of the two markets is actually larger — the one for children’s foam furniture or the one for sex furniture. It’s a “wedge issue,” because wedges are one of Nugget Comfort’s biggest sellers, and I don’t think I need to bend over backwards to outline what you can do with a wedge in the boudoir. But, for kids, they are the basic building block of all sorts of superstructures, including bridges, castles and forts, which is why the wedge is a key element of the Nugget play couch.

Nugget Comfort’s popularity, not to mention the simplicity of its product, has not surprisingly engendered knockoffs, and a quick search on Amazon or a visit to either Walmart or Target can tell you who they are. Like Nugget, these alternative brands all are marketing to the play furniture sector, not the one for sex furniture. But, while it feels pretty icky to point out, both sectors value adaptability, smooth design and lightweight modular units at no-brainer price points. 

The yoga market values this same aesthetic, as well, which is why the Avana chaise lounge for yoga aficionados has garnered popularity in the sex furniture sector, as well. One reviewer at Amazon hyperventilated, “If couples ‘yoga’ were an Olympic sport, this piece would have helped my wife and I earn at least a Bronze Medal.” If only. 

“Sex furniture has come a long way from shoving a pillow under your butt,” wrote Vice Media’s Sirin Kale. Yes, the innuendo possibilities are endless. 

Other brands in this business, by accident or by design, include Jaxx, which is available at Wayfair, Pillowfort at Target, Figgy, Foamnasium and Best Master Furniture (check out the high heel shoe chair). 

‘Shake your money maker’

To return to the success story that is Nugget Comfort, the company began in 2014 in Durham, North Carolina, but moved production to a “two-football-fields-long” factory in nearby Butner in 2021. Nugget’s website has a fun section on how the foam furniture is made using big roll-pack machines. To squeeze the air out of the foam for shipping, a ton and a half of actual bricks are lowered onto the bagged foam units.  

The popularity of the Nugget concept has meant that each and every time the company drops a new item or even a new color, an online feeding frenzy snaps up every available piece in short order. Let the backlogs begin! It’s not surprising that the company ranked among the fast-growing companies in North Carolina both for 2020 and 2021, according to the Raleigh News & Observer newspaper. When was the last time the state’s furniture industry could boast that? I imagine the closely held, privately owned company is getting more than a few unsolicited offers to manage an IPO. 

Newest in the Nugget product lineup is the Nugget Chunk that just dropped about three weeks ago, a $180 circular ottoman set that can be stacked, sat on, rolled or arranged in any number of configurations. One Nugget photo shows the Chunk as wheels on a foam locomotive. Each Chunk set comes with four pieces that nest together to form a storage ottoman, but the number of possible configurations is limited only by kids’ imaginations. Oh, and those relating to more intimate settings.

Editor’s note: The subtitles are musical references to, in order, KISS, Britney Spears and the Sex Machine himself, Mr. James Brown.

The post ‘OK, kids. Time to go to bed!’ appeared first on Home News Now.

Famous for basically being famous, Kardashian is that quintessentially American phenomenon: A celebrity spawned by “reality” TV who becomes a brand without making anything herself. How could any of that be good for furniture?

In her defense, Kardashian didn’t intend to help the home furnishings industry, just like she didn’t intend for her sex tape with then-boyfriend Ray J to be exposed. Well, she’s been exposed again, this time for showing off her authentic Donald Judd furniture that, it turns out, probably isn’t authentic Donald Judd furniture at all.

Appearing in a video tour of her Skkn skincare brand offices that was posted to YouTube in August 2022 is a cameo by what look a lot like Judd’s La Mansana table and inset chairs. “If you guys are furniture people, I’ve really gotten into furniture lately,” Kardashian says during the office swag tour. “These Donald Judd tables are really amazing and totally blend in with the seats.” (It’s actually the other way around: The chairs dissolve into the table.)

When the video was pulled down in January, or more than a year after being posted, it had been viewed nearly 4 million times. (I found the video at the Internet Archive’s Wayback Machine, which is a rabbit hole well worth the cabbage. For example, check out FurnitureToday.com from December 1996, that publication’s first website that David Perry, Lester Craft, Vicky Jarrett and I put together under extreme deadline pressure in the web’s early days. So much coffee.) 

Judd Foundation v. Kardashian

The cameo spurred a lawsuit brought by the Judd Foundation against both Kardashian and her furniture source, LA-based Clements Design, under trademark law. 

“Clements Design’s and Ms. Kardashian’s actions harm Judd Foundation’s reputation by undermining its ability to control the quality of pieces sold under its trademarks, as well as its ability to control Mr. Judd’s name and identity,” the foundation’s complaint reads. According to the foundation’s press release on the suit, Kardashian’s representatives confirmed that the table and chairs were indeed what we in the industry call “knockoffs,” an admission that puts Clements Design in a very bad spot. 

“This case is about protecting the intellectual property rights of Judd Foundation, including its trademarks and copyrights,” Judd Foundation attorney Megan K. Bannigan said. “The existence and promotion of fake Donald Judd furniture harms both consumers and Judd Foundation. The fake furniture has caused massive consumer confusion, with millions of Ms. Kardashian’s followers being misled to believe that the furniture in Ms. Kardashian’s office is real Donald Judd furniture.”

Bannigan’s assertion that the widely viewed Kardashian office tour had caused confusion in the marketplace is a paraphrase of the core claim of the lawsuit, and it’s the contribution Kardashian inadvertently makes to our industry. Knockoffs, copycat furniture, replicas and what we might broadly call intellectual theft have plagued the furniture industry since the advent of either furniture or lawyers (or both). I’m pretty sure the first wheel in the fourth millennium B.C. led to a knockoff axle-and-wheel and, subsequently, the first Sumerian v. Sumerian lawsuit.

‘Inspired by’ or ‘stolen from’?

Admittedly, the distinction between trade dress and homage is fine, and there are only so many ways to make a chair or a table. But, when a designer or furniture maker has advanced the whole idea of furniture and what furniture can be and do? That deserves what copyright law intends, which is enough protection such that the designer or furniture maker believes him- or herself incented to bring the design to market. 

Here are Jefferson’s own words, from 1813: 

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. . . . Society may give an exclusive right to the profits arising from [the ideas], as an encouragement to men to pursue ideas which may produce utility.

In short, the law must furnish enough protection of the expression of idea to incent that idea’s beholder to share it with the rest of us. The law can’t protect the idea, for the reason Jefferson articulates, but it can protect its expression. And while it’s increasingly difficult to innovate a table or a chair to the level that might warrant the law’s protections, where a design clearly seeks to trade on the fame of a preceding version of the same, intellectual property theft has likely taken place. 

To enforce those trademarks, however, litigation is sometimes necessary, as is educating the public about the need to protect original works and their designers. Not all or even most furniture companies have the time, expertise and resource to police the marketplace. 

“If creators’ works can simply be usurped with no repercussions and exploited by other people, what will be the protection for artists and designers to further create in the future?” asked Rainer Judd, president of Judd Foundation and daughter of the artist.

Thanks, Kim!

Thus, Kardashian (and Clements Design) have done the industry a great service in providing this education to the public and, by being the targets of litigation brought by the Judd Foundation, in providing important case law that will guide future trade dress disputes. These are contributions obviously neither corporate entity sought, but, for very different reasons, they are contributions they have nonetheless made. Kardashian didn’t do her homework. (In the video, she admits she can’t even operate her own luxury car.) If the foundation’s claims are true, Clements Design didn’t either, preferring instead to crib Donald Judd’s notes. 

This gets to another problem of trade dress. To my previous statement in this column, I had to add, “If the foundation’s claims are true,” because I’d like to avoid a libel suit. I’m not a furniture designer, nor am I an intellectual property lawyer. I don’t even play one on TV. Thus, I can’t say as empirical fact whether the Kardashian office table is or isn’t a Judd knockoff. I can only say that, as First Amendment-protected fair comment, criticism and opinion, the office table and the original La Mansana look pretty much the same in photos posted on the web. Clements Design is likely to argue that La Mansana inspired its pieces for Kardashian but that these pieces aren’t knockoffs. 

Capitalizing on the intersection of celebrity and high-end furniture, The New York Times developed an interactive quiz for readers to test their ability to distinguish the genuine Donald Judd from the knockoff, presenting versions of a bookcase, chair, table, bench and cart. (I scored a 3.) 

Donald Clarence Judd

Before I close, a final word about Judd, who died in New York City in 1994. A key figure in the Minimalism movement of the 1960s, the Missouri-born Judd was an artist, sculptor and, obviously, furniture designer. In 2020, the Museum of Modern Art in New York exhibited a retrospective of some of Judd’s work, including furniture pieces. 

Because of the whole idea of minimalism, its objects are easier to replicate than, say, baroque or Victorian. Like midcentury modern, minimalism seeks to be simple but not simplistic, clean but not sterile. These attributes make it ripe for copying. A Google search for “Judd knockoffs” led me to mostly legitimate sources and marketplaces, including Etsy, Happy Medium and Interior Icons. (The sponsored link for this particular key word search: Wayfair.) 

While Judd and his objects are in demand, his popularity can’t be reasonably compared to that of Kardashian, which is another aspect of this lawsuit that is worth noting. In an era in which AI is threatening to overwhelm what we might call genuine artistry and creativity with oceans of regurgitated “mid” that pass themselves off as original and artistic, the Judd claim is a flag in the sand. The lawsuit seems to be also saying, “By God, originality still matters, and it’s worth valuing and paying for!” (The La Mansana table is valued at $90,000.)  

“Kim Kardashian is so much more famous than Donald Judd, plus every other minimalist artist combined, it is a sort of funny thing not to want to be associated,” Amy Adler, a law professor, told The New York Times. “But I think that it is an attempt to draw lines between the pure, high-minded art world and pop culture.”

In a world of perfect copies (perfect only in the sense of fidelity to the original), of photo filters and AI everything, the real deal is more than worth protecting. It might even be sacred.

The post Why Kim Kardashian is good for the furniture industry appeared first on Home News Now.

After posting unaudited financials in early March, Big Lots now has filed its annual report with the SEC. Inside are a few surprises, and we watch Big Lots because as a big home discount chain, the company is something of a bellwether for retail at mass price points and because of its significant footprint in furniture.

First the fundamentals. The chain’s total net sales slipped 13.6% to $4.7 billion compared to $5.5 billion for fiscal 2022, missing by the smallest of margins the consensus estimate but contributing to a yearly net loss of nearly $482 million. The drops came despite a 53^rd week for fiscal 2023 that contributed $67 million in sales. 

Net sales of furniture, the chain’s largest merchandise category, slipped to $1.2 billion for the fiscal year, down 16% from fiscal 2022’s $1.4 billion. Soft retail sales, store closures and the lingering effects of the sudden shutdown of United Furniture, a major supplier to Big Lots’ Broyhill line, contributed nearly 140 basis points of sales decline year over year.

For the fiscal year ended Feb. 3, SGA costs were reduced by $140 million, or 2.3%, to finish at $510 million, but as a percentage of what were lower net sales, these costs were, of course, higher. The reductions did boost gross margins, however, which reached 38%, compared to 33% for the year prior. Gross profits slipped 2.9% to $544 million, while Big Lots trimmed inventory by approximately $200 million. 

For the fiscal year, Big Lots’ operating loss was $387 million, which compares to $262 million for the year prior. The extra week mitigated that operating loss decrease by approximately $6.2 million, according to the company. 

The Broyhill re-set

We’ve been watching the chain’s responses to the sudden UFI shutdown in November 2022, seeing newly sourced upholstery for the Broyhill lineup appear on the showroom floor of our local Big Lots in late summer/early fall last year. Big Lots acquired the Broyhill name in 2018, bringing out its first product at retail under the name in late 2019. 

Broyhill’s brand-name equity clearly is still central to the Big Lots strategy of “extreme bargain sourcing” and being a destination location for furniture purchases. For fiscal 2023, Broyhill accounted for 8.3% of total sales, which was down significantly from a 12.4% share the year prior. That share is expected to bounce back this year.

According to the company, the decrease was in large part due to UFI, the closure of which “impacted the availability of Broyhill merchandise in our stores in the first half of 2023,” according to the filing. “We fully replenished our availability of Broyhill merchandise during the second half of 2023 by restoring our Broyhill supply chain with new vendors, who we believe are more reliable.”

Right, well, any company would be more reliable than UFI. 

Not only did the chain replace UFI, but just prior to filing its annuals, Big Lots announced that it had opened buying offices in Shanghai and Ho Chi Minh City. The move signals the retailer’s commitments to Asian sourcing and to being closer to its supply chain. 

“Global sourcing is key to our ability to add newness and expanded assortment at extreme value prices for our shoppers,” Bruce Thorn, president and CEO of Big Lots, said in a statement. “Today’s announcement positions us for even greater success in a changing global marketplace as we create more extreme bargains and everyday great values for our customers.”

In 2023, Big Lots purchased approximately 21% of its goods directly from overseas vendors, including approximately 13% from vendors in China. 

Part of an “ongoing turnaround plan,” the buying offices will improve sourcing by bringing “long-time, exclusive third-party agents” in-house, as well as getting the company closer to “closeout deals and extreme bargains,” according to the company. The offices are also being looked to to generate “significant operational cost savings” even during the current year. 

Big Lots’ sourcing team is working alongside its merchandising team to “integrate new procurement channels and to directly source deals without intermediaries,” Thorn said during an earnings call. The offices are also a move to further expand the company’s sourcing network into Central and South America, as well as into Africa. 

Furniture categories that Big Lots carries include upholstery, mattresses, case goods and ready-to-assemble.

Supply chain control is clearly essential to the Big Lots strategy of “buy today, take home today,” a position that requires in-stock inventory of whatever is on the floor. This immediacy “positively differentiates us from our competition,” as the annual report put it. 

Tough sledding in 2024

While not surprisingly optimistic about making progress in all of the fundamentals, especially SGA and same-store sales, Big Lots acknowledged the swirling uncertainty facing all of the big retail chains and most retailers in furniture, as well: Uncertainty because of the elections, interest rate fluctuations, the continuing war in Ukraine and geopolitical instability because of the Middle East, and supply chain disruptions. 

Despite these challenges, Big Lots states in its filing that it “expects to continue witnessing quarterly year-over-year gross margin enhancements” and “anticipates a pathway toward achieving positive comparable sales as the year unfolds.”

Five “key actions” will drive the improvements: Owning bargains, communicating unique value, enhancing store relevance, strengthening customer relationships through omnichannel initiatives, and driving productivity.

“There’s a lot of work to do in 2024, and we are moving aggressively to accelerate our transformation, return to positive comparable sales, and continue to improve our gross margin rate over the course of the year,” Thorn said. 

Geaux Tigers

It’s also interesting that Big Lots announced no plans to fill the chief merchandising role after the recent departure of Margarita Giannantonio. Senior vice presidents Kevin Kuehl and Shelly Trosclair will absorb those duties, reporting to Thorn. The buying offices report to Kuehl, while Trosclair is responsible for furniture, décor and seasonal. 

Trosclair was recently promoted to senior vice president and general merchandise manager after joining the company in January 2023. Prior to joining Big Lots, Trosclair, who judging by her LinkedIn is a big LSU fan, spent four years at Tuesday Morning, most recently as senior vice president and GMM. Prior to Tuesday Morning, she held several positions in merchandising at Ollie’s Bargain Outlet and Burlington Stores.

Finally, we always look at store counts as a rather crude metric of growth and expansion. For Big Lots, that expansion has turned into retrenchment. After opening 56 stores in fiscal 2022, the chain added just 15 last year, while closing 48 locations. That’s a net drop of 33 stores, which came on the heels of a net reduction of six locations in 2022. At 1,392 locations, Big Lots is in all 48 continental states, with nearly a third of those stores in four states: California, Texas, Florida and Ohio.

“Our overall average selling square footage has increased since 2019,” the filing stated, a result of many of the shuttered locations having been under the average footprint of its stores of 33,500 square feet. “In 2024, we expect to open approximately three new stores.” Beyond this year, the company says it expects to “return to growth in our net new store count, particularly within rural and small-town markets.” 

The company’s real estate team has identified more than 500 markets across the U.S. where Big Lots believes it can successfully open stores, the filing stated. The company estimates the cost of opening a new location at exactly $1 million.

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Consumers have absolutely no sense of changes in home furnishings trends within any single year, and as hard goods, furniture isn’t susceptible to the winds of changing fashion blowing four times per year. Heck, even the fashion industry doesn’t pretend that consumer tastes change this quickly.

The end result inevitably is a colossal amount of waste, and much of it is in the guise of self-service. Hosting or putting on markets is a separate business, one that is more tied to real estate and hospitality, so it’s in the best interests of the markets to hold them as often as consensus deems possible. It means more rents, more fees, more contracts and more for all of the tertiary services, such as catering, entertainment, hospitality and transportation. 

I wish there were a way of measuring the waste, a metric that would have to account for pulling sales reps off the road, executives out of their offices and retailers off of the front lines to hole up in High Point or Vegas to kick the tires on just enough new product to present the illusion of a reason for gathering in the first place. 

Covering these markets for a decade or so, I charted several strategies employed by manufacturers to create buzz, generate showroom traffic and persuade and cajole buyers into commitments. Some of them made a lot of sense; a lot of them made no sense at all. 

Do-Si-Do

One of the smarter moves I saw was the Texas two-step danced by Hyundai to bring new occasional to market. The first step was to unveil a smattering of new prototypes at premarket, enough to merit visits by the big buyers. At least a few of those pieces would have fairly obvious design weaknesses, like their scale or a less-than-optimum mix of materials. This defect-in-the-design strategy was intentional. The big, experienced buyers would zero in on the problem immediately and recommend a fix, like bringing the scale down 10% or 15%. Hyundai anticipated these suggestions, according to the executive I spoke with, and would have the “corrected” version already in production to bring to High Point at market even as premarket was underway. Those same buyers returning to the Hyundai showroom for market, the second step, would see the improvement, feel like they had a part in designing the piece and often commit to carrying the finished version. 

It’s the same reason “no bake” cake and cookie mixes have the consumer add an egg. The recipe doesn’t need the egg, but the simple act of cracking it and stirring it in gives us the impression that we’re involved, that we’re baking, rather than mindlessly pouring, stirring and waiting. 

A firm hand

Among the most disciplined manufacturers in terms of using markets during my watch were Stickley and EJ Victor, which admittedly had their higher-end market positions to use to their advantage. Each would have only a very few highly targeted pieces that clearly rounded out their already formidable lines, pieces with a pedigree, a reason for existing, for which an appetite among consumers had been already well established. These introductions were always the proverbial “no-brainers,” which is to take nothing away from the very careful thinking that went into their issue (or, in many cases, reissue). It seemed these pieces would have been introduced at these times whether there were markets or not. The big show offered buyers the opportunity to reconsider the lines as coherent wholes. 

Hickory Chair under Jay Reardon, Kindel and John Widdicomb applied this same discipline. I’ll admit it took me several markets to get it. 

Gary Ash, a maestro at merchandising for so many years at Lane, worked closely with department store buyers to conceive of, design and roll out whole-house collections under license from a name or brand already in the public’s awareness. But not every market. 

Gary knew before the big splash in High Point that the entire collection wouldn’t make muster for any number of reasons, including and especially price point, but that enough would stick to merit a verdict of success at retail. Hearst Castle and Marrakesh, one of the most jaw-droppingly beautiful collections I ever saw, are two examples that come to mind. 

Oh, and he would always have a few new topical cedar chests to reassure buyers that Lane was still committed to that business, as well.

Va bene

Natuzzi proved an interesting showroom visit because product introductions were so closely intertwined with and dependent upon the company’s distribution and its promise of exclusive product. You could track the highly targeted introductions by metro markets in which Natuzzi sought to break into or expand. This, too, took me a few markets to figure out, but it explained many of the product development, merchandising and, eventually, vertical integration moves the company made. 

Not coincidentally, a trip to Trieste, Udine and Santeramo, Italy, to see how Natuzzi worked its just-in-time supply chain helped contextualize what I’d been seeing in the big ship in High Point every six months. This trip also showcased Pasquale Natuzzi’s charisma and vision, and the devotion among employees he inspired. 

A variation of this distribution-first strategy that avoided the pressures to bring out new product just because another market was upon them was (and remains) Ethan Allen’s annual dealer conference, which put into one snow globe in Danbury the entire business model of the vertically integrated company. Visiting these conferences always impressed in their precision planning and unity of purpose, with much of this attributable to the Zen master of corporate discipline, Farooq Kathwari. 

Several manufacturers, it seemed to me, got caught up in the costly and quixotic pursuit of market buzz, attention and hoopla, breathlessly launching a big collection almost every market, often with a marquee licensed name. Oftentimes, the big collection of the previous market hadn’t even hit retail floors yet. 

Name-dropping

We, the trade press, poured gas on this fire by devoting so much ink to these big splashes because, well, it’s what we do. We love the big names, the glitter and shine, the celebrity. We are geared to trumpet what’s new, big, bold and attention-getting, almost to the exclusion of anything else. We’re in the attention business. And these were stories that almost wrote themselves, narratives that were sort of “too big to fail.” 

I couldn’t wait for premarket to find out which “names” Ladd was bringing to High Point a month later. We covered the daylights out of Ernest Hemingway, Martha Stewart, Thomas Kinkade, Grant Hill, Dennis Conner, Bill Blass, Arnold Palmer and so many others. Of course we did. And, of course, manufacturers would be interested in leading coverage and gaining mind share as often as they could. (The product designers behind the scenes on these Hollywood productions, who never got a moment’s rest, rarely got the attention they deserved.)

But, oh, the waste. Drifts of cardboard, Styrofoam, bubble wrap, wiring, lumber scraps and fixtures washing up on the shores of High Point’s sidewalks, loading docks and garbage bins each and every premarket, each and every market. The waste was stunning; I’m sure it still is. 

And all of this wasted money and time are resources that could have been leveraged in more meaningful ways, like technology, tooling, sourcing and market research. So, as the dust settles on yet another big show, hear the clarion call to higher efficiencies, smarter merchandising and more rationale business practices. As I know you know, more than competing against each other, you are competing against travel, consumer electronics, automotive and the many purchase decisions other than home furnishings that consumers have. It’s an industry thing.

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THE WOODLANDS, Texas — The much-anticipated fourth-quarter and fiscal-year earnings results for Conn’s were made public Thursday, showing the company faring pretty well early into its acquisition of Badcock.

Conn’s reported earnings for the fourth quarter ended Jan. 31 of $43.3 million, a complete turnaround from the $42.8 million loss for the same period a year ago. The turnaround came on total consolidated revenues of $366 million, compared to $335 million for the fourth quarter of fiscal 2023, or a 9.3% gain. Analysts were expecting revenues of about $422 million, however.

“Our fourth-quarter financial performance reflects ongoing industry headwinds, as well as one-time costs primarily associated with the completion of the Badcock transaction,” said Tim Santo, Conn’s chief financial officer, on the conference call.

Conn’s acquired Badcock from Franchise Group in an all-stock deal on Dec. 18 last year, giving Conn’s 550 retail locations in 15 mostly Southern states.

“Once fully integrated, we believe the transaction will accelerate our growth by combining two complementary businesses with similar product categories, payment solutions and customer profiles, while driving material cost savings, enhancing gross margins and improving operating leverage,” Conn’s CEO Norm Miller said on the conference call.

For the fiscal year ended Jan. 31, Conn’s reported a loss in net income of $76.9 million, which compares to a $59.3 million loss in fiscal 2023.

On a per share level, Conn’s fourth-quarter adjusted loss was $1.25, which compares to a $1.55 per share loss for the same period a year ago.

According to the financials posted, the Badcock transaction contributed $68.4 million to total consolidated revenue for the quarter.

For the fiscal year, total consolidated revenue declined 7.8% to $1.2 billion, a drop attributed by the company to a 9.1% decline in total net sales. For the year, the net loss per diluted share was $3.17, which accounted for one-time transaction expenses, and the adjusted net loss ended up at $6.22 per diluted share.

“As a result of our team’s efforts, we have removed approximately $50 million of combined expenses during the fourth quarter and we have identified over $50 million of additional cost synergies that we expect to realize over the next 18 months,” Miller said. “In addition, during this period we expect to drive over $50 million of revenue synergies as we transition Badcock’s credit program to Conn’s in-house loan product, offer Conn’s successful e-commerce capabilities to Badcock’s customers and pursue shared retail growth strategies.”

Conn’s reported retail revenues were $297 million for the quarter, up almost 10% over the $271 million reported a year ago. While Conn’s same-store sales dropped 14.4%, the Badcock chain contributed more than $60 million in quarterly revenues. This added up to a $38 million quarterly operating loss for Conn’s retail, which is almost double that for the same period a year ago ($19.5 million).

For the fiscal year ended Jan. 31, Conn’s reported total net sales of $978.3 million, which is 9.1% lower than the $1.08 billion reported for fiscal 2023. Total revenues for 2024 were $1.24 billion, down 7.8% off the $1.34 billion reported a year prior.

Celebrated on the call were quarterly and fiscal-year increases in retail gross margins. For the quarter, the gross margin was 38.3%, which compares to 33.7% for the same period a year prior. For the entire fiscal year, retail gross margins were up nearly two percentage points to 35.9%, compared to 34% for fiscal 2023.

In short, just six weeks into the acquisition, Conn’s is already benefiting from the higher percentage of furniture and mattress sales in Badcock locations.

“The contribution of Badcock was the primary driver of our gross margin improvement from the third quarter,” Miller said. “As our integration efforts continue, we expect our retail gross margin to improve to over 40% in the coming quarters.”

Badcock was founded as a furniture and mattress retailer, expanding its product categories to include appliances, consumer electronics and home office. At the time of the acquisition, furniture and mattress sales represented 70% of Badcock’s annual sales. By contrast, Conn’s was founded as an appliance retailer, expanding into consumer electronics, furniture, mattress and home office. At the time of the acquisition, approximately 60% of Conn’s sales were in the categories of appliances, electronics and computers, according to Miller.

In the near term, Miller said the priority for Conn’s will be to capitalize on “credit-driven growth strategies,” particularly on the Badcock side, by seeking to lower the average monthly payment for Badcock customers.

“Our core customer makes the purchasing decision primarily based on the amount of their monthly payment,” Miller said. “We believe we can significantly increase Badcock’s average ticket. … We have launched Conn’s credit in select Badcock stores here in the month of April with the expectation of offering Conn’s credit across all Badcock locations by the end of May.” 

By more widely implementing its digital application process across both chains, the company hopes to make it easier for Badcock customers to apply for multiple payment options. The number of digital applications filed with Conn’s jumped nearly 22% during the fiscal year just ended, according to its filing.

Miller also pointed to the transition from the Badcock in-house revolving credit option to Conn’s in-house installment loan.

“Before we even consider expected increases in Badcock’s sales, we believe the transition to Conn’s in-house installment loan will contribute nearly $20 million in incremental finance charges and other revenue,” Miller said.

Also of note was significant growth for Conn’s in e-commerce, offsetting modest losses online recorded by Badcock. For the fiscal year, Miller said Conn’s posted record e-commerce sales of $109.3 million, a 38% increase over fiscal 2023, nearly a nine-fold expansion over the $12.6 million recorded just four years ago.

E-commerce sales on the Badcock side were just $22.4 million for the year, a 27% dive compared to fiscal 2023.

E-commerce, therefore, represented 11% of Conn’s total retail sales last year compared to less than 5% at Badcock.

“By leveraging Conn’s established digital resources and capabilities, we are confident we can improve Badcock’s e-commerce sales and begin a multiyear process to align Badcock with Conn’s growing balance of e-commerce sales,” Miller said on the call. “During the year, we will begin leveraging Conn’s digital marketing capabilities, which includes our recently launched application process, and the investments we have made across our digital platform to further support the e-commerce growth strategies of the combined company.

Miller said he expects to see e-commerce sales reach over $300 million in the next several years.

SGA will also be a focus. For the quarter, SGA increased to 46% from 38%, while for the year, SGA was up slightly to 36% from 34% for fiscal 2023. One near-term opportunity Miller identified on the call is the supply chain. Approximately 95% of the two chains’ product categories overlap, but they only share 45% of the same vendors, he said.

“As we align our assortment across our combined product categories, we are focusing on capitalizing on the bestselling products at both Conn’s and Badcock,” Miller said. “We will also take advantage of material, margin and cost opportunities as we consolidate vendors.”

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Though RH revenues dropped 4.4% to $738 million for the fiscal fourth quarter compared to the same quarter a year ago, and though quarterly net income of $11.4 million fell nearly $20 million short of expectations, investors snapped up shares in the company. 

For the fiscal year ended Jan. 28, RH reported net sales of $3.6 billion, down 4.5% from the $3.8 billion reported the year prior. For the year, net income slipped 23.2% to $528.6 million from $688.5 million a year ago. 

Despite these drops, RH share prices soared 17% the day after the company’s quarterly earnings call, during which it was revealed that RH fell short of both top- and bottom-line expectations for the second consecutive quarter. 

The Street is buying the RH story because, among other things, the stock market is an index of hope and of something we might call trust.

That the stock did so well on tepid financial results is a testimony to CEO Gary Friedman, who is one of the industry’s best storytellers, which isn’t to disparage at all either the story or the storyteller. He has proven astute in seeing the threats and the opportunities, then crafting a narrative that meaningfully anticipates and situates both. These narratives also serve the industry as a whole in educating the Street about the idiosyncrasies of the home furnishings industry.

After a year of “adversity, innovation and investment” for Team RH, Friedman is projecting revenue growth this next fiscal year of 8% to 10%. Bold! For the disappointing quarter, Friedman cited bad winter weather and Red Sea shipping disruptions, which combined to cost the company approximately $40 million in sales. (The effect of the Baltimore bridge disaster will be “minimal,” according to the company.)

We’ve detailed in this space RH’s long-term global strategy, which, if successful, would put the luxury retailer on par with LVMH or Chanel. Nearer term, as in this next fiscal year, results will likely hinge on consumer acceptance of its new outdoor furniture collection, which Friedman said is off to an “exceptional” start, the continued rollout of the company’s largest-ever tidal wave new product, and, as always, upon interest rates. Friedman called the current housing market the “most challenging” in three decades.

For the year, RH’s adjusted operating margin was 13% and the adjusted EBITDA margin was 18.2%, which Friedman attributed to lower revenues, markdowns resulting from RH’s comprehensive “product transformation,” and costs associated with its global expansion. 

Counted on to drive growth this next year is the RH Outdoor Sourcebook, or 14 new collections of outdoor that rolled out during the past two months. RH sees itself gaining “significant market share” in outdoor this year, according to its published statement. In addition, the 30 collections comprised by the RH Modern Sourcebook are just arriving in homes this month, collections that cover all furniture categories and that in aggregate are a complete product line reset for the company. 

Global expansion

On the heels of the launches of RH England (June 2023), RH Munich and RH Düsseldorf (November 2023) and RH Brussels (last month), global expansion will next take the brand to France with RH Paris (2025) and Australia with RH Sydney (2026). In North America, five Design Galleries are on tap for this fiscal year, including Cleveland, which just opened in the last week. Palo Alto and Montecito, California; Raleigh, North Carolina; and Newport Beach, Virginia, are the other destinations. 

The “drag” on margins caused by all of this international investment are predicted to run at about 200 basis points for fiscal 2024, according to Friedman, who forecasted an adjusted operating margin for this fiscal year to end up at 13% to 14%. Another source of drag will be RH’s backlog, which the company is predicting to end up between $110 million and $130 million at year’s end, which is another way of predicting significant growth in demand.  

When asked whether the drag on results from expansion globally will “taper quickly or slowly,” Friedman used more than 2,700 words (I counted) avoiding a direct answer. He chose instead to explain how complex any one of RH’s many international showplaces are to site, build or refit and take operational and to stress the “halo effect” from a brand awareness perspective these elite properties produce, among other emphases. 

The point: “Give us some time. It’s going to pay off, and it’s going to pay off big.”

Specific to RH England, situated 30 miles north of Oxford in what is essentially countryside, Friedman admitted that RH underestimated the overall time it might take to build the brand and ramp the brand to a consumer given the remote location. 

“What’s the population of Aynho Park?” he asked, rhetorically. “A few hundred people?”

Still dodging the Morgan Stanley analyst’s question, Friedman cautioned that, internationally, RH is “just out of the gate,” and while not in the order that it would have preferred, it still is a sequence of openings that will put RH in the major style centers of the world. 

This comprehensive global expansion eventually will take RH to $20 billion to $25 billion in annual sales as RH begins competing in sectors that include hotels and hospitality, real estate and housing, kitchen and bath, and, most recently, outdoor furnishings. 

With the introductions of RH Couture, RH Bespoke, RH Color, RH Antiques & Artifacts, RH Atelier and others, and with a plan to open design galleries in every major market, the RH strategy is “to move the brand beyond curating and selling product to conceptualizing and selling spaces,” according to the annual report. “Our hospitality efforts will continue to elevate the RH brand as we extend beyond the four walls of our galleries into RH Guesthouses, where our goal is to create a new market for travelers seeking privacy and luxury in the $200 billion North American hotel industry.”

Weak housing market

For the needle on consumer demand to move to any significant degree, the housing market will have to improve. It’s the worst home sales market in 30 years. Friedman said he predicts a series of quarter-point cuts in the prime interest rate, beginning in the second half of the year. (For his part, Jerome Powell, chair of the Federal Reserve, indicated no hurry to lower rates.) The (eventual) cuts will help, but Friedman also cautioned about the lag time between any cuts and their effect on demand, because most people are already locked in on their mortgages.

“You need home prices to come down and you need interest rates to come down,” he told analysts. “And that gap, I think, is going to take longer than three quarter-point interest rate cuts.”

(It’s not known whether Friedman participated on the call from his office, from his Malibu home or from his other Malibu home 12 doors down from his first. According to the Robb Report, Friedman bought a 5,600-square-foot house in Malibu in August for $26.7 million and a 4,000-square-foot “stunner” in December that closed for $28.5 million.)

While pointedly refusing to offer guidance on any timeline beyond fiscal 2024, Friedman did say that the company is aiming to return to 20% operating margins “over the next several years,” a goal complicated by the housing market and by challenging business conditions. 

RH’s annual report states that the company sourced 75% of its volume from 28 vendors, with the largest of these accounting for 14% of purchase dollar volume. Two-thirds of this volume came from Asia, including 30% from Vietnam, 22% from China and the remainder mostly from India and Indonesia. About 14% was domestically produced.

A few notes

One of the newest locations for RH is Cleveland, where a 55,000-square-foot store and rooftop restaurant opened in the Chagrin Highlands development adjacent to Pinecrest. The new three-story building includes indoor and outdoor selling spaces on the first floor, furniture and an interior design studio on the second, and a rooftop restaurant and wine bar on the third floor.

The RH workforce shrunk again in fiscal 2023, dropping 3.6% to 5,960 from 6,180 a year prior. In fiscal 2021, the total workforce numbered 6,470, putting the downsizing since then at 7.9%. 

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First, the luck. 

When you’re really good, even the bad breaks go your way. On board the Dali, the super freighter that took out the Francis Scott Key Bridge in Baltimore, was 7,000 metric tons in goods, including quite a bit of furniture. Fortunately for Ikea and a few exporters, that Asian-made furniture was off-loaded before the roughly 1,000-foot freighter slammed into the bridge, according to a report from Bloomberg. 

It might be a good rule of thumb to avoid loading your goods on a ship named for a surrealist painter, in this case the guy famous for melting clocks. Just saying.

Regardless, for Ikea and its furniture coming from China and Vietnam, the shipment made it to the East Coast before the big ship’s power failure in Baltimore, according to its bill-of-ladings. 

Enron redux

We’ll stick with Ikea for the tragedy, as well. A Dow Jones story out of Johannesburg, South Africa, tells us that a day after getting a $25 million fine for corporate fraud, former furniture CEO Markus Jooste shot himself dead on Thursday, March 21.

Resigning his post as CEO of Steinhoff International in December 2017, the 63-year-old Jooste and several of his co-executives had been investigated for years for fraud. According to the report, family-owned Steinhoff based outside Cape Town was known as “Africa’s Ikea” for its retail chains, which, in addition to Ikea, included Mattress Firm, the owner of Sleepy’s in the U.S., Poundland in England and Poco in Germany — in all, 40 retail brands in 30 countries. 

The company has a distinctly South African story: Bruno Steinhoff began by selling inexpensive furniture from West Germany to East Germans in 1964. Approximately three decades later, the Steinhoffs acquired a stake in a South African furniture company, tapping Jooste to run it in 2000. 

Flash forward to March 20 this year, South Africa’s Financial Sector Conduct Authority identified Jooste as the “mastermind” behind the secreting of billions of dollars in losses and fined Jooste a record $25 million, according to Dow Jones. Enron anyone?

Jooste’s death was confirmed by his lawyer on March 22. 

According to Dow Jones, Jooste enjoyed a lavish lifestyle, “acquiring a wine estate in Stellenbosch, near Cape Town, and a world-famous stable of race horses.” But, following the charges in 2017, Steinhoff shares collapsed to the tune of 90%. The company liquidated last October, while Mattress Firm filed for Chapter 11. 

Go Huskies!

Let’s think about happier fortunes by checking in on Bob’s Discount Furniture. According to a lengthy story in the Hartford Courant newspaper, the “no-nonsense” chain plans 20 new locations this year alone. 

With 171 stores in 24 states, Bob’s is benefiting from a macro trend in home furnishings that is seeing consumers trade down in order to save money and beat inflation. All of the 20 new stores are planned for the chain’s existing five regions, which offers advantages in advertising and for distribution, but President and CEO Bob Barton said the long-term strategy calls for locations in all 48 continental states. 

“We have visibility of over 500 stores [so] we have a lot of runway ahead of us,” he told the Courant. 

Beginning in 1991 with a single location in Newington, Connecticut (population 30,000), founder Bob Kaufman quickly began expanding in the state, then the region.

“Our strategy is simple,” Barton told the newspaper. “We buy narrow, and we buy deep, and we buy a lot of it. That helps our vendors because we are committing to a large volume. That keeps our costs down. It isn’t a complicated model to understand. The complicated thing is to execute it.”

Presumably enjoying retirement somewhere nice, Kaufman has to love this year’s March Madness. His UConn Huskies are the top seed and virtually everyone except Jim McIngvale is predicting them to be cutting down the nets to defend their title, which would become their sixth. 

Warts and all

Finally, a story that reminds me of the brief run of Australian eucalypt back in the 1990s, a wood species touted for its blemishes, including fire scars and insect trails. Kimball Home and several other manufacturers brought it to market in case goods as a replacement for American chestnut, which a fungus made virtually extinct by wiping out billions of trees beginning midcentury.

I don’t know what happened to eucalypt, and Kimball Home shut down in 2005, but back in a blaze of potential glory because of climate change are wood species that include and even showcase imperfections, according to a big design piece in the New York Times last month. 

Just in time for the High Point market, the story heralds furniture from Sweden’s Vitra and Finland’s Artek, among other product lines, that makes no attempt to stain or paint over knotholes, insect trails and idiosyncratic wood grains. Historically called imperfections, Artek calls them “features.”

“Because of climate change and industrialization, the forests are changing,” Marianne Goebl, Artek’s managing director, told the Times.  

Artek sources all of its wood from Finland, and these woods are looking increasingly idiosyncratic.

As the article acknowledges, and eucalypt’s brief run testifies, embracing imperfection isn’t new. However, we can expect more discussion about ethical consumption in a world challenged by a warming planet. Sustainability is increasingly a watchword in global sourcing strategies. Leather upholsterers have been embracing the “features” in semi-aniline leathers for decades, for example. 

But, as the article also acknowledges, it’s one thing “for eminent designers to toy artfully with imperfection but quite another to produce deliberately flawed objects on an industrial scale.”

Were I still covering the High Point market in case goods, this imperfection trend is something I would be looking for at the upcoming spring edition, especially at the higher price points. At the lower, price-sensitive levels, it’s likely still true that consumers want furniture that looks exactly like the suit they saw on the showroom floor (or in the photography online). Imperfections at these mass market price points are usually interpreted as flaws rather than as “features,” or as problems with quality. 

Even MDF is likely to be affected. In a new line from France’s Ligne Roset, Chute Libra, the mixed materials used are plainly visible. And the company is marketing the line in part by celebrating this variability as a manifestation of Ligne Roset’s commitment to sustainability.

“The Chute Libre project is part of a desire to do with very little,” Ligne Roset’s marketing materials state. “This collection aims to promote scrap wood from standardized panels such as chipboard, medium, laminated, in order to bring a new perspective to these materials which are often neglected.”

The Finnish producers, including Vaarnii, also cite their commitment to sourcing wood locally, which reduces their carbon footprint. So, expect to see a lot more pine and birch, woods that have fewer tenderloins than the hardwoods. 

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With a part of my brain always working to identify ideas and themes for this space, this month’s Academy Awards telecast served up one on leadership. Beckoning me already, like the family dog plaintively peering up at the dinner table, was an email with fangs from Wayfair’s CEO sent to employees over the holidays. Next, seeing Jamie Lee Curtis present the award for best supporting actress fired the synapses, because juxtaposed by the fates of time are examples of leadership, one good and one not so good, from which I believe all leaders can benefit.

First the good, and I mean “good” in the Aristotelian sense: morally good, virtuous and, oh, by the way, likely motivational and persuasive. Jamie Lee Curtis, who won an Oscar a year ago for her role in “Everything Everywhere All at Once,” used her rigidly timed acceptance appearance to immediately give credit to the team, the wondrously collaborative “magic” that is any nominee for best picture.

“I know it looks like I’m standing up here by myself but I am not. I am hundreds of people,” she said to the glitterati in attendance. “I’m hundreds of people.” 

The daughter of two Oscar winners, Janet Leigh and Tony Curtis, Jamie Lee then expanded her circle of credit to include all of us: “To all the people who have supported the genre movies that I’ve made for these years, the thousands and hundreds of thousands of people, we just won an Oscar together!”

This year, Jamie Lee’s pro move was leaving the Oscars early in order to grab a burger at In-N-Out. Respect with a capital “R.” 

Humility and gratitude

Both her 2023 acceptance speech and her 2024 beeline for a big, bad burger demonstrate humility, a grounding, and not only a recognition that success is rarely a solo event, but a gratitude for the context of teamwork that furnished the already accomplished actress with Hollywood’s Holy Grail. She exhibited humility, gratitude and the absence of ego, that great ogre of blaming, name-calling and scapegoating wherever it makes its demands.

In one of the courses that I teach, this week we have been looking at organizational communication, a field that emerged in the 1960s and that can be traced to the famous time-and-motion studies a half-century prior. I’ll save you the lecture, but important here is this field’s recognition and deep study of the now-demonstrable fact that workplaces are living, breathing, dynamic ecosystems inhabited by people who seek meaning in part through each other. In the language of this field, they exhibit prosocial motivations and prosocial behaviors.

Prosocial motivation is the desire to protect and promote the well-being of others, and it predicts persistence, performance and productivity. Prosocial behaviors are those intended to benefit others, such as acts of kindness, compassion, empathy and aid.  

In short, to quote Stanley Tucci’s character in “The Inside Man,” most of the time, what happens to people is other people. Healthy organizations and workplaces design, incent and reward collaboration. In sharp contrast, ego-driven approaches rely on coercion, fear and competition. From a bottom-line perspective, the latter might work, but at what human cost?

Freedom cries, as in tears

Aristotle understood, as Jamie Lee Curtis understands, that human flourishing can only happen in society, as part of a team, amidst something larger than ourself. Our founding fathers understood this as well, which explains the Aristotelian “E Pluribus Unum” motto. Out of the many, one. The current entitlement demand for something called “liberty” at any cost could come at all cost, or democracy itself, because if united we stand, the so-called culture wars are ringing alarm bells everywhere. 

To the extent a leader can foster community and belonging, a sense of a shared fate, to that extent a leader is recognizing what we share in our basic wiring as humans. This brings me to Wayfair’s recent communication with its employees and that communication’s seeming disregard of our evolutionary disposition toward working together. 

In what has become a first-of-the-year tradition at Wayfair, the company announced a rather sizable round of layoffs. As reported by Home News Now in January, Wayfair said it would cut 13% percent of its workforce, or 1,650 jobs. Given the company’s revenue woes and the Street’s general approval of “right-sizing” in the tech sector, the job cuts aren’t all that surprising. And they demonstrate once again that Wayfair is as much as a tech company as a furniture concern, if not more so. 

Recall that just a year prior, Wayfair cut loose 1,750 employees after shedding 870 jobs just five months prior to that. CEO Niraj S. Shah referred to these moves as “cutting the fat.” That’s the team spirit!

The profitability ‘journey’

This year’s cuts coincide with fiscal year reporting that has Wayfair’s revenue down 1.8% compared to a year ago for a net loss of $738 million. While significantly less terrible than fiscal 2023’s net loss of $1.3 billion, this year’s dip complicates Shah’s claim showing “one more definitive step on our profitability journey.” 

The irony of Wayfair’s three-pronged plan to “nail the basics,” engineer customer and supplier loyalty, and drive cost efficiencies is its sustained disregard for employee loyalty among Wayfair’s own.

In December, before the latest round of big job cuts and less than a week before Christmas, Shah reportedly sent an email to employees warning them that the company would immediately begin cracking down on “laziness” and foreshadowing longer hours and fewer perks. Now that’s “nailing the basics”!

Apparently denied the role of The Grinch in whatever local community theater he might aspire to joining, Shah stuffed yet more coal down employees’ stockings by “informing” them that the demarcation between work and life will blur yet more, because this blurring is the “recipe” for company success. 

You work at Wayfair. There’s more than a one-in-five chance you just said goodbye to a close colleague recently laid off. You’ve been called lazy. And you’re “informed” that work will press more into your private life. Where’s my medium drink, because that’s quite a combo!

“Working long hours, being responsive, blending work and life, is not anything to shy away from,” Shah wrote in his “motivational” email. “There is not a lot of history of laziness being rewarded with success. Hard work is an essential ingredient in any recipe for success.” Thanks, Captain Obvious! 

I can’t get satisfaction

A recent survey of 5,000 full-time employees worldwide showed that 96% will only consider working for companies that emphasize well-being. In addition, 93% said well-being is more important than their salary, and 87% reported that they will leave the employ of companies that do not focus on well-being.

Shah also declared that the trait he is most interested in is ambition, or the trait author Michael Chabon described as “that reliable breeder of monsters.” 

“Everyone deserves to have a great personal life — everyone manages that in their own way — ambitious people find ways to blend and balance the two,” Shah penned, presumably stroking a white Persian cat and laughing maniacally. “I think that is what we all should do.” 

Says the guy who had an annual salary in 2022 of $750,000 and whose shares of the company that same year were worth $671 million, according to Simply Wall Street. 

Wayfair-ers should be “aggressive, pragmatic, frugal, agile, customer-oriented and smart.” And here’s my favorite part: They should spend company money as if it is their own money. 

Says the guy with an estimated net worth in April 2022 of $1.6 billion, again according to Simply Wall Street.

“Would you spend money on that, would you spend that much money for that thing, does that price seem reasonable and lastly — have you negotiated the price?” Shah said, with clearly zero interest in engaging with his “team” in ways Curtis made look so easy, gracious and good. “Everything is negotiable and so if you haven’t then you should start there.” 

The email isn’t even grammatically or syntactically correct! I don’t know if I’m more offended as a student of leadership or as a grammarian. (Note: I don’t know Shah, so he might be a swell guy. I’m just going on his published comments.)

Given Shah’s views on his own workforce, we will watch even more closely the opening of Wayfair’s retail location in Chicago in May, because it’s one thing to operate as a tech company but quite another to manage customer-facing teams at retail. Well, gotta run — pulling up to the In-N-Out drive-thru now! And, yes, I want fries with that.

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