Wednesday, June 01, 2005

Hospitality Industry Driving Fabric Sales

New York - Contract business, especially in the hospitality segment, is driving sales for many decorative fabrics converters and mills this year.

As hotel chains increasingly develop new facilities and initiate refurbishing programs for existing hotels, the hospitality segment of the contract business has moved into the strongest growth area for a number of fabric companies with the HD show in Las Vegas earlier this month reinforcing that view.

Analyzing their various channels of distribution, a number of fabric executives point to a weakness at retail in the furniture channel - a mixed bag as far as the retail fabric and decorative jobber channels are concerned.

The top-of-bed business, until recently a major segment of fabric supplier revenues, has dropped - precipitously in some cases - because of direct imports by the bedding suppliers as well as retailers. In other cases, the fabric houses have initiated programs that provide either fabrics and/or the finished products for the bedding and window coverings suppliers.

Export for some fabric companies is showing gains, in some cases because of the dollar's value in relation to the euro and other currencies; in other instances because of renewed efforts on the part of the companies.

"Contract is leading the way" in an overall business picture that is just fair, according to Jim Richman, president of Richloom, who termed the retail channel "good" and jobbers "OK." An important change, he pointed out, is the trend to shorter life cycles for designs. "We are having to bring out collections more frequently."

Contract is the big gainer for Valdese - up 28 percent for the year, said Mike Shelton, president, who noted that Proposte earlier this month in Como, Italy was "great - really good. But the dollar was a big influence."

Furniture was up comfortably and jobber business, while off a bit in the first quarter, "is creating more of a selling opportunity for us with existing customers who are asking for assurances that suppliers will be around five years from now," he said. Top-of-bed is off significantly, Shelton noted.

"We saw an industry-wide slowdown in January and February in the independent retail channel," noted Tom Leahy, vice president of Waverly. He pegged that channel and export in the last three months as being the big gainers for the company. As for export, he said, "We're benefiting from exposure at offshore shows."

Overall, Leahy explained, "We've had good results from our merchandise direction change with national fabric accounts, miscellaneous manufacturers, jobbers and furniture manufacturers. Importantly, we're adding shelf space, not just substituting new for old product."

Calling furniture business "up and down, a bit of a struggle," Roger Gilmartin, executive vice president of Covington Industries, remarked, "Contract is booming. It's really strong, and we're focused on hospitality and health."

Export continues to grow for Covington, Gilmartin noted. "We had a very nice Proposte and our best jobber season in some time."

For Heritage House with its ITC division, "We're the wrong ones to complain about business," said Tom Hilb, president, who noted, "We could double our sales this year. We're up 70 percent through April, and May is up 150 percent."

He explained, "We brought out a lot of salable skus - well priced and middle of the road." The company's strengths, he added, are with over-the-counter retail, some contract, JCPenney custom decorating and jobbers.

Calling business "good," Burt Kaplan, president of Portfolio, said furniture was fair at best. "Suppliers and furniture producers are still looking for the best way to source overseas." Contract is strong - "hotels are being built like crazy, and we're getting more project business from the non-furniture manufacturing areas."

As for strong selling areas, Kaplan said, "Higher-end products are strong and prints are back in the decorative area."

"Our core converting business is dull," was the assessment of Ron Kaufmann, president of P/Kaufmann, who added that business in contract is "very nice, as well as in manufactured product. Retail, generally, is not great, and there is a contraction on the furniture side."

On the retail fabric side, "The moms and pops are healthier than the big chains which are not as aggressive as they had been," Kaufmann observed. As for export, it was up in 2004, recovering from a slump, and is up again this year.

Business is steady, not booming, explained Rocco Simone, vice president, Sunbury, who added, "We have to be more diverse than ever." Jobber business is strong especially in the Crypton and Sunbrella collections, and the residential casual market is growing especially with Sunbrella, he noted.