Gat Creek makes solid wood bedroom, dining, occasional and home office furniture at its 140,000-square-foot West Virginia facility. Shown here is the Kelly bedroom in cherry.
HIGH POINT — The outlook for the case goods segment leans weaker heading into 2025.
The segment is expected to remain in the shadow of its upholstery counterpart, a place it’s been in for some time. Case good sales are more connected to the housing market, which remains stagnant.
But it’s not all negative: Interest rates have dropped, spurring some optimism that housing will improve. It’ll take some time for that to happen, but industry executives are hopeful.
Looking for improvements
“Overall, the economy is good, but the furniture business is soft,” said Gat Caperton, president of case good specialist Gat Creek. “The slogan ‘Survive to 2025’ should be recast as ‘Survive to late 2025.’ Housing (new, remodeling and transactions) is starting to improve after the Fed rate drop, but our industry will need at least another six months before feeling any benefit.”
“The third quarter proved slower than normal, especially in early October,” he said. “I don’t normally believe that election years slow business significantly, but this year was probably an exception. Our orders were still up over last quarter and year over year.”
Tim Donk, vice president of sales operations and marketing for upholstery and case goods supplier Legends Home, said the case goods business remains down.
“For 2025, we’re going to try to rebuild our import program with case goods,” he said. “I wouldn’t say it’s on the back burner, but it’s not our primary focus.”
Donk talked up upholstery though, particularly Legends’ new warehousing program, which will see all the company’s upholstery stored in Phoenix.
“I think our first containers arrive at the end of November, and once we get that stuff warehoused and flowing, upholstery is going to pick up even further,” he said. “We were already doing well in the category in our container business.”
He’s hopeful that overall business will improve now that the election is in the rearview.
“People just weren’t getting the door swings before the election,” he said. “But I’m hopeful this will change. Regardless of reality, people will feel better about the economy.”
Optimism on domestic manufacturing front
Domestic manufacturer Vaughan-Bassett was optimistic for two reasons: a strong new product and the potential of tariffs.
“Our hope is that as interest rates and mortgage rates come down, that housing will begin to heal,” said Doug Bassett, president. “The bedroom furniture category in particular is very dependent on new bedrooms being created, and that’s done through new and existing housing sales. After an incredibly tough two years, we believe the tide will turn in 2025.
“The key for us is our product,” he continued. “We had a real homerun with our new highly customizable Tide and Timber bedroom collection at market. It’s the most customizable set ever offered. We had a similar solid wood group, but we heard from our dealers they wanted it at a better price. They wanted it in veneers with more style and choice.”
On the tariff front, Bassett is confident they’ll be implemented soon.
“We heard it at the AHFA meeting and from our government affairs people that tariffs are expected across the board on all countries,” he said. “People like us, that are 100% American-made, obviously have a chance to benefit. The key word I would emphasize is ‘risk-free.’ Almost every other bedroom resource is filled with risk and uncertainty. Not us.”
Fellow domestic manufacturer Sherrill Furniture agreed on all fronts. Business is soft, but tariffs have potential. Also, customization is a key trend.
“We made a statement in our lobby and first couple rooms to show our ability to do customization and really show our breadth with hand finishes and inside/outside combos,” said Tom Zaliagiris, senior vice president of sales. “We’re seeing more demand for custom in both upholstery and case goods.
“During the pandemic, everyone purchased lots of stock that was safe,” he said. “But people are entering other peoples’ homes now, so they want to have better looks.”
Zaliagiris said tariffs are “reinvigorating” the soft business climate.
“I think they will bring us increased business,” he said. “We’re getting a lot of inquiries about what we can produce, how much we can produce, etc. People want to know our capability. Retailers could be moving away from import products that could blindside them with higher costs.”
Strong business despite tariffs
Case goods and upholstery importer Lifestyle Enterprise had sort of the opposite view. Business is strong, but tariffs are on the horizon.
“The third quarter was strong for Lifestyle because we had a backlog of orders which were difficult to ship because of the availability and costs of containers,” said Michael Hsieh, CEO. “Once the availability opened up and costs adjusted, we were able to get products out of our factories.
“The demand for products with the values that we offer is not always affected by a strong demand or slowness at retail,” he added. “They are put in an everyday program business or bought to create sales, so the interest level at retail is pretty consistent.”
Hsieh said that the company placed “a lot” of orders at High Point Market, which buyers wanted shipped before Lunar New Year.
“That’s a good indication of a positive feeling about 2025,” he said. “Most retailers feel positive about the new year and are happy to be placing new products on the floor to generate excitement.
Tariffs, he said, are the challenge.
“The challenge is now the possible tariffs. This is an unknown for China. Most of our products have been moved to other countries, however there will be some unexpected impact that’ll be felt across the industry.”
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