As cash-flow concerns mount, PFP introduces health check tool for furniture stores

ENFIELD, Conn. — This past summer, Planned Furniture Promotions’ Tom Liddell warned about a looming cash-flow danger for furniture stores fueled by a head-on collision between product shortages and surging consumer demand. 

Now, as price increases have only worsened the liquidity crisis for some, PFP is offering a free tool to help retailers catch potential problems — hopefully before it’s too late. The retail sales consulting and liquidation firm developed a cash-flow calculator in the form of an Excel spreadsheet. Retailers, it said, have the assurance of a certified-safe download at no cost by clicking here. 

As first reported by Home News Now, PFP Senior Vice President Liddell saw the problem brewing back in August. High consumer demand after pandemic-induced store shutdowns combined with furniture supply shortages led to a dramatic increase in special-order business for many retailers once they reopened. While that unprecedented surge seemed like a windfall, retailers that have been using customer deposits for everyday business operations may now be underwater due to order cancellations, continuing product delays and the recently initiated price increases and other rising expenses.

Earlier this week, Liddell said he was on the phone with a client whose business may not be salvageable even for liquidation. He declined to name the retailer but said it’s an iconic, family-owned furniture store that has been in business for decades. As little as 18 months ago, the company was healthy but then started to experience some difficulties tied to the temporary shutdown. Liddell said this probably wasn’t anything the retailer couldn’t overcome under normal circumstances.

“Even if the manufacturers could ship the product, which they can’t, the retailer no longer has the ability to pay for the cost of fulfilling its backlog.” Liddell said the company’s lenders got wind of the situation and, “it looks likely they’re going to be forced into bankruptcy and not even allowed to run a sale.”

One of PFP’s merchandisers refers to the unusual sales surge retailers have been seeing as a “sugar high.” Liddell said it has been exacerbated by customer cancellations and the multitude of price increases vendors have passed on. Some retailers are trying to reallocate orders to suppliers who can ship the goods, “but in our opinion, it’s all leading up to the perfect storm,” he said.

“They’ve enjoyed inordinate amounts of revenue due to these order deposits. However, they’re also seeing price increases on freight and raw material from vendors, and they don’t have the ability to ask consumers to (pay more) for furniture they’ve already sold.

“Chances are good they’re going to lose money on every one of these orders even if they had the cash flow to fulfill them.”

While Liddell suggests the situation is dire for some, he added that not all furniture retailers are affected equally. Large retailers, for instance, have the buying power necessary to pressure vendors to ship — or at least ship more quickly than they will to smaller players. Some suppliers have cut off smaller accounts, or drastically pushed out their delivery dates as industry analyst Jerry Epperson recently pointed out, and that could be amplifying the cash crunch, too. 

The cash-flow calculator PFP is providing for free doesn’t solve the problem but goes a long way in helping retailers determine whether they have a problem in the first place. In a press release, Liddell said, “We’ve already seen clients that were shocked by the results when using this tool.

“Many are enjoying record-setting business, however, that comes with a very steep price when it comes to fulfilling those orders.”

Asked how many retailers he thinks are in trouble, Liddell told HNN it would be irresponsible to put a number on it, but “I would say it’s a large percentage. They just don’t know it.”

Liddell and his PFP partners have heard from a handful of retailers who have used the calculator before it was broadly distributed, and every one of them found they had dug themselves a hole.  

He told HNN that it’s a hard pill to swallow, but the more some of these stores sell, the deeper the hole and the more likely it is they are reducing their equity and the liquidable value of their business. Some think they should borrow money to help fulfill their backlog, but that reduces equity, too, Liddell added.

The calculator identifies the problem, but there’s no easy solution. “Each situation would have to be evaluated on its own merits, and that’s where PFP can help, as a consulting company, to determine the best direction to go,” he said.

Clint Engel

Clint Engel is a veteran home furnishings industry journalist and executive editor of Home News Now. Please share your feedback with him at

View all posts by Clint Engel →

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our Newsletter for breaking news, special features and early access to all the industry stories that matter!

Sponsored By: