Since late January, more industry suppliers have raised prices on finished goods
HIGH POINT — Cost pressures across several fronts, ranging from still high container rates to rising prices of raw materials such as plywood and foam, are resulting in further price increases on wood furniture and upholstery.
For importers, a major issue largely continues to be spot container rates, which are reportedly as high as the mid $20,000 range and not expected to drop any time soon. For domestic producers, factors affecting the price of finished goods include rising domestic transportation costs and higher costs on raw materials and labor.
Ashley Furniture Inds. alluded to these and other issues in a letter released this month that alerted retailers to price increases taking effect March 13. But it is certainly not the only company facing cost pressures effecting the pricing of finished goods. Other lower middle and middle priced resources also are affected, particularly due to higher container rates that are often said to be higher than the value of the goods being shipped.
Cost pressures are affecting many others too from the upper middle to the luxury segment of case goods and upholstery. Some of these increases took effect starting in late January — following Home News Now’s last report on price hikes — and some are slated to take effect in early to mid-March.
For example, stationary and motion upholstery resources Jackson Furniture and Catnapper implemented a 5% surcharge increase for their catalog and kiosk dealers effective Jan. 24.
Company Senior Vice President, Merchandising Anthony Teague told HNN that this was due to several factors including container prices, which affect the cost of goods it imports such as cut and sew kits and mechanisms.
However, he noted that the increase also was due to wood costs such as plywood and OSB (Oriented Strand Board) which was up 30% in January alone compared to its average 2021 price for these materials. (Pricing for the wood components has risen an additional 20% since then, Teague noted.)
A third major component he said that’s affecting the cost of goods is domestic freight.
“It has been a challenge,” he said of the freight issue. “We subsidize domestic freight rates for many dealers and that has been a challenge. We also have domestic components that we have to pay freight on and that also has been a driver of costs.
“And until the last week or two, I would say the cost of Covid in general,” he added, noting that absenteeism in January and February caused not only higher overtime costs for workers who were able to work, but also inefficiencies in overall production.
In addition, having to pay higher wages in a tight labor market also has been a challenge.
He noted that since issuing its letter in mid-January, the company has seen some relief in container rates. However, that has been offset by the dramatic increases in wood prices.
“I would say right now that it is not substantial enough where we are going to take another pricing action,” he said, noting that the company is hoping for a ‘balancing out on the wood prices.’ “I would hope that the wood prices start to come down and out of the stratosphere in the back half of the year,” which he said could result in a lowering of surcharges.
“If prices come down, we will gladly lower it,” Teague said.
In January, Elements International, which sells lower-to-mid-priced case goods and upholstery, also passed along a price increase, which company President Mike Wurster said was largely do to freight rates on imports. On the domestic upholstery side of the business, the increase was based on imported components and labor rates.
Wurster did not elaborate on the level of the increase, other than to say, “It wasn’t really across the board. We did what our typical strategy is, which is to try to keep the prices as low as we can. We just have to support our customers and the end consumers…We went up where we had to and held prices where we could.”
Sources note that cost pressures have affected just about everyone that imports, due to the high container costs. That includes middle to upper middle priced resources bringing in product from Asia, where the freight costs are most severe.
Universal Furniture raised its prices on case goods, upholstery and outdoor furniture about 12% on Feb. 14, company President and CEO Jeff Scheffer told Home News Now, noting that the increase was mostly due to high container rates. He described any higher costs on finished goods as “infinitesimal” by comparison.
“Some things went up more, some things went up less,” he said of the 12% average increase. “A few things didn’t get touched at all. But the key word is few.”
As container rates are still being negotiated, it’s hard for Scheffer and others to say where prices could head moving forward.
“The whole situation is very fluid,” he said, adding, “It’s hard to think that freight rates are going to be this high forever, but I think the consensus is at least through the end of the year.”
Some of Universal’s domestic upholstery mix also had a price increase, which Scheffer attributed to higher materials costs and to a lesser extent, labor.
The issue has also affected other resources from the middle to the upper end, many of which have implemented increases since the start of the year.
Several others implemented earlier this year but not previously reported by Home News Now include: A 10% surcharge on new orders with Century Furniture effective Jan. 7; an increase on inbound container surcharges to 17% from 10% previously at Hekman and Howard Miller for orders received on or after Feb. 1; a 10% across-the-board price increase at Hancock & Moore, Jessica Charles and Maitland-Smith effective Jan. 1; a 5% to 5.5% average price increase on most Vaughan-Bassett groups excluding its Carlisle and Dovetail collections, effective Jan. 3; a 4% increase at the Sherrill Furniture Cos., effective Jan. 3 (the same letter notified dealers that the new price list absorbed an 11% surcharge, “removing the need for a surcharge process” for orders received on or after Jan. 3); a 5%-7% increase on domestic collections and 8%-10% increase on imports at Stickley Furniture effective Jan. 28; and a 7% increase at Baker Furniture effective Jan. 3.
Others in the luxury segment affected by rising costs include Chaddock, which is raising prices 8% across the board on case goods and upholstery effective March 1. Company CEO Andrew Crone said this results from pressures across the supply chain, ranging from the sourcing of premium materials to rising labor and transportation costs.
“While these challenges make this increase unavoidable, our value proposition remains the same, and we will never compromise on the quality of our product or craftsmanship,” Crone said in a recent letter announcing the increase. “Our team does not take these decisions lightly, and we remain dedicated to considering your business and success with every decision we make.”
Theodore Alexander implemented a 10% increase on case goods and an 8% increase on upholstery effective Feb. 15.
The cost of wood product is being impacted by container rates, which company president Ed Teplitz said have risen from $4,000 two years ago to as high as $24,000 today.
“And it’s not just the containers,” he said. “There’s other inflation. Oil is up and oil is a major component of foam and it’s a major component of metals for motion furniture. Everything kind of works off oil.”
The increase on domestic upholstery primarily relates to higher labor costs in a still tight labor market, Teplitz said.
“It’s a tight market, and we want to treat our people well,” he said of their compensation as well as the need to compete with convenience stores paying their associates $16 per hour.
“Nothing is to give us more margin — unfortunately, we just have to pass it through,” Teplitz added. “But we also are still absorbing (cost increases) and again, if we start to see decreases, we can lower our prices. We have no issue with doing that.”
Jeff Young, CEO of A.R.T Furniture and Jonathan Charles Designs, and Chairman of Caracole, said that January price increases from A.R.T., Jonathan Charles and Caracole ranged from 5% to 9%, averaging 7.5% overall.
In addition to freight rates, Young said there have been increases for lumber and other materials in Vietnam and labor and materials increases in China.
“They are not nearly as acute as they are in Vietnam, but then again, you have to pay the tariff,” Young said, noting that despite tariffs, China doesn’t have the same logistical bottlenecks as Vietnam.
As with many others, Young noted that the latest increase is in addition to increases that have taken place since 2020. His hope is that cost pressures including freight rates, will soon start to subside.
“If materials prices and freight rates start settling down, we might be able to reduce it,” he said of some of the increases passed along to customers thus far. “We are certainly open to that.”