(Updates stock price in 11th paragraph.)
Oct. 26 (Bloomberg) -- The U.S. furniture industry hasn’t emerged from the recession because a “gridlock in housing” has sapped spending on couches and home items, said Furniture Brands International Inc. Chief Executive Officer Ralph Scozzafava.
Revenue at Furniture Brands, the maker of the Broyhill, Lane and Thomasville lines, is projected to drop for a fifth straight year in 2011, to $1.15 billion, according to the average of analysts’ estimates compiled by Bloomberg.
Demand won’t recover without a rebound in housing sales and consumer confidence, Scozzafava said. Home prices in 20 U.S. cities declined more than forecast in August, spotlighting the housing slump’s drag on the economic recovery.
“From a big-ticket perspective, we’ve never seen housing rush back,” Scozzafava, 52, said in an interview this week at the company’s Thomasville showroom in High Point, North Carolina. “We need housing and consumer confidence to move. We’re still in a recession.”
Consumers are waiting for discounts or not buying at all, according to several manufacturers displaying goods at the International Home Furnishings Center in High Point. More than 2,000 exhibitors show home furnishings twice a year at the market, attracting major chains and independent retailers replenishing their stores.
“If middle-class people do not buy houses, they are not buying furniture,” said Amy Bai, manager of Drayton Hall Furniture, exhibiting Chinese-made dining room tables on the sixth floor. “The past two years have been quiet, this market even more quiet.”
Consumer confidence in the U.S. unexpectedly sank this month. The New York-based Conference Board’s household sentiment index slumped to 39.8 in October, the lowest level since March 2009 and less than the most pessimistic forecast in a Bloomberg News survey, the group’s data showed yesterday.
The S&P/Case-Shiller index of property values in 20 cities fell 3.8 percent from August 2010, the group said yesterday. The median forecast of 30 economists surveyed by Bloomberg News was for a 3.5 percent decline.
“There’s gridlock with housing,” Scozzafava said. “A lot of people are underwater with their mortgages or feel like they’re going to take a loss if they sell. So if you don’t have sellers, they don’t turn into new buyers.”
Furniture makers and distributors cited a housing recovery as critical to booking orders, which have been “flat in terms of traffic,” according to Scozzafava, also chairman of Furniture Brands, based in St. Louis. “We’re not seeing a measurable difference from a year ago or earlier in the year, up or down either way.”
Shares of Furniture Brands rose 3.1 percent to $2.03 at the close in New York and have declined 61 percent this year.
One afternoon this week, Henry Lail sat in a leather chair made by his company, Leathermakers Furniture Co., in a Main Street showroom in High Point.
“It’s a tough market and we’re waiting for it to come back,” Lail said. “The recession is not over for the furniture industry.”
--With assistance from Shobhana Chandra and Bob Willis in Washington. Editors: James Callan, Kevin Orland
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