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The national furniture industry doesn't sit too comfortable these days, at least when it comes to unsold inventory.
Private furniture retailers, on average, had 142 days of inventory on hand in 2013, according to a new report from Raleigh, N.C.-based data firm Sageworks. That's up nearly a week from the average in 2011, and 18 days more than 2006.
The firm says several variables impact the data, which is calculated by dividing inventory by cost of goods sold multiplied by 365. Those include tastes, trends, geography and seasonality. A Sageworks analyst says there are several possible reasons behind the average inventory growth, including a perverse impact of the industry rebound: Sales have improved so much, the theory goes, maybe stores over-bought to meet expected demand.
“We can't necessarily pinpoint why,” Sageworks analyst Jenna Weaver says in the release. “All we can really see for sure is that the inventory days have increased.”
Despite the inventory hangover, all isn't lost in furniture world: Sageworks also reports net profit margins are up significantly industry-wide, from a 0.07% margin in 2008 to 4.3% in 2013. Sageworks compiles reports from a proprietary database of privately held company financial statements in a variety of industries.
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