FIN DeskOriginally published November 4, 2024. This version was rebuilt from the Franchise Group release, the Census Bureau's quarterly e-commerce report and the ISM manufacturing report for the FIN archive, and the facts are as of that date.
The first weekend of November 2024 brought the end of a national discount furniture chain, a reminder of how much shopping had moved online and more evidence that furniture factories were still slowing.
The short version
- Franchise Group said it would wind down American Freight and start store closing sales on November 5.
- Census said e-commerce accounted for 16.0% of total retail sales in the second quarter.
- ISM listed Furniture & Related Products among industries reporting lower new orders in October.
American Freight closes nationwide
On November 3 Franchise Group filed voluntary Chapter 11 cases and said it had determined to wind down American Freight, which it said had struggled due to sustained inflation and challenges facing the large durable goods sector. Store closing sales were set to begin nationwide and online on November 5.
The restructuring plan was backed by $250 million of committed debtor-in-possession financing, and Franchise Group said its other businesses, including Buddy's Home Furnishings, would keep operating.
The closing put a large discount furniture and mattress chain into liquidation just before the holidays, adding clearance inventory to the market.
Online share keeps growing
Census estimated second-quarter e-commerce sales of $291.6 billion, up 1.3% from the first quarter and 6.7% from a year earlier, while total retail sales rose 2.1% over the year. E-commerce accounted for 16.0% of total sales.
Online growing roughly three times as fast as retail overall kept pressure on store-based furniture sellers to improve their websites and delivery options.
Factories slow down
ISM's Manufacturing PMI fell to 46.5% in October. Furniture & Related Products was among the industries reporting a decline in new orders and among those reporting lower employment.
Lower orders and staffing pointed to a cautious end to the year for domestic furniture makers, even as some consumer measures improved.
Industry resilience
A chain closing, steady growth online and slower factories all pointed to the same thing. Furniture companies that could sell through more than one channel, and keep costs flexible, were in the best position heading into 2025.
Related on FIN
Sources
- Franchise Group, Restructuring agreement and American Freight wind-down (Nov. 3, 2024)
- U.S. Census Bureau, Quarterly retail e-commerce sales, 2nd quarter 2024
- Institute for Supply Management, October 2024 Manufacturing ISM Report On Business
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