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Many companies in the home furnishings and furniture industry are enhancing their marketing efforts and improving internal efficiency in response to the industry's increased competitive environment., and the Internet has also become an important industry tool. The US domestic economy is also slowing and this is also having an effect on the industry due to its cyclical nature. Investors will find several interesting stocks in this sector, and some have growth potential for the next three to five years.

Many investors have become skittish about the future of the US economy, but a recession is not forecast for 1998 and 1999. The carpeting industry has lost market share in the 1990s to alternatives, but several companies are taking steps to change the situation. The stocks in the home furnishings and furniture industries are timely in 1998 and several are well-ranked for the next three-to-five years.

The was a general slowdown for the furniture and home furnishings industry during the mid-1990s with sluggish sales and earnings, but manufacturers have modernized their facilities and made the industry more competitive. The industry should remain prosperous in the late 1990s and the home and office subsectors are responding well to demand. These stocks are timely for 1998, but few are compelling investments for the next three to five years.

Retailers of home furnishings and furniture are not expected to feel the effects of the Asian financial crisis, as moderate interest rates in will likely spur growth in the US home and furniture markets. In addition, sales in the office furniture market will complement increased spending for home furnishings. Most of these stocks are timely for investors in 1998, but may be less so for the next three to five years.

Stocks in the furniture and home furnishings industries have remained stable in the last quarter of 1997, although the stock market has been volatile. The increase in housing starts in 1997 has not led to increased furniture sales, nor has lower interest rates, although the office furniture market has remained positive. Rankings for these stocks are favorable for investors in 1998, and several individual issues are appealing for commitment.

The Federal Reserve's decision to raise short-term interest rates by 1/4% is expected to have a major effect on the home construction industry which will be reflected in the home furnishings and furniture industries' economic performance. Most industry observers expect that with fewer housing starts there will be fewer furniture purchases, but some predict the possibility of future interest rate boosts may inspire immediate purchases. The office furniture industry should perform well for investors and be unaffected by interest rates.

The furniture/home furnishings industry is doing favorably in early 1997, especially the industrial sector. The timeliness of investments in the industry is high in early 1997 compared to low in mid-1996. Companies in office furniture manufacturing, hotel/motel furnishings and restaurant furnishings are outperforming the other parts of the industry.

Economic recovery was absent from the furniture/home furnishings industry during the 2nd qtr of 1996, although interest rates were stable and housing starts increased. Sales and earnings for the 2nd qtr of 1996 have also been weak, even though results have been aided by cost-cutting efforts and by manufacturers' inventory reduction. There are few timely stocks in this industry, although several have potential from 1996 through 1999-2001.

A stronger economy, lower interest rates and more home sales will benefit the furniture and home furnishings industry. Sales have not been good during the 1990s for the industry. Furniture and home furnishings stocks are not expected to do well during 1996. Investors will need to wait a few years for any changes for the better.

Delayed home buying and furniture purchases by consumers caused share prices in the furniture and home furnishings industry to drop in 1995. Lower interest rates are expected to have a positive effect, however, in the future. Most manufacturers have high fixed costs, even with the impact of automation on workforce reduction, waste, and accuracy. There are very few timely stocks in this industry for investment in 1996.

Furniture industry stock prices have underperformed the market since 1994 due to sluggish sales and high fixed furniture plant costs. Several companies are installing computerized and state-of-the art equipment to modernize their facilities. Furniture orders are smaller, however, since retailers are reducing inventories. These stocks are not timely and investors will find few selections in this industry.

Sales of home furniture and furnishings are low, due to slow home sales and low consumer confidence. Office furniture sales, however, are rising, with individual company increases from 8% to 17% in the first half of 1995. Home office furniture is becoming a larger segment of the industry. This industry is not timely for the 1990s and is not expected to improve quickly. Investors should concentrate only on the most promising areas.

The furniture and home furnishings industry should experience modest earnings gains, despite increasing mortgage rates and a slowing of home building activity. Interest rates continue to be low historically, which should not cause a dramatic decrease in home purchases. The residential furniture sector continues to be dominated by manufacturer-retailer alliances, and office furniture suppliers are becoming more automated and focusing on the development of ergonomic products. Investments in this industry have suffered double-digit losses in 1994, a situation not likely to improve in 1995.

Industry analysts believe that the currently low price for stocks in the home furnishings and furniture market could be a good long term investment. The analysts point out that although interests rates have risen and home buying may have slowed, the furniture industry does not seem closely tied to home sales. The purchase of furniture generally lags behind home buying. However, only one of the 10 stocks listed have risen since Apr 1994. The majority of the rest have declined by double digits.

Furniture and home furnishing stocks have declined by 4% to 11% since Feb 1994, but should do well in 1994. These businesses usually do well once the economy is well into the recovery. One problem that exists include the fact that consumers perceive the price of furniture to be higher than the value. Manufacturers can help to fight this by reducing delivery times, which would take a large investment in new equipment, and by creating brand awareness.

Furniture and home furnishings industry stocks should perform well in 1994. New home construction and the higher sales of existing homes generally forecast sales of new furniture. However, analysts believe that new home owners may be taking advantage of low interest rates and spending all available cash on homes with none left over for furnishings. Sales of home furniture increased by 10% in 1993. Sales of office furnishings are expected to increase as well since many companies are investing in ergonomic furniture.

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