Manufacturers benefiting from huge demand – the challenge is to meet it amid supply chain issues, higher costs
What the nip in supply means for Carhartt customers is that some products, including its classic beanie, will be hard to find this holiday season. So, the company offers different styles and emphasizes gift cards so that customers can get what they want later when the demand is less crazy.
Customers browsing the toy aisle at Walmart, Meijer, and other major retailers should still be able to find trucks from American Plastic Toys, but, along with the rest of its products, can expect to pay more.
“From my perspective, I don’t see inflation as transient,” Gessert said. “I see it as something that is going to last at least for a while because between the materials and the costs of labor and shipping, the items that we used to sell for $ 20 or $ 25 now cost $ 30 or $ 35 or even $ 40, depending on. “
Inflation has been the topic of discussion for economists and financial experts in the United States for the past few months. It’s a major concern for Michigan consumers and businesses amid the pre-Christmas supply chain nightmare.
Some have behaved better than others. Benton Harbor-based Whirlpool turned challenges into bottom lines, with third-quarter revenue of $ 5.5 billion, up 4% from a year ago, when demand for household appliances exploded. Its gross margins were on par with last year – $ 1.1 billion, despite an increase in cost of goods sold of $ 237 million, the company said.
The negative impact of increases in the prices of raw materials, particularly steel and resins, was “fully offset by our pricing mix and our actions on net costs,” said Whirlpool CFO James Peters, during the Whirlpool results call.
“Today we operate in an environment of supply constraint and inflation, which is negatively impacting most industries around the world,” said Marc Bitzer, Chairman and CEO of Whirlpool. “Still, we are on track (for a) year of record performance.”
At Monroe-based La-Z-Boy, executives are asking customers to weather the supply chain storm hand-in-hand with the furniture maker.
“Given the unprecedented nature of rising material costs, we are asking our business partners to share the financial impact during a time when we are all experiencing record demand,” said President and CEO Melinda Whittington during an investor call in August.
Wait times for La-Z-Boy recliners and other products have stretched to seven months, according to the company, which has responded by stocking “key components” to keep furniture flowing and to minimize disruption. disturbances. It has also increased product prices several times over the past year.
The pass-through of costs did not hurt business. La-Z-Boy posted record earnings and sales for its fourth quarter of fiscal 2021, which ended April 24, with gross profit of $ 222 million on $ 519.4 million in sales for the quarter, compared to $ 171.1 million in gross profit on sales of $ 367.3. million at the same time last year.
Zeeland-based furniture maker MillerKnoll, which changed its name to Herman Miller after acquiring Knoll Inc. in the spring, has been hit hard by the pandemic – particularly its office furniture segment. Despite news of an increase in orders amid a return to the office for some, the company has estimated revenue of $ 30 million for the first quarter of its 2022 fiscal year due to supply chain issues. ‘supply. He also raised the prices.
“It’s no secret. We are feeling the impact of inflationary pressures in the business. We expect that commodity pressures sequentially from Q4 to Q1 will result in an estimated cost increase of $ 4 million which will put pressure on gross margins, “MillerKnoll CFO Jeffrey Stutz said at a press conference. call for investors in June. “We are also feeling it in the area of direct labor costs, as are so many companies.”
Masco, based in Livonia, which supplies Behr paint to Home Depot and other wholesale customers, is another Detroit subway company that is successfully passing on price increases. Although its bottom line was affected by the supply squeeze, it said late last month that strong demand more than made up for it.
Toy maker Gessert said he’s wondering how long the demand will last – and if he can hire enough employees to take advantage of it before it goes away.
“We could have had a really phenomenal year,” he said.