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Business, Las Vegas

2022 Business Outlook: Rug Execs Focus on Bright Spots Heading to Las Vegas Market

With costs soaring, inventories rising and consumers shifting spending, some rug players shift year-end expectations yet remain optimistic heading to Las Vegas Market.

Lisa Vincenti
7/21/2022
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Despite headwinds, area rug exhibitors at Las Vegas Market remain cautiously optimistic.

LAS VEGAS -- The bullishness of area rug sales, which began to skyrocket beginning in the late 2020 and 2021, when the appetite for new home furnishings far outstripped their supply, appears to be faltering amid yet another series of unexpected headwinds.

From shutdowns to shipping delays and now to surging prices and rising cost of fuel, area rug executives yet again find themselves treading on uncertain ground as several major retailers cut earnings outlooks for the remainder of 2022 in response to changes in consumer discretionary purchases and the rise of inventory levels.

RugNews.com surveys several key players across the area rug industry, from the large purveyors of machine-mades to the cadre of high-quality hand-knotted area rug ateliers and everything in between, to get a read on the category as these companies prepare for Las Vegas Market, running July 24-28.

"We are expecting increased traffic from dealers and designers at summer market versus Las Vegas Market in January," said Giovanni Marra, Nourison director of marketing & digital strategy. "We had a positive first half. Our low- to mid-level area rugs are driving sales although we also have demand for larger size rugs and custom projects too.

"We still expect a positive second half of 2022 even though growth is leveling off as our product remains in demand and we currently have a healthy inventory position and new products to introduce."

Among the popular choices with Nourison clients are the company's best-selling tufted Prismatic collection, which adds a new design for summer market, as well as a growing demand for washable rugs and continued demand for custom-size rugs. Nourison is revamping its Building C showroom adding a new entry to the space and carving out space dedicated to its new Custom Reserve Studio program.

At Feizy, which also rolled out a new designer-driven program at High Point called Revolution, the remainder of 2022 is anticipated to hold up as the company continues to add fashion in mid-tier price points and increased offerings of high-end products for marketgoers. "We expect continued traffic post-COVID as consumers and the interior design segment are still in full swing," said Mike Riley, president, who recently rejoined the company. "While inflation and high gas prices have slowed down some foot traffic at retail, we are still seeing consumers looking for in-stock items for their home furnishing needs.

"Our expectations are that the pieces we are introducing will continue to resonate with our customer base. Feizy continues to launch new collections – both fine and lifestyle, and we added several new introductions to our Thom Filicia line at High Point in April. We are debuting a number of smartly priced machine-made pieces. Our 2022 started off great, slowed to single digits in May, but overall we are pleased, and we expect flat to slight year over year gain."

Kalaty, known for its hand-knotted area rugs, has seen a positive response to its high-end machine-made assortment, which it introduced in mid-2018, and for summer Vegas market amps up its machine-woven offering and hand-knotteds, both of which it expects to bolster sales for the remainder of 2022. What’s more the New York company is adding mansion sizing (13x18, 14x20, 15x22 and 16x24) to a curated selection of its top-selling hand-knotteds in response to clients’ requests (read more).

"We are optimistic about attendance this summer in Las Vegas," said Ariel Kalaty, a company spokesperson. "People are now traveling more, and our customers are interested in face-to-face markets again, so we’re expecting to see at least as many customers this summer as we did at this past winter’s Las Vegas Market.

"So far, 2022 is meeting and, in most all cases, exceeding expectations. No single category is currently driving business, as we are doing well across all categories. Our high-end hand-knotted business in all style genres remains a primary focus for the company and continues to sell well. Our K-TWO series of open-distribution popular-priced collections, which has grown to 28 collections this year, and which includes all style genres and all weaves (hand-knotted, hand tufted, hand-loomed and power-loomed), continues to sell well."

The company is counting on positive sales in all categories but also expects its two new high-end machine-mades to attract plenty of attention.

"We are excited to bring into our high-end Kalaty line two new ultra-luxe power-loomed collections with knots-per-square-inch counts (KPSI) that would be nearly impossible to achieve by hand, elevating power-loomed rugs into a new high-end realm," Kalaty said.

Harounian Rugs International (HRI) is equally bullish about summer market. "We are expecting strong market attendance trend to continue through this summer Vegas market," Greg Jordt, executive VP, sales and marketing, said, noting that the company had a strong turnout at the spring High Point Market.

"Our business growth in 2022 remains very strong with production flow and logistics getting better with each passing week. Transitional continues to be the leading category with fresh recolorations of traditional designs really trending. With our mid- to high-end assortment, we are well positioned to maintain our strong growth trend throughout the balance of this year even though the general economy seems to be headed towards a recession. The customers of our clients are less affected by the ups and downs of the national economy -- we have successfully gone through this before."

Debuting in HRI lineup at Vegas are its new hand-knotted Arizona collection with thick dense pile of undyed wool, and Glaze, hand-knotted from wool with viscos highlights. In addition, HRI's relatively new Charlotte collection has been a hit and gets a line extension for summer, as does its Platinum Oushak collection, which is hand-knotted in Gazni wool from Pakistan.

Kaleen remains somewhat cautious. While the company expects summer Vegas market to be a bit tepid, it is projecting quality customers and big box retailers ready to write orders.

"2022's first half was good, and we exceeded 2019 and 2021 numbers, which is a huge achievement given the supply chain and labor issues," said Monty Rathi, COO. "We worked hard building inventory in our hand-tufted and hand-knotted rugs, which have driven our sales this year, with the icing on top being our machine-made business. Overall, it was satisfactory so far first half 2022."

As a result, the company is poised for a positive finish to the year. " We are focusing on service levels by maintaining our January and April launches rather than introducing new product, given supply chain challenges. We found success at the spring High Point show with our Tamara Day launch and our new Kaleen Custom area rug display."

Dynamic Rugs also anticipates a moderate showing at Vegas. "The retail industry is right now 'on hold' and some are being cautious with the amount of product they will commit to," said Matthew Rhouhanian, company founder. Despite that, Dynamic’s appointment roster is "pretty booked," and exceeds winter 2022 figures.

"We have been doing well for the first half of 2022. Last year was an abnormal year for us but compared to say 2019 and previous, this year has been a really strong year overall. The increase in our higher-quality machine-made rug offering has driven our success this year," Rouhanian continued, noting that the company is rolling out several collections in that category for summer shoppers. "We are expecting a very strong second half for 2022, mainly due to our quality machine-made rugs. Top-sellers at Vegas will likely include the new Annalise and Ella collections of neutral toned traditional designs.

Couristan, like others in the machine-made category, is focusing its latest releases on higher-end machine-made indoor area rugs and expects Las Vegas Market traffic to be steady on the opening days of the show. "The first-half [of 2022] started slow, however in recent weeks [business] has picked up significantly," Larry Mahurter, vice president of marketing and advertising, said. "The outdoor category has seen steady increases since April, while our high-price-point goods have seen growth since the middle of May."

To that end, Couristan is emphasizing its Vegas presentation on its growth drivers, which have been the middle- to higher-points. "We have been focused on our million point plus products in traditional and contemporary designs; on 100 percent wool in traditional looks, and 100 percent wool in textured hand-loomed constructions in simple stripe and Ogee patterns."

Karastan expects a stronger finish to the year than it experienced during the first half of 2022, with Vegas market attendance at 90 percent of normal summer traffic. "Our Las Vegas Market expectations are optimistic, but the reality of inflationary pressures is of concern for manufacturers and customers alike," Bart Hill, senior vice president of product development and operations, said. "The first half of the year has been slow moving due to raw material, transportation costs and of course higher inflation across all categories. But we are looking for a stronger second half of the year. There are still plenty of economic pressures that negatively affect the current market, but we are optimistic that our breath of product will have something for a variety of price points."

Among the top-selling requests by clients are contemporary style, "terrific colors", and durable construction. Karastan is introducing its new Echo collection, and extending its Bobby Berk, Stacy Garcia, and Drew & Johnathan lines, as well as its Zephyr, Soiree and Cosmopolitan collections.

Loloi, which also has a showroom in Atlanta and in Dallas, reports that summer is starting with positive momentum. "Summer markets appear to be solid," Austin Craley, VP of sales, said. "We just finished the Dallas show with an expanded showroom, and it was strong -- we anticipate more of the same in Atlanta [running July 12-18] and Las Vegas. Appointments are solid and those who are coming, are coming with the intent to commit and buy." Craley anticipates larger orders per attending customer and a fair number of new customers at Vegas.

"Despite many headwinds, the first half of 2022 was surprisingly strong for Loloi and our higher-end hand-knotted products continue leading the way in 2022. We expect the trends from early 2022 to be even more pronounced in the back half. Customers will be turning to brands they can trust to offer newness and salability while having strong in-stock positions," Craley added, noting that higher-end hand-knots will drive rug sales in the second half.

The company is introducing eight brand-new collections in Vegas, in addition to the nine new constructions debuted at High Point, Dallas and Atlanta. "It is a simple formula: Saleable, fresh products that are in-stock that will turn quickly at retail. And that is what we formulate every decision around, so we are well-prepared heading into the markets."

-- Get all the major area rug debuts at Vegas with our comprehensive two-part Las Vegas Market buyers' guide, start with Part 1 here
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