Ekornes CEO addresses price increases, production ‘rightsizing’

Ekornes Interim CEO_Fredrik Ødegård Nilsen_Ekornes AS
Fredrik Ødegård Nilsen

IKORNNES, Norway — The interim CEO for Ekornes QM Holding says that recent workforce and production reductions will not impact the U.S. market.

Fredrik Ødegård Nilsen told Furniture Today that cutbacks announced yesterday will allow the company and its brand names Ekornes, Stressless, Svane and IMG to maximize opportunities to gain market share in a competitive economic environment.

“The uncertainties into 2023 is very high, and it is difficult to say what to expect,” Nilsen said, referencing long-term speculation about market conditions. “History has shown that Ekornes has come through recessions and economic fluctuations well, to a large extend driven by strong products and brands. Although the outlook is challenging, we are still optimistic that we will continue to take market share and utilize the pockets of opportunity that might arise.”

In the update on 2023 initiatives distributed on Wednesday, Ekornes QM Holding announced that it will reduce its workforce in Norway, restructure activities in Asia, and implement additional measures to manage cost and margin development, including price increases, as demand for furniture returns to pre-pandemic levels.

“Ekornes has over recent years experienced sharp increase in raw materials and logistic costs,” Nilsen said. “As a consequence of this, we have increased prices in the U.S. market a few times since 2020. We have an increase planned for January, and no further increases are planned.”

Nilsen noted that U.S. production demands are strong and that the Morganton, N.C., factory will continue operations at current levels, contrasting with consolidation of operations in Asia.

“Consolidation of our APAC operations has been a long-term plan for Ekornes,” he said. “However, due to the surge in demand for our products over the recent years, we have been dependent on the added capacity of our Vietnam facilities. As we have started to see normalization in the furniture industry, we have over time now gradually shifted volume from Vietnam to Thailand and been scaling down activity. The Vietnam facilities are still operational, but we expect to close our operations within the first quarter.

“The order books for our Morganton facility is still very strong, and we currently have challenges producing enough at this location,” Nilsen said. “Sales outlook for this part of our portfolio is still looking strong, so we currently have no plans for adjustments here.”

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