Large Chinese Furniture Seller (Nouhaus) Profits Drop 22% Due to Freight Costs
Henglin Home Furnishings Co., Ltd. is one of the largest manufacturers and sellers of furniture in China.
Henglin reported revenues of approximately $1.1 billion (7.81 billion RMB) for the first three quarters of 2024, a 35.24% year-on-year increase. However, rising freight costs and other expenses led to a 21.9% decline in net profit, which stood at $37 million (264 million RMB).
Related reading: Seller Profile for Nouhaus Inc.
Key Growth Factors: Brand, Supply Chain, and Online Marketplaces
Founded in 1998, Henglin Co., Ltd., based in Zhejiang, China, is a leading manufacturer of office chairs and furniture. It has long-standing partnerships with global retailers like IKEA, Office Depot, and Home Depot. In recent years, the company has expanded into direct-to-consumer (D2C) sales, with cross-border e-commerce revenue reaching $234 million (1.69 billion RMB) in the first half of 2024, a 240.89% increase, including sales from its Amazon store.
To enhance supply chain efficiency, Henglin has automated production with robotics and smart warehousing. It also operates manufacturing facilities in China, Vietnam, and Switzerland, ensuring rapid fulfillment and reduced logistics costs. The company maintains a 350,000-square-meter distribution network, including warehouses in New Jersey, USA, for faster deliveries.
Global Furniture Market Outlook
According to Statista, the global furniture market was valued at $770 billion in 2023 and is projected to reach $866.87 billion by 2027, growing at 5.31% annually. The U.S. furniture market reached $252.7 billion in 2023, with expectations to surpass $300 billion within five years. The office furniture segment, valued at $60.8 billion in 2022, is projected to grow to $77.4 billion by 2028.
Financial Performance & Future Strategy
Henglin’s total revenue for 2023 was $1.14 billion (8.2 billion RMB), growing 25.78% year-on-year. However, net profit dropped by 27.32% due to increased marketing expenses, foreign exchange losses, rising freight costs, and stock-based compensation expenses. The company sells nearly 10 million office chairs and 2 million soft furniture pieces annually.
Henglin is publicly traded on the Shanghai Stock Exchange and its stock has taken a beating this year, down over 30% over the last 12 months.
Moving forward, Henglin aims to strengthen its presence on platforms like TikTok and Walmart, where it has already achieved top seller rankings in the home category. The focus for 2024 will be expanding sales channels, reducing costs, and increasing operational efficiency to counter profit erosion from logistics expenses.
Conclusion
Despite strong revenue growth, Henglin faces profitability challenges due to rising operational costs. By optimizing its supply chain and expanding e-commerce channels, the company hopes to sustain growth while improving margins in a competitive global market.
