As lockdowns increase furniture sales in the UK, SET-listed carpet and furniture maker TCM Corporation (TCMC) is focusing on the furniture business, acquiring furniture producers and plans to raise funds via the stock market in either the UK or US.
Pimol Srivikorn, chairman of TCMC, said its furniture business in the UK has benefitted from the pandemic, with extremely strong sales of sofas and a backlog of orders in the pipeline since the second half last year.
“People are spending more on home furnishings, furniture and kitchenware as they stay home and work from home,” he said. “Our sofa sales were so large we needed to expand our factory in the UK.”
Despite the factory expansion at Junction 28, Midlands, which boosted production capacity by 30-40%, the company had backlog orders at the end of 2020 totalling £43 million (1.94 billion baht), equivalent to 3-4 months worth of sales.
Surging demand in the UK during the lockdown from March to June 2020 resulted in year-on-year revenue growth of 7.21% to 4.1 billion baht last year in the furniture business under TCM Living Ltd, a subsidiary in the UK.
Its operating and net profit also grew by 60% to 91.5 million baht and 69% to 34.5 million, respectively.
The proportion of total revenue from TCM Living rose to 65% last year from 52% in 2019, while that from TCM Flooring (carpets) dropped to 25% from 35%, mainly because of the strong impact of Covid-19 on global tourism.
TCM Automotive, which provides carpets and upholstery fabrics for automotive brands, saw a decline in revenue, falling to 10% of total revenue from 13%. Sales dropped in the first half of 2020 as major car manufacturers closed their factories.
The momentum carried on to the first quarter of this year, with the proportion of revenue from TCM Living growing to 71%. It recorded sales growth of 37% to 1.31 billion baht from 956 million in the same period last year.
TCM Living’s sales drove total revenue in the first quarter this year to 1.83 billion baht, up from 1.63 billion. Revenue from TCM Flooring dropped 35% and TCM Automotive rose 7% for the period.
“We are shifting our focus to the furniture business,” said Mr Pimol. “We are looking for British furniture makers to acquire to increase our production capacity and expand our ability to fulfil orders.”
The corporation even has a plan when the furniture and home furnishings boom ends once the pandemic is over, resuming its exports to the US, Europe, the Middle East and China.
“Demand in the UK this year is robust, as orders increased by 35-40%,” he said. “We previously planned to focus on exports, but could not because of the influx of existing orders in the UK.”
For acquisitions, TCMC will consider a few key factors, said Mr Pimol, 57. The furniture brand should be distinctive and help the company cover a wider range of markets, particularly in the middle and upper-middle segments.
Another factor is a product mix of more than just sofas, meaning it should sell beds or desks.
“We aim to be the largest furniture maker in the UK,” he said. “But of course the investment should make sense in terms of finance.”
TCM Living, which was renamed from DM Midlands Holdings Ltd in May last year, has 650 staff and a market share of 22%, ranking second in the UK.
Early last month, TCM Living acquired premium sofa brand Arlo & Jacob for an undisclosed sum.
“With Arlo & Jacob, TCMC’s business platform is significantly evolving,” said Mr Pimol.
“Earlier we sold our sofa brands via department stores, but Arlo & Jacob is our first B2C [business-to-consumer] retail brand and our first step in the B2C world.”
On June 2, TCMC shifted the company’s strategy to consumer products as well as home and office products.
Arlo & Jacob has five showrooms across the UK in prime areas comprising Bristol, Harrogate, Marlow, Fulham and Islington. It also has a well-established online platform.
“To tap end users, our items will include not only sofas, but also home furnishings such as coffee tables, cigar ashtrays, lamps, photo frames and lifestyle knickknacks,” he said.
“Customers will find everything they need at our store and won’t have to visit other places.”
The company plans to try this model at one of Arlo & Jacob’s existing stores. If it proves successful, other branches will follow, including new outlets overseas to help boost sales, said Mr Pimol.
Founded in 1967 by Pimol’s father Chalermphan, TCMC has made several furniture acquisitions the last six years, including Alstons in 2015 and DM Midlands, which owned Ashley Manor, AMX Design and Alexander & James, in 2016.
Sales soared from 700 million baht 10 years ago to 9.54 billion baht in 2018.
Last year, sales dropped to 6.79 billion baht from 8.76 billion in 2019 due largely to Brexit, which weakened the pound sterling, in addition to the impact of Covid-19 on carpet sales.
“Sales jumped from less than 1 billion baht to 2-3 billion after we acquired Alstons, which posted 1.2-1.3 billion in sales in the first year we got it,” he said.
LISTING A BIT
TCM Living previously planned to list this year on the Alternative Investment Market bourse, the London Stock Exchange’s market for small and medium-sized companies.
The pandemic delayed this listing plan.
“Raising funds will help TCM Living acquire more businesses and add value to the parent firm,” said Mr Pimol. “We are studying listing on the New York Stock Exchange as we plan to export to the US and may buy a furniture business there.”