What an Alaskan Furniture Company Tells Us About Tariffs

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:24)

Joe, can I start this conversation with what will seem like a random story, but I swear I have a point.

Joe Weisenthal (0:29)

Go on.

Tracy Alloway (0:29)

Okay, so a long, long time ago, when I was visiting my mother in Beijing one winter, she was working out there. Beijing winters are really cold. They're really dry. And I was sat in her apartment, and all of a sudden I hear this giant crack, and I run downstairs, and it turns out the console that the TV was on had just like completely split in half because the air was so dry, and it was so freaking cold. And I had never considered that you could have weather locations where the weather was so extreme that you actually had to factor that into your furniture.

Joe Weisenthal (1:01)

I never thought, I mean, I do have one sort of connection to that, which is we're going to start bragging about our international experiences, etc. You know, I've mentioned my family lived in Malaysia for a year, and we bought this big round table that we brought back with us to Illinois. And I do remember now that there was some discussion about like, oh, this was designed for the humidity of Malaysia, etc. Maybe have some natural give, etc. But it's fine. But it's funny you say that because yes, now I would not have remembered that otherwise. All right.

Tracy Alloway (1:31)

Well, the reason I bring it up-

Joe Weisenthal (1:32)

We're so sophisticated in international, aren't we?

Tracy Alloway (1:34)

So sophisticated. I hope everyone's factoring in climate considerations into their furniture. But there is actually a reason that I'm bringing that up, which is we are in Alaska. And Alaska does have cold, very, very dry winters. And it's also very, very large. It's very hard to get things into and out of the state. And so I think it would be really interesting if we actually talked about the furniture industry within Alaska.

Joe Weisenthal (2:00)

We need no more introduction. We need no more. Let's do it.

Tracy Alloway (2:03)

All right. So we do in fact have the perfect guest. We're going to be speaking with Dave Cavitt. He is the CEO and founder of Furniture Enterprises of Alaska. So really the perfect person to speak to. Dave, thank you so much for coming on Odd Lots.

Dave Cavitt (2:15)

Thank you so much for having me here.

Tracy Alloway (2:17)

So tell us about Furniture Enterprises of Alaska. What exactly are you doing there?

Dave Cavitt (2:22)

Yep. We are furniture retailers. We have 14 stores under six different brand names. And so we have our stores are Sadler's Furniture, Williams and K-Home furnishings, which is more design and custom order products. Sadler's is mid-market. We have two Ashley stores that are a licensee of them. We have three mattress firm stores, a La-Z-Boy store, and a Ultimate Mattress store, which is a higher-end mattress retailer. So what we do is we segment the different demographics in the marketplace and then combine the operations back behind it to be able to deliver the furniture at a lower cost than other companies.

Joe Weisenthal (3:10)

And tell us a little bit about, you mentioned the size of the retail footprint. Tell us a little bit about the history. How did you get into this? Are you a native Alaskan? We learned the term sourdough recently. Are you a sourdough? What's the story of you and your company?

Dave Cavitt (3:26)

Yes, I am a sourdough now. I am 69 years old.

I grew up in central California in the farming area, and it was not the right fit for me. So two weeks out of high school, I hitchhiked up here, kind of thing by myself. Amazing. And already that, I did several different odd jobs. Short term as a commercial fisherman, but we sunk the boat. That was not good. I was a janitor and bedmaker on the north slope during the building of the pipeline. And then I went as a day laborer to a furniture company and stayed there ever since.

Tracy Alloway (4:02)

This is already really fascinating. So one thing that Joe and I are learning about Alaska in real time is it is incredibly cyclical and sort of you have these boom bust cycles that are tied to what's happening in the oil industry. So you mentioned making beds when the pipeline was getting constructed. Is it fair to say that furniture sales follow that boom bust cycle as well when there's a lot of activity, lots of people moving to Alaska and building stuff? Do you suddenly see demand for furniture ramp up and then when it kind of goes bust, do people start selling their, I don't know, their beds on the corner?