November 10/17, 2014; Volume 28/Number 11
By Ken Ryan
The industry’s leading flooring distributors continue to increase hardwood as a percentage of their product portfolio, and the reasons are quite apparent: Hardwood is a fashion product, and consumers aspire to have it in their homes, more so than ever before.
“A decade ago no one would have described wood as a fashion product but today they do,” said Enos Farnsworth, president of Denver Hardwood, one of the flooring industry’s largest distributors of hardwood flooring. “When we do seminars, we sit in front of 25 designers, and that didn’t happen a decade ago.”
Other distributors have gotten the message.
Hardwood is the largest single category for T&L Distributing in Houston, accounting for 47.3% of its business, up from 40% a year ago, according to Bob Eady, senior vice president of sales.
Herregan is another distributor beefing up its wood presence, from 16.7% in 2012 to 18.3% in 2013. Other distributors report similar increases.
While hardwood remains a fashion choice for remodeling jobs and new residential work, the fundamentals of the business are slowly improving as well. “Lumber, wood flooring pricing and margin are the big headlines in wood,” said Bruce Zwicker, CEO of Haines, Glen Burnie, Md., the industry’s largest distributor. “Wood was red hot beginning in 2012 with lumber prices increasing as the demand for it surged. [As a result], lumber supply for flooring became very tight. Wood flooring demand was driven by a surge in new residential. All of that is now calmer, but margins are not satisfactory.”
Zwicker said that while lumber prices have stabilized—which is a good thing—manufacturers have not seen wood flooring prices catch up with the ramp up of lumber prices since 2012.
The bad news: The margin on hardwood is still too low. On the plus side, the supply of hardwood and lumber is not as tight as it was a year ago.
Some distributors are balancing their brand portfolio with private-label offerings they say help boost both top-line sales and bottom-line income. Herregan’s private-label Paramount division of mostly solid hardwood is doing well in the market, and its Mannington engineered business is soaring on the strength of the distressed hickories in the line.
Other flooring distributors have found similar success in diversifying their portfolio to private-label offerings. For example, Jeff Hamar, president and CEO of Galleher, Santa Fe Springs, Calif., said his private-label hardwood products—Reward, an engineered product, and Monarch, a European oak—ranks as his No. 1 and No. 2 sellers. This in a year when Galleher’s hardwood category is growing nearly 25%.
“It is a look and price [that is working],” Hamar said. “But you need both private label and brand to be successful. You need the Mullicans, the Somersets, the Lauzons in the eyes of the dealer. It gives you the margin.”
Cain & Bultman in Jacksonville, Fla., which this year celebrated 90 years of business, continues to fare well with its 80-year partner Armstrong. “American Scrape has been a phenomenal product for us,” said Buddy Faircloth, president of Cain & Bultman. “Handscraped in general has been very good, and that continues to grow.”
Adam Burke, president of Readers Wholesale in Houston, said 95% of his strong wood business is handscraped, and that has been driving the business for quite awhile. “The volume is in birch and hickory, that’s what we are seeing the most activity in,” he said.
Trends
For some time now, wider, longer planks coupled with rustic and distressed looks have been in favor among distributors and their customers, and nothing seems to be slowing that trend. Hamar said 7 inches and wider and 6 feet and longer in a true European white oak is his home-run product. “Clearly what is hot are the longer lengths to 10 feet long, wider widths to 7, 8 and 10 inches, European white oak, with rustic grades. It has been an amazing phenomenon,” Hamar said. “In addition, soft scraped, edged, European finishes and multiple stains are faring well. There are products using Russian white oak and Chinese white oak but they don’t have the same characteristics and frankly don’t look as good as the oak from France, Poland and Germany. We actually have some products that are 12 inches wide and 12 feet long—amazing.”
Rick Holden, chief operating officer at Derr Flooring in Willow Grove, Pa., said higher-end customers are specifying longer lengths, and widths continue to grow wider. “Dark tones are still very popular in mocha and chocolate. Also grays, from light to almost black, are still selling briskly,” he said.
Pat Theis, vice president of sales and marketing at Herregan, said distressed hickory has been the go-to product for at least four years, and the distributor just now is taking advantage of that. “We have hit our sweet spot with it the last two years and are trying to catch up to where we should have been,” Theis said.
Farnsworth added, “Between walnut and hickories and character grade, there’s a whole new avenue for the consumer.”