Executive Forecast: Resilient–LVT/WPC expected to continue its strong surge well into the new year

December 16, 2016

December 5/12, 2016; Volume 31, Number 13         

By Ken Ryan

 

The double-digit growth that has catapulted the LVT category in recent years is expected to continue in 2017, buttressed by the rise of rigid core products (also known as WPC). The lone caveat may be the very success of LVT, which is ushering in a new wave of players looking to grab a piece of this ever-expanding market.  

Larry Browder, CEO, Karndean Designflooring
screen-shot-2016-12-16-at-9-48-47-amWhat is your projection for category growth next year?
All indications show the category will again grow around 15%.

What segments and/or products will fuel this growth?
Commercial and retail will continue to be strong. Glue down or dryback products will see success in all categories while floating floors will drive the largest growth. Premium products within the rigid WPC segment will drive significant growth and create good margin opportunities.

What is the predicted growth of your company in 2017?
Karndean has enjoyed significant growth year after year due to our Designflooring strategy and customer-partnership philosophy. We fully expect that to continue in 2017 and beyond.

What is the “X factor” that will impact business next year?
The recent U.S. Presidential election and the [carry over] effect over the next four years remains to be seen.

Where do you see opportunities for next year? Challenges?
In 2016, Karndean made significant investments to increase our inventory, production, service and sample capabilities with the expansion of our U.S. headquarters outside Pittsburgh. This will allow us to meet the challenges of increased competition.

What are some of your biggest initiatives for 2017?
The new product launches we have scheduled will expand our product selection beyond dryback and loose lay floors to include Karndean Korlok, a premium, rigid-core format that will provide superior retail, commercial and consumer benefits.

 

Kurt Denman, CMO/executive VP – sales, Congoleum
screen-shot-2016-12-16-at-9-48-52-amWhat is your projection for category growth next year?
Overall I believe the category will continue to see modest growth in the range of 3-4%.

What segments and/or products will fuel this growth?
Rigid core products will lead the category growth, particularly as variations intended to address specific price points and segments are introduced. We plan to introduce additional variations in construction and design options that are worlds apart from anything out there.

What is the predicted growth of your company in 2017?
The past couple of years we have enjoyed steady growth and are planning to outpace category growth. Our plans are for growth in excess of 5%.

What is the “X factor” that will impact business next year?
This shouldn’t be a surprise but the Presidential campaign has been such a distraction. Policies of the new administration and consumer confidence will determine the strength of the overall economy and ultimately industry performance.

Where do you see opportunities for next year? Challenges?
We have seen meaningful growth in the builder and multi-family segments. ArmorCore, our limestone-based sheet product, was specifically created to meet the needs of these segments and has done a tremendous job in helping us take market share.

What are some of your biggest initiatives for 2017?
First is innovation. We’ve seen through the rise and popularity of rigid core products that to drive growth we must continue to focus on finding new and exciting ways to solve old problems. That’s true in product construction and design.

 

Piet Dossche, CEO, USFloors
screen-shot-2016-12-16-at-9-48-56-amWhat is your projection for category growth next year?
I expect for the LVT/WPC category to continue its high double-digit growth.

What segments and/or products will fuel this growth?
Opening price point, dryback, glue-down LVT and WPC will be the main catalyst for this growth. The solid click LVT segment will see its growth stagnate as the more stable composite core construction of the WPC will eventually become the click, floating LVT floor of choice.

What is the predicted growth of your company in 2017?
We are again expecting to strongly outpace the industry’s category growth in 2017, just like we have done in the last three years. Our COREtec product collections are still showing strong upward momentum, with several new collections being launched during Surfaces and early 2017.

What is the “X factor” that will impact business next year?
Clarity on trade agreements and Chinese currency policy will take some of the angst away on the LVT being imported from China.
Overall political stability and clear direction will stimulate the consumer to build, renovate and buy new flooring.

Where do you see opportunities for next year? Challenges?
The acquisition of USFloors by Shaw Industries will provide us with tremendous opportunities to streamline and fine-tune our business. The strength of Shaw’s operational excellence and distribution will be a strong addition to our speed to market and creative DNA.

What are some of your biggest initiatives for 2017?
USFloors’ start-up of the first WPC manufacturing plant in the U.S. will be by far the biggest initiative we will be undertaking in 2017.

 

Paul Murfin, CEO, IVS US
screen-shot-2016-12-16-at-9-49-02-amWhat is your projection for category growth next year?
We do the resilient category a disservice when we put all products in one bucket. You are going to see double-digit growth for LVT. However, on the sheet vinyl side, we show negative growth for felt. All together we see high single digits for resilient.

What segments and/or products will fuel this growth?
LVT enjoyed a superb year in 2016. I don’t see anything to prevent that growth from continuing. It is still the fastest growing product segment in the industry, and when I talk about LVT I include these rigid-type products (WPC), which are driving a good portion of that growth as well.

What is the predicted growth of your company in 2017?
My goal and expectations would be to do better than [the overall] market growth.

What is the “X factor” that will impact business next year?
While people are talking of LVT growing rapidly it is also the most crowded category in the industry. This growth rate is not necessarily something you can take for granted. Companies will have to continue to focus on differentiation and value relative to other product categories.

Where do you see opportunities for next year? Challenges?
There is opportunity for Mohawk resilient to leverage our LVT factory, which is now established and starting to make product in a fairly healthy manner. We are looking forward to taking advantage of that capacity, which we have not had at our disposal before.

What are some of your biggest initiatives for 2017?
We have a variety of product plans across all of our distribution channels. New products and initiatives for IVC include refreshing our Flexitec sheet vinyl line and transitioning our LVT from Belgium production to U.S. manufacturing.

 

Michael Raskin, CEO, Raskin Industries
screen-shot-2016-12-16-at-9-49-06-amWhat is your projection for category growth next year?
We are projecting 15% growth for 2017.

What segments and/or products will fuel this growth?
Dryback will continue to grow, but the floating products will continue to increase due to ease of installation and contractors looking to reduce the cost of floor prep. Click and loose lay products will continue at higher growth rates. There will be more variations of rigid products.

What is the predicted growth of your company in 2017?
We expect our volume to be double of the overall category growth. We expect to be at 30% growth rate due to new distributors, growth from our existing distribution and domestic production expansion. We will launch our waterproof, rigid LVT products.

What is the “X factor” that will impact business next year?
Assuming the playing field is even, the “X” factor will be companies that deliver design, color and consistent quality. You will see a stronger divide between brands driven by design vs. low price LVT brands. The companies in the middle will find it harder to maintain market share.

Where do you see opportunities for next year? Challenges?
The expansion of our domestic offerings will provide exclusive designs and the ability to reduce delivery times. By offering more domestic products we keep our supply chain diversified in case there are trade sanctions imposed or cost increases from freight or overseas suppliers.

What are some of your biggest initiatives for 2017?
To strategically select products that are imported vs. made in the USA and collectively inventory with our distribution partners to maximize our logistics.

 

Russ Rogg, CEO, Metroflor
screen-shot-2016-12-16-at-9-49-12-amWhat is your projection for category growth next year?
Specific to the LVT category, we anticipate total blended growth will be in the 10% range, i.e., “blended” across all segments and all LVT product types/categories.

What segments and/or products will fuel this growth?
All segments will grow but not at the same rate. Floating LVT—rigid-core floating LVT in particular—will outpace all other categories with accelerated growth. This growth in the rigid-core category will come from all [residential] segments and certain commercial segments.

What is the predicted growth of your company in 2017?
We are planning for a 10% increase. With the continued growth of our Aspecta commercial LVT brand specifically related to two new collections that we’ve added (Aspecta Ten featuring Isocore Technology and Aspecta One, a new line of dryback commercial LVT).

What is the “X factor” that will impact business next year?
The “X” factor for Metroflor is to simply execute the various initiatives that we have already begun or have planned. Aspecta Ten, our commercial rigid-core product, has only begun to see exposure during the fourth quarter, so there is a lot of runway for this brand/collection.

Where do you see opportunities for next year? Challenges?
The two greatest opportunities for Metroflor are tied to our plan to engage with and create closer relationships with our Aligned Dealer Network. Through this effort, we desire to establish our Isocore platform as the market-leading technology in the rigid-core category.

What are some of your biggest initiatives for 2017?
We want to continue to invest in and grow our Aspecta business. In two and a half years, we’ve gone from a conceptual new commercial LVT brand to having nearly 200 SKUs across three collections: Aspecta Five, Aspecta One and Aspecta Ten.

 

John Wu, president and CEO, Novalis Innovative Flooring
screen-shot-2016-12-16-at-9-49-16-amWhat is your projection for category growth next year?
We predict the LVT/WPC category will continue to grow at a double-digit pace through 2017.

What segments and/or products will fuel this growth?
We still see continuing growth in the specified commercial segment and the Main Street commercial segment. We also believe the WPC category will continue to push forward residential volume in 2017.

What is the predicted growth of your company in 2017?
Novalis will continue to grow at a double-digit rate internationally.

What is the “X factor” that will impact business next year?
In the U.S. there will be a new Presidential administration, so the “X” factor will be to see how this new administration’s policies and changes will affect the U.S. and world economy.

Where do you see opportunities for next year? Challenges?
LVT continues to be a huge opportunity, especially for Novalis and other large and experienced players. The challenge is to continually innovate. We have some interesting developments in that area for 2017. The other challenge the LVT industry faces: increased raw material costs.

What are some of your biggest initiatives for 2017?
Continued growth in the areas we started in the last half of 2015 and through 2016—commercial, Main Street and our high-performance core (WPC) product.

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