September 3/10, 2018: Volume 34, Issue 6
By Ken Ryan
Flooring dealers are expecting a better-than- average fall selling season, citing a stronger economy that favors investment in home improvement projects such as flooring. The one caveat expressed by retailers: the potential threat tariffs may have on business in the final two quarters.
For the most part, dealers are viewing the fall market as a continuation of what has been a solid year so far. For a few retailers, however, the autumn is a chance for a reprieve following an uneven first half.
“As fall approaches, we see continued growth opportunity in all segments of our business, including multi-family, new construction, commercial, wholesale and retail,” said Craig Phillips, president of Barrington Carpet, Akron, Ohio, whose overall business is up 10% year over year, and his gross margin is up nearly a full point. “We got through the dog days of summer, experiencing very strong growth in our retail business. The luxury vinyl/WPC category continues to dominate our hard surface business in all segments.”
For Carpetland USA, with nine stores across eastern Iowa and western Illinois, the first part of 2018 was a missed opportunity squandered by an elongated winter in the Midwest that hurt business for months. However, there is a silver lining with a harsh winter, according to Doug Bertrand, executive vice president. “I believe with the long winter a good portion of the country missed the normal spring selling season, which created pent-up demand. Now, with winter approaching, I feel customers will have disposable income to invest in their homes. As a result, I feel the fall selling season will be better than average.”
The winter weather was harsh in western Pennsylvania as well, and the summer was no great shakes, either. All the more reason why Mike Foulk, owner of Foulk’s Flooring America, Meadville, Pa., is ready for a bounce back during the fall selling season. “Late summer has slowed on the retail side with vacations and anticipation of schools starting. The fall shows promise of coming back as product sales promotions go into effect.” Foulk said Main Street commercial and contract have remained strong throughout, and the LVT and ceramic segments have continued to drive demand.
Chris Kemp, owner of Kemp’s Dalton West Flooring, Newnan, Ga., sees the robust activity continuing. Still, he worries retailers might have a false sense of security amid these heady times. “My concern is we could get used to the volume we are doing. I want to be ready as a company to be profitable in normal business seasons. We need to be careful not to build the machine bigger than we can feed it.”
Don’t tell that to Rob Elder, owner of Hiller’s Flooring America, Rochester, Minn., who doesn’t mind if the good times keep rolling. “The fall season is off to an unbelievable start—we are coming off the biggest August in the store’s history by far, and September is starting off right where August left off. The LVP category is still doing incredible numbers. The economy is strong, and our customers are confident with it and excited to spend money on their homes.”
Some retailers worry that the pent-up demand that finally seems unleashed could be threatened by tariffs on Chinese vinyl products. “The only concern I have is the pending tariffs that could put the brakes on LVP,” Bertrand said.
Barrington Carpet’s Phillips agreed, adding, “My main concern for the near term is the potential 25% tariff on imported flooring products from China and how that could hamper the overall dominance of this category.”
Beyond tariffs, there are other issues retailers are facing on a local level. For example, at Montgomery’s CarpetsPlus Color Tile, with three locations in southwest Florida, the issue is the persistent red tide (the normal, seasonal occurrence in southwest Florida). But this year’s red tide has persisted since last November, making it the worst bloom since 2006. The problem has killed off marine life, kept tourists away and hurt the economy. “The red tide has definitely affected our area and some of our snow birds will not be returning,” said Missy Montgomery, manager. “However, our fall compared to spring and summer will be up since we still have a very large customer base for fall and winter. We do the majority of our business in those months, being that we are in Florida and we have a large retirement community.”
Sam Roberts, president and owner, Roberts Carpet & Fine Floors, Houston, was hesitant to give a prediction on the fall season but offered this: “I’m a terrible source for prognostication.” But product trends are another story. “Sophisticated patterns in carpet; wide and long white oak hardwood with low luster and little distressing, and the continued strengthening of the LVP category are some pretty clear trends at our stores.”