Despite obstacles, quarterly outlook appears bright

Home Categories Carpet Despite obstacles, quarterly outlook appears bright

By Ken Ryan

The stay-at-home economy continues to buttress the flooring industry as remodeling projects surge.

With few exceptions, flooring retailers continue to report strong activity as they enter the final four months of what has been an unprecedented 2020.

Initially blindsided by the fast-moving coronavirus that shut down much of the industry and country in late March, flooring dealers have rebounded thanks to a robust home improvement segment.

Flooring retailers told FCNews that signs remain pointed in the right direction, with pent-up demand still vibrant. “Our business continues to do very well, especially considering the current situation,” said Ted Gregerson, owner of Ted’s Abbey Carpet & Floor in Anniston, Ala. “Year-to-date, sales in our two retail stores are up a combined 23% over last year.”

While Gregerson’s increase may represent the higher end of what flooring dealers are reporting, retailers for the most part say business is on par with 2019 numbers. That flooring retailers are even holding their heads above water at this point in 2020 is a testament to their entrepreneurial skills and being in the home improvement market.

Consider what so many dealers are wrestling with in 2020: an ongoing COVD-19 pandemic that has killed more than 182,000 Americans and infected another 6 million; a disrupted supply chain that has led to inventory and logistics slowdowns; full restoration of 25% tariffs on products sourced from China; and an impending Presidential election that is sure to be contentious.

“And 2020 isn’t done throwing us curve balls,” said Eric Langan, owner of Carpetland USA (The Langan Group). Davenport, Iowa. “However, I’m hopeful that the ‘stay-at-home economy’ continues to roll on and we can capitalize on the opportunities presented.”

A split consensus 

Brian’s Flooring & Design in Birmingham, Ala., is optimistic about the fall selling season.

Given the ongoing virus and fear of a second wave, coupled with a brutal election season that will likely dominate the airwaves and social media platforms, some flooring retailers are split on their forecasts for the final four months of 2020. “I think things are largely unpredictable but likely to be rocky over the next few months,” said Sam Roberts, owner of Roberts Carpet & Flooring, with multiple locations in the Houston area. “No one really knows what the continued effect of the virus will be on our businesses, and that will be exacerbated by what will probably be the most contentious election of my lifetime. I also believe things will return to some kind of recognizable ‘normal’ by some- time in the second half of 2021.”

Phil Koufidakis, president of Baker Bros, with multiple stores in Phoenix metro, hedged his
bets. “As long as virus numbers stay under control, I would anticipate a stronger-than-normal September and October,” he said. “Beyond that, with the Presidential election unknown, we could see a change to all that depending on the outcome, so I’m making no prognostications.”

In Fort Myers, Fla., John Taylor, owner of Taylor Carpet One Floor & Home, said he sees a “mixed bag” for the fall selling season. “We think the winter residents from up north will be happy to get back down here, and with that we expect strong sales,” he said. “The question mark is our Canadian friends might not be able to come back and how much that affects the economy down here with their absence. We do see opportunities, though, as the real estate market is hot and we believe a lot of people will be moving into our area to get away from some of the big cities up north. We welcome them with open arms.”

Brian McCarver, owner of Brian’s Flooring & Design, Birmingham, Ala., said his business was ahead of quota for the month of August after falling a tad short in July. “We are optimistic about the last quarter and are very hopeful to make up the shortfall from April and May.”

What retailers can control are their own marketing and advertising decisions. On that front, Abbey’s Gregerson is making the same advertising commitment this fall as in any other year, despite it being a Presidential election year. “Because other stores in our area have made the decision to stop all advertising during this time, we believe we have a golden opportunity right now to increase our market share and brand recognition by continuing with our marketing strategy,” he explained. “So far it has worked out very well for us.”

Products in demand

LVT products, like Mohawk’s SolidTech+, are a hot spot for dealers this year.

Before COVID-19, the LVT category, led by the SPC/rigid core subsegment, was sailing along on the way to another double-digit increase. The good news: not even the worst pandemic in 100 years has taken the wind out of those sails—or sales. “LVP continues to be our hottest product,” Taylor said. Steve Weisberg, president and owner of Allentown, Pa.-based Crest Flooring, said “business has been extremely busy, and we are selling a tremendous amount of luxury vinyl for installation and DIY.”

Likewise, Carpetland’s Langan said his stores “continue to do well with WPC and rigid core. Retail continues to be very opportunistic as consumers hunker down and reinvest in their homes.”

(LVP is so strong in some places that installations are backed up several weeks, according to several dealers.)

A few soft spots

With millions of Americans working from home and scores of businesses closed or slow to reopen, specified commercial has felt the impact, observers say. Some estimates have the segment down 30% year-to-date.

Ted’s Abbey Flooring’s commercial business is down 6% compared to last year even as his overall business is surging. Still, he remains optimistic. “Although the commercial segment is down for us, we do believe projects that were put on the back burner will come to fruition in the next six months,” he noted. “We will be ready to seize on those opportunities as soon as they arise.”

Other dealers FCNews interviewed say their retail business has slowed a bit after a torrid May-June.

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Sept. 7, 2020