Executive Forecast 2023: Hardwood

We’re cautiously optimistic the industry will be up low to middle single digits. Up a little bit in units but more so in dollars.

Both engineered and solids in wide/long planks are going to continue to drive the growth. In terms of sectors, we expect to see activity in the remodel market.

We expect we will be right in line with the overall category growth forecast of low to mid-single digits, maybe just slightly better.

We did a very good job of transitioning the company business and moved on to the third generation of ownership. And with new ownership comes new leadership. It’s a hurdle that we overcame quickly and successfully.

The challenge obviously is going to be the economy and interest rates—where will they go, where will they lead us? The opportunities are going to be growth in certain market segments that we aren’t currently in.

We’re still seeing some additional distribution growth in certain pockets of the country. That’s going to open up additional sales opportunities for Mercier, especially in solids.

I think the first quarter is going to be tough. But in the third quarter of next year I expect things are going to pick up.

We are bullish on remodel. People don’t want to move now because they have a 2% interest rate on their existing home, and they’ll pay a 7% interest if they try to upgrade. You’re going to see more remodel because of that.

We expect to grow faster than the overall industry.

We invested in a world-class plant in Cambodia. We also acquired American OEM, which gave us access to a whole new range of engineered products. We also launched new brands such as tmbr. So, we’re certainly investing in the parts of the wood flooring category that are growing faster—engineered, wider/longer plank and sliced face vs. rotary.

Right now people seem to be absorbing the realities of the interest rate changes, but we’ll see how that holds up.

I think we’re well-positioned across the board. We’re putting $30 million into our U.S. wood plants—automation, new technologies. Not a lot of companies are doing that right now. However, we’re not going to see the benefit of that for the next two years.

We anticipate flat to low single-digit growth.

There are several segments and products that will fuel this growth, specifically the introduction of new wide-width, light-colored, subtle-textured white oak products.

Flat to low single digits. Despite the exciting new products launching in 2023 and going into 2023 in a much better inventory position than we were in the first half of 2022, we can’t ignore the macroeconomic headwinds driven by rising interest rates and inflation.

Some of the most notable initiatives we achieved include our improved inventory, our ability to maintain our customer service regarding order fulfillment despite all the COVID-19 headwinds. Plus, the launch of our new, trend-forward innovative products that support a comprehensive hardwood flooring assortment.

Inflation and rising interest rates will definitely impact business in the upcoming year for all flooring categories. However, we have seen these things most significantly impact wood flooring as wood flooring is regarded as a premium category compared to other flooring categories.

We plan to continue to focus our efforts on developing trend-forward products that align with consumer desires. We expect that hardwood will continue to be the desired aesthetic and we do believe it is a viable flooring option for consumers.

I think the market is going to be down in the low single digits—flat to down a little is probably the best way to say it.

Products with elevated features like sawn-face veneers or wire brushing is really where I think engineered wood is going to win.

We’ve really made a change internally to focus more on market share grabs. So, we’re looking to be slightly better than the overall market.

I think we did a very good job of managing our suppliers, managing the trade routes, etc., to be able to keep our products in service as much as we possibly could. Not to say that we were perfect by any stretch of the imagination, but I really saw us buckle down and drive a level of visibility and accountability that we hadn’t had before within our organization.

Segment-wise, I think builder is definitely going to be a little bit of a challenge as the major builders are looking to take cost out of the homes and look for more ways to come up with more of a “value” offering.

The sustainability aspect on the commercial side is becoming more important to consumers. I think there’s still an opportunity there to drive that story and set engineered wood apart from a sustainability perspective.

We firmly believe 2023 will be a tale of two halves with contraction in the first half and growth in the second half of the year. Ultimately, we believe the category will be close to flat on the year.

The number of homes under construction right now will carry the category through the beginning of the year as remodel will remain weak. Engineered, wide/long plank will continue to fuel the growth, but watch for a return to solids as prices fall back in line with declining lumber prices.

For both Somerset Hardwood Floors and Boen, we are projecting modest growth next year as we continue to expand into geographies not currently covered for the brands and begin to see the fruit of the seeds planted in the market this year.

Clearly, our biggest initiative, as a group, was the acquisition of Somerset Hardwood this year, adding an extremely valuable product line and team to the Bauwerk Group portfolio. This acquisition reinforces our desire to be the world’s leading premium hardwood manufacturer with an increased focus in the North American market.

The X factor is clearly the remodel market and how quickly we see consumers return to remodeling. It’s our belief, with a slowing construction market and increased interest rates, consumers will reinvest in their homes rather than move.

There is still a tremendous amount of opportunity to educate the consumer about why they should choose real wood vs. the imitations and as we do this, we will see the category take share.

We anticipate the hardwood category will be flat in the first half of 2023, with improving market conditions in the second half of the year.

The remodeling market will remain strong, providing opportunities for the professionally installed dealer network and the DIY business.

We believe our growth will continue to trend above the industry average.

We successfully navigated our way through labor and raw material shortages and achieved production increases at all of our plants. We also completed several capital-improvement projects.

Interest rates, obviously, but also consumer confidence impacted by the stock market and inflation.

We are excited about the growth opportunities in 2023 as we launch new technologies and products across both solid and engineered hardwood. We will continue to support customers with leading-edge product innovation and—all made here in the USA.

We’re expecting modest growth for the category as a whole, somewhere in the low to mid single digits.

Consumers in the market for our products still show a strong desire for high-end hardwood, especially wide and long plank flooring. They are not going to be deterred from higher gas prices.

We’ve grown 55% since we launched the Fabrica hardwood brand about four years ago. Obviously, we’re starting at a different point compared to the major manufacturers in the industry, but we expect to outpace the industry again in 2023.

We continued to build market penetration for the Fabrica brand and rolled out a number of new collections and displays in the market.

We expect to see slower movement on the new residential construction side of the business.

We expect the residential replacement market—especially the consumers who buy our product—will be strong in 2023. To that end, we are planning to further expand our lineup next year to gain more market penetration.