Exclusive: AFS taps Vermette to spearhead growth

Home Featured Post Exclusive: AFS taps Vermette to spearhead growth

Michel Vermette

America’s Floor Source (AFS), one of the largest retailers in the country with 2022 sales just south of $200 million, has named former Armstrong CEO and Mohawk business unit president, Michel Vermette, as the company’s new CEO/CFO. The move was announced by company founder and COO, Jason Goldberg, who is seeking aggressive growth over the next five years.

Vermette is charged with leading organic growth across the company’s five channels—retail, builder, multi-family, commercial and wholesale—in the five cities in which AFS currently operates as well as through acquisitions and product augmentation.

In an exclusive interview with Floor Covering News, Goldberg said a group of advisors he hired last year identified four areas where AFS could improve: strategy, finance, marketing and building partnerships on the purchasing and sourcing side. At the same time, AFS made three acquisitions since late 2021 that enabled the company to expand into new markets and upgrade technology. During the integration, AFS learned the need for better due diligence and the importance of communication. Those elements were the main motivators for this change.

“I’ve built and been running this company for 23 years,” Goldberg said. “But when you get to this size, you have to know what you don’t know. It became clear to me the things I didn’t know would inhibit this company from getting to where we have the potential to go.”

However, the one thing that did not appeal to Goldberg was hiring multiple people to address the areas where the advisors felt AFS was deficient. “I would have had to hire a high-level purchaser, a finance leader, a high-level marketer with merchandising experience, someone who understood sourcing and someone who could put a strategy in place. That was not desirable.”

A potential solution emerged in November out of nowhere. “I was at FloorCon and heard Michel Vermette give his keynote; he gave his phone number out and I texted him one minute after his speech was over,” Goldberg recalled. “Never did I think I could find one person who had all that knowledge. I felt if I could get Michel to join the AFS team, nothing could stop us from maximizing our future.”

Job No. 1

Vermette will be charged with one task: enhancing the value of AFS. “I want him to make us more valuable, more respected,” Goldberg said. “I want people to look at AFS and say, ‘They did it the right way, they got the job done.’ I want to be the most admired company in all of flooring and make money doing that. We are a profitable $200 million company and have not come close to maximizing what we can do. When you get the opportunity to get someone of Michel’s caliber, you have to put him in a position to be successful. I won’t put handcuffs on him.”

Goldberg has an array of strengths, but he said he is not what a CEO of a $200 million company should be. “Michel has those traits,” he said. “He has that knowledge. He has led due diligence for some of the largest acquisitions in this industry. He has experience building teams. He has turned fledgling companies into successful companies. He can take us from here to there. He looks at business from a different lens than I do. And we have to look at things differently than we have in the past. His network, knowledge, connections— he is the perfect fit. To get to a billion dollars, you need a person like this.”

Aggressive goals

jason goldberg

Vermette has always been tasked with turning companies around: Dal-Tile, Mohawk Commercial and Armstrong Flooring. For the first time, he does not have to turn around a business. Rather, he is looking to maximize the potential of a successful company. “I’ve done a lot of turnarounds and each was with an established, purposeful plan,” he said. “Here, I will be working with the team to determine where we want to be three and five years from now and what we need to put in place so we can double, triple and quadruple the size of this business. We are in three states but not fully penetrated in those three states. There is so much more potential.”

AFS, Vermette noted, represents a unique opportunity to scale and grow. “I said if I ever was going to be in a president or CEO role again, it would be something I would have fun doing— doing the things I know I would be good at with people I respect. A place where I could make a big difference. After months of discussions, I believe we can accomplish something special here. The vision Jason has is there. They have a very well-run operation, but with some additions there is a lot more that can be done.”

Vermette took his time to make sure he and Goldberg were aligned and that his skill set matches exactly what Goldberg sought. “Finance first and foremost. Building the capital structure to grow, acquire and expand the business. Vendor relationships will be key in partnering with the right folks and making sure we have the right deals for the long term.”

Deals include the right products at the right prices; maybe some exclusivity. “I want to get what I feel we’ve earned for the size company we’ve become,” Goldberg added. “We can move the needle for each other.”

As an example, Goldberg cited procurement of product where Vermette can help. “We have designed our own brand and we’re sourcing it internationally,” he said. “When you have no experience doing that, you can make a boatload of mistakes. Michel’s international experience and vendor relationships fit very well.”

Vermette is also focused on building the organization. “There will be some need to bring in talent. I have a track record of building teams and retaining and attracting talent. So identifying, developing and recruiting will be key.”

To put it simply, achieving Goldberg’s short- and long-term goals are now in Vermette’s hands. “Like I said, first and foremost I want to be the most respected retailer in the country,” Goldberg told Floor Covering News. “I love what I do, and I’ve been doing this for a long time. But I am 52, I have two very young kids. My kids are not going into the business. So, most likely I will end up selling or taking the company public years down the road. There has to be a way for AFS to continue on without my sons running it. I know we have the capability to be the best flooring retailer in the entire country. We were just missing one component—and now we have that component. I’m having fun again. And I want people in the industry to say, ‘I want to be a part of that.’ Supplier, potential acquisition, etc. I want people to say AFS is setting the bar as to what can be done in this industry.”

What makes the best retailer in the country in Goldberg’s mind? “It starts with people who thoroughly enjoy working here; fighting the good fight every day. It’s how your customers look at you, how your suppliers look at you. Give us enough time and we will be the best in every category we touch. Take Empire; I don’t think their customers have a particularly high opinion of them. I don’t think their suppliers particularly enjoy doing business with them. I want suppliers to come to this area and say, ‘There is one company we want to see.’”

Both Vermette and Goldberg told Floor Covering News growth will be organic, through acquisition, through new product categories and through some currently underserved channels. “As an example, we are not fully operational in wholesale or commercial in every geography in which we participate,” Vermette said. “We could probably add $100 million in the five cities we are already in by maximizing the five categories. We will also add markets through acquisition. We have categories we know we need to augment and some we need to add. Some of it will be people who will come along with their expertise. There will be no lack of opportunity for growth. The big thing is to do it in a methodical and opportunistic way.”

According to Goldberg, the infrastructure is already in place. “I have invested so much in the setup of this company. When you look at all the major cities we are in, we have beautiful hubs.” AFS is currently building a 265,000-square-foot facility that will service Columbus with 180,000 square feet of warehouse space, two showrooms and corporate offices.

AFS is already on the lookout for potential acquisitions; however, selectivity is the order of the day, according to Vermette. “Every acquisition takes a similar amount of energy and commitment, so we would be looking for a $20 million-plus company in a major market with a quality, collaborative team. It would help if they are on the same technological platform as AFS.”

Goldberg agreed, adding that he would like a dynamic team with some succession with people who “want to be part of something bigger.”

At the end of the day, Goldberg said there are defining moments in every person’s career and every business’ evolution. “I think when people look back, this one hire will be a defining moment in my career, Michel’s career and AFS.”

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March 6/13, 2023

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