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Dealers report mixed reviews for first quarter

April 16/23, 2018: Volume 33, Issue 22

By Ken Ryan

 

The first 100 days of 2018 have yielded some uneven performances for flooring retailers and distributors, with most reporting a slow start in January and February followed by some improvement in March/early April. Still, the prevailing sentiment is that, to date, 2018 has been an underachiever, saddled by late winter weather woes in the East and Midwest along with burgeoning inflationary pressures.

Cathy Buchanan, owner of Independent Carpet One Floor & Home, Westland, Mich., didn’t mince words when asked to assess the first 100 days. “I wish you wouldn’t have to bring up the past when it comes to the first three months of 2018 because they were horrible,” she told FCNews. “I haven’t seen numbers down like this in at least four years. We didn’t make our mark. For January through April 10 we are down 12.7% in written sales. Thank goodness for our delivered sales.”

Buchanan would not use weather conditions as an excuse, either. While acknowledging that it does play a part, she noted it will play a completely different role once the weather breaks. “People will be focusing on their yards and enjoying warm weather. It’s a catch-22 with the weather. I have to think positively, but that is a hard thing to do because we are heading into the summer months when traffic is typically down. I can’t explain this phenomenon; it doesn’t make sense. Retail is struggling and maybe it is due to e-commerce purchases.”

Flooring retail continues to be a roller coaster business month to month, and regional differences play a role. For example, in San Antonio, Atlas Floors Carpet One got off to a rough start before things started to turn around, according to Billy Mahone III, manager. “Overall business has been up the first 100 days, but it is interesting how we got there.” January and February were slower than normal, he noted, but business has been booming since. “We are expecting business to be steady through the rest of 2018, resulting in a moderate, single-digit increase over last year.”

It was also a slow start for The Vertical Connection Carpet One in Columbia, Md., which experienced a lighter-than-normal January. “Since then, business has picked up nicely,” said Adam Joss, co-owner. “We’re pushing full steam ahead; we’re pacing for a record year. At some point, business will turn. However, we don’t see any signs yet.”

A year ago, weather in the mountains out West was brutal with record snow. Not so much this year, and the results proved favorable to dealers like Dillabaugh’s Flooring America in Boise, Idaho. “The first quarter was eerily manageable,” said Casey Dillabaugh, owner. “The mild winter of 2018 has made our ability to fulfill the needs of both residential and commercial contractors at the same time as our retail work.”

Similar to their retail brethren, distributors reported some mixed results. For example, Scott Rozmus, CEO of FlorStar Sales, a top-20 distributor based in Romeoville, Ill., said the first 100 days of 2018 were a little slow vs. 2017. However, he noted 2017 was particularly strong by comparison. “In talking with our clients, weather across the Midwest impacted business in parts of February and March, which usually are fairly busy months. January was OK, but folks were slower later in the quarter.”

Jeffersonville, Ind.-based Gilford-Johnson Flooring, another top-20 wholesaler, finished the first quarter very close to its budgeted goal. However, as it entered the second quarter, call volume and sales were slower than last year. “But I remain very positive, especially now that the Mastercraft acquisition in Florida has been integrated into Gilford-Johnson and the Florida team is fully trained on all of our product offerings,” said Dennis Cook, president and CEO.

Inflation concerns

Industry observers have seen consumers trading down from higher-priced products like wood into LVT and WPC during the first 100 days. The result: Dealers are closing sales, but the ticket might be smaller. Then there is the issue of inflation, which is beginning to rear its ugly head.

“Over the next year it appears evident we will see some significant inflation,” FlorStar’s Rozmus predicted. “Suppliers across the board are announcing significant increases. Many cost inputs are increasing substantially, whether in raw materials, such as plasticizers, or in transportation costs—not just freight per se, but additional costs due to newer regulations, driver scarcity, etc. Many people in the channel have limited experience managing in an inflationary environment. The consumer or end user ultimately needs to bear the cost of inflation but getting there sometimes is easier said than done.”

For Bob Weiss, CEO of All Tile/Carpet Cushions & Supplies, in Wood Dale, Ill., the first 100 days has been more about managing a new location. “We just moved into our new corporate facility in Wood Dale, so the excitement of the combined operations has permeated the first 100 days,” he said.