Floor Covering Weekly April 21, 2014 : Page 1

Vol. 63 No. 8 A Hearst Business Publication April 21, 2014 $4 Coverings 2014 F LOOR C OVERING W EEKLY The Industry’s Business News & Information Resource 8 Communication key for NFA goals By Janet Herlihy [San Antonio, Texas] The National Floorcovering Alliance (NFA) gathered at the Hyatt Hill Country Resort here, March 30 – April 2, to share the ideas and best practices that go into making this 42-member elite organization so effective and powerful. After serving as NFA president for about 18 months, Phil Koufidakis, pres-ident of Baker Brothers Super Floors in Phoenix, said he has been most impressed with the willingness of members to get involved in the organization. “We have seven committees and the members have been most generous with their time,” Koufidakis stressed. Fourteen NFA members were among FCW ’s Top 50 Specialty Flooring Retailers ranking in 2013. As such an elite group of carpet and flooring dealers, Koufidakis described NFA members as retailers that are high-profile industry leaders with multi-stores, who are dealers of better goods and believe in advertising. “The biggest ‘get’ for Continued on page 4 Haines prepares, procures for growth By Mallory Cruise [Glen Burnie, Md.] Rosana Chaidez, vice president of sales, marketing and product procurement for Haines, is laser sharp when it comes to creating a strong and profitable portfolio for the growing distributor. Joining Haines, No. 1 on Floor Covering Weekly’s ( FCW ) Top 25 Distributors list, in 2002, she has held the positions of chief information officer and vice president supply chain, gaining insight into procur-ing the right product for the company’s now vast customer base. And with the recent acquisition of CMH, previously No. 3 on the FCW Top 25 Distributor listing, maintaining a strong product mix and pro-viding quality service for its customers is all the more important. of new product because that’s “It’s a blend of our cus-our commitment to our suppli-tomer feedback and our ers and because we recognize that knowledge of the market that our manufacturers utilize a lot of allows us to manage a strong R&D resources to look at new product portfolio. We’re trends. Suppliers also understand always looking at new market the demands in each region and trends, and the right colors, market,” said Chaidez. styles, length, width, tile sizes and finishes for specific prod-Adapting to market shifts ucts,” she explained. Haines is also very adept at One policy that has allowed Rosana Chaidez shifting to meet new product the mega distributor to main-tain strength, even in tough economic times, and consumer demands, explained Chaidez. “Customers want to continue to reinvent is supporting its manufacturing partners and taking advantage of the investments they make themselves. There are new demands sur-rounding them — Lumber Liquidators and in product development. “We’re recognized in the market as a house shop at home businesses introduced a new of brands and our preference is to work with dynamic to our retailers, and our retailers our existing suppliers. We support the launch Continued on page 19 Winter weather puts freeze on flooring By Janet Herlihy It was not your imagination or media hyper-bole. The weather from December 2013 through February 2014 really was uniquely severe for much of the U.S., according to the National Oceanic and Atmospheric Admin-istration (NOAA) National Climatic Data Center. The Midwest was especially hard hit, with Wisconsin, Michigan, Minnesota, Iowa, Indiana, Illinois, and Missouri all reporting seasons that are among the top 10 coldest winters on record, according to NOAA. Sev-enteen other states from Washington to por-tions of the northern Gulf Coast to New York were colder than average. Combine that cold with above-average precipitation across the Northern Plains, Midwest and along most of the East Coast, and you have a perfect storm of condi-tions that had a ripple effect across virtually all businesses. From school closures and high heating bills to cancelled flights, plant shutdowns and delivery delays, winter touched all parts Shaw’s manufacturing and shipping of everyday life and the supply felt the effects of weather like this. chain. Randy Merritt, president of Shaw Industries, noted, “Even in North-most snow fall since records have been kept. west Georgia, we had some down days We were able to catch up easily by working due to weather. This is tough on custom-through Saturdays, but from an expense ers trying to place orders and get needed standpoint, there were costs such as energy product shipped. But the closings here use (which) spiked in January and there were were only a couple of days and shipments additional startup and shutdown costs. We also lost one quarter of a day starting and resumed quickly.“ Severe weather affected operations for stopping production,” Holm said. Kevin Biedermann, senior vice president of Mannington too, according to Kim Holm, president of the company headquartered in residential flooring products for Armstrong Salem, N.J. “We had to shut down five or six World Industries, agreed that winter weather days in South Jersey, where there was the Continued on page 19 Steve Brannen (left), Carpet King, and Dave Snedeker, Nebraska Furniture Mart, flank Phil Koufidakis, Baker Bros., during a break in the member/vendor meetings. Periodical For breaking news updated each business day, visit us online at www.fcw1.com

Communication key for NFA goals

Janet Herlihy


[SAN ANTONIO, TEXAS] The National Floorcovering Alliance (NFA) gathered at the Hyatt Hill Country Resort here, March 30 – April 2, to share the ideas and best practices that go into making this 42-member elite organization so effective and powerful.

After serving as NFA president for about 18 months, Phil Koufidakis, president of Baker Brothers Super Floors in Phoenix, said he has been most impressed with the willingness of members to get involved in the organization. “We have seven committees and the members have been most generous with their time,” Koufidakis stressed.

Fourteen NFA members were among FCW’s Top 50 Specialty Flooring Retailers ranking in 2013. As such an elite group of carpet and flooring dealers, Koufidakis described NFA members as retailers that are high-profile industry leaders with multistores, who are dealers of better goods and believe in advertising. “The biggest ‘get’ for our members is the camaraderie with others in similar situations and the sharing of best practices. Everybody is big enough to be able to buy right. All our members are non-competing so there is open, honest dialogue, which is essential. Each individual can take from the many,” Koufidakis stressed.

Growing the NFA network is not so much about adding members, but seeking out those who fit the profile and who are willing to be giving and sharing, Koufidakis added.

An open-air reception and dinner kicked off the meeting Sunday night followed by a day of round robin meetings between approximately 26 top tier vendors of hard and soft surface products and NFA members. These 15-minute “dates” gave members a chance to see new products, consider specials and air issues. Koufidakis said the round robin is good exposure for both vendors and members.

One typical exchange began with a vendor, saying, “How are we doing?” and the dealer responding, “Not so great.” The following conversation defined the concern and proposed a solution.

Another vendor presented a new finance program designed for NFA members, while several carpet suppliers discussed a Premier Gallery of 27 styles, nine from each of three manufacturers, which has been developed to correspond to the NFA’s existing hard surface Premiere Gallery. The carpet collection is made up of unbranded soft nylon styles — some solution dyed, some piece dyed — that offer a value story with price points coming in just under branded nylon programs.

Read the full article at http://bt.e-ditionsbyfry.com/article/Communication+key+for+NFA+goals/1687960/205660/article.html.

Haines prepares, procures for growth

Mallory Cruise


[GLEN BURNIE, MD.] Rosana Chaidez, vice president of sales, marketing and product procurement for Haines, is laser sharp when it comes to creating a strong and profitable portfolio for the growing distributor.

Joining Haines, No. 1 on Floor Covering Weekly’s (FCW) Top 25 Distributors list, in 2002, she has held the positions of chief information officer and vice president supply chain, gaining insight into procuring the right product for the company’s now vast customer base. And with the recent acquisition of CMH, previously No. 3 on the FCW Top 25 Distributor listing, maintaining a strong product mix and providing quality service for its customers is all the more important.

“It’s a blend of our customer feedback and our knowledge of the market that allows us to manage a strong product portfolio. We’re always looking at new market trends, and the right colors, styles, length, width, tile sizes and finishes for specific products,” she explained.

One policy that has allowed the mega distributor to maintain strength, even in tough economic times, is supporting its manufacturing partners and taking advantage of the investments they make in product development.

“We’re recognized in the market as a house of brands and our preference is to work with our existing suppliers. We support the launch of new product because that’s our commitment to our suppliers and because we recognize that our manufacturers utilize a lot of R&D resources to look at new trends. Suppliers also understand the demands in each region and market,” said Chaidez.

Adapting to market shifts
Haines is also very adept at shifting to meet new product and consumer demands, explained Chaidez.

“Customers want to continue to reinvent themselves. There are new demands surrounding them — Lumber Liquidators and shop at home businesses introduced a new dynamic to our retailers, and our retailers don’t want to fight and compete with only low-end product. Market demands are also changing; we’re continuing to see wider, longer boards, bigger tiles and European looks, as well as different handscrapes and different species,” she said.

To remain nimble to market changes, Haines maintains a full offering in each of its product portfolios. “We evaluate the trends in all product categories: wood, ceramic tile, LVT, vinyl and carpet collections. With carpet, we make sure to offer new trends, styles and the right fibers. We believe carpet has a lot of opportunity to be sold through distribution so all programs are structured to satisfy that timed need of the retail segment,” Chaidez said.

Haines also works to maintain the right balance of domestic product and imported product. While Chaidez said that the company prefers to buy domestic, it recognizes that certain price points as well as some looks and styles are only available in imported product.

One product mix in particular that is continuing to provide growth for the distributor is LVT. “There are new LVT players and new companies. We also see companies opening new LVT plants in the U.S., such as with Armstrong, Shaw and IVC,” said Chaidez.

She added, however, that there is concern regarding pricing pressure in the LVT category similar to what laminate faced with from the DIY category.

“In the case of LVT, there’s great demand for the product — it performs well and it is great looking. It can also be used for different applications. As long as the industry continues to develop high-end and medium-end product, and not just focus on the low-end product, we think this category has a lot of potential now and in the future,” she said, adding that the company is managing its LVT product portfolio by “working with existing manufacturers to develop the right product mix.”

Managing hardwood
One challenge that Haines as well as other distributors are facing today is an unbalanced hardwood supply and demand coming out of the Great Recession. In fact, according to industry reports, there were 15 percent less wood manufacturers in 2011 than there were in 2001.

“The supply and demand challenge has been overwhelming. The builder market recovered faster than anticipated and domestic manufacturers struggled with supply chain issues because there was more demand than product available. Those challenges differed greatly from a pre-recession standpoint because we didn’t have this same shortage of supply pre-recession. The recession hindered overall efficiency and productivity so manufacturers started making necessary adjustments at plants to follow suit with recession volumes,” she explained. In the wood category, the shortage of raw materials also contributed to the supply issue.

Haines is managing its wood supply in the face of price increases by maintaining good levels of inventory. Buying, and staying, ahead allows Haines to work with its customers to help them implement price increases.

“We’re doing our best to work with vendors by planning ahead to help mitigate those price increases for customers,” Chaidez added. “We understand why price increases are necessary, we implement all price increases in support of manufacturers, but the industry has seen more price increases than any of us expected. We are starting to see price increases in all wood products.”

A successful hardwood portfolio also needs to address regional differences, noted Chaidez. “We look to have the right price points and right product in terms of what’s selling in all of our markets. For example, product that sells in Florida is different from what sells in Maryland,” she said. “Trying to find the right product for each market is demanding. We can’t focus on one market; we have to look at the entire footprint we cover.”

Preparing for the future
Chaidez said that there are outside forces related to global, economic and political factors that could potentially disrupt the 2014- 2015 outlook.

“Government issues can impact consumer confidence and people start to question whether or not they should spend money — this hurts consumer confidence. Housing statistics are getting better, employment is improving and the economy continues to show slow recovery. All those other factors that can add vulnerability to the stability of the economy can change the outlook,” Chaidez explained.

But still, Haines’ outlook for this year remains positive. “The weather this year hasn’t helped but we are optimistic that our growth will be greater in the second quarter,” she said.

In fact, Haines is anticipating modest, and in some markets, double digit growth.

“We think commercial will have a decent year and an even better next year. Residential remodel will continue to grow modestly and the builder market is strong. This year we’re focusing on successfully integrating CMH without any customer or supplier disruption,” she said. “Our highest priority is to remain focused on the business and keep our customers and suppliers happy, and continue to grow business, as well as welcome new team members to the Haines family.”

Read the full article at http://bt.e-ditionsbyfry.com/article/Haines+prepares%2C+procures+for+growth/1687961/205660/article.html.

Winter weather puts freeze on flooring

Janet Herlihy


It was not your imagination or media hyperbole. The weather from December 2013 through February 2014 really was uniquely severe for much of the U.S., according to the National Oceanic and Atmospheric Administration (NOAA) National Climatic Data Center. The Midwest was especially hard hit, with Wisconsin, Michigan, Minnesota, Iowa, Indiana, Illinois, and Missouri all reporting seasons that are among the top 10 coldest winters on record, according to NOAA. Seventeen other states from Washington to portions of the northern Gulf Coast to New York were colder than average. Combine that cold with above-average precipitation across the Northern Plains, Midwest and along most of the East Coast, and you have a perfect storm of conditions that had a ripple effect across virtually all businesses.

From school closures and high heating bills to cancelled flights, plant shutdowns and delivery delays, winter touched all parts of everyday life and the supply chain. Randy Merritt, president of Shaw Industries, noted, “Even in Northwest Georgia, we had some down days due to weather. This is tough on customers trying to place orders and get needed product shipped. But the closings here were only a couple of days and shipments resumed quickly.“

Severe weather affected operations for Mannington too, according to Kim Holm, president of the company headquartered in Salem, N.J. “We had to shut down five or six days in South Jersey, where there was the most snow fall since records have been kept. We were able to catch up easily by working through Saturdays, but from an expense standpoint, there were costs such as energy use (which) spiked in January and there were additional startup and shutdown costs. We also lost one quarter of a day starting and stopping production,” Holm said.

Kevin Biedermann, senior vice president of residential flooring products for Armstrong World Industries, agreed that winter weather had impacted business across the board. “Armstrong had to close factories in Pennsylvania and the corporate offices closed for two and half days,” Biedermann said. “A tile plant outside Chicago was closed because there were 20 days in a row with temperatures below zero and some raw materials solidified in silos.”

Road conditions combined with production delays to slow delivery cycles. Biedermann added, “We usually have just in time shipping, but there were delays across the Eastern half of the country and transportation is still an issue (in late March). We polled our distributors — the Eastern half of the country and Chicago to Texas. Most in the Eastern half had five days or more in the first two months when they couldn’t ship.”

Flooring sales down
The weather also impacted sales in the Midwest and Northeast, according to Holm. “It slowed consumer traffic, but we expect it to start up again now,” Holm said. “Those sales are not lost; they are delayed. Right now, we are seeing gradual improvement, but it is not a recovery yet. Mannington is still bullish on 2014. In 2013, the industry saw some increase and we expect single digit growth overall. Sales will make up for winter losses in the next three quarters.”

On March 27, Armstrong had not ended its first Quarter, but Biedermann noted that markets that were not impacted by the weather were up 20 percent so far (in 2014), and where the weather was an issue, markets were down 20 percent compared to a year ago.

Retailers report chilly sales
Many retailers in affected areas have had a very difficult time since December. Michael Peters, president and CEO of Carpets Plus of Wisconsin, said, “The fourth quarter of 2013 was the first in six quarters to see us fail to increase revenues from the prior year. Unfortunately, the extreme weather conditions of the first quarter saw us decline a second consecutive quarter. A good March couldn”t save the January and February declines.”

But there is good news too. Peters reported, “We can see the uptick already as the last Saturday in March was our best in more than six years. We almost needed more parking stalls at times.”

Steve Brannen, COO of Carpet King in Minneapolis, dealt with more cold and snow than usual, even for a Minnesota winter. “But as the weather is turning, we are beginning to see an uptick,” Brannen reported. “We’ll make up for the slow start in the second quarter.”

Still, Brannen will wait to start his spring advertising until the weather has warmed up. “Most years, it’s in March but this year, it will probably be April,” he said.

Based in the Boston area, A.J. Boyajian, owner of AJ Rose Carpets, said, “This winter was one of the most difficult I can remember. We were coming off an excellent 2013, but weather reduced foot traffic for the first two months of 2014 and humbled us. March was better and we are still very optimistic about 2014.”

G. Fried Carpet & Design Center, Westbury (Long Island) N.Y., also saw a decline in traffic as shoppers stayed home. “It hurt us this year,” said Wendy Fried, owner of the retail operation. “Even when we were writing business, delivery was often delayed because trucks were having a hard time getting out of Georgia. Some customers were so upset that their installations were delayed, that they wanted compensation. We did what we could to accommodate them and nobody cancelled.”

Business began to come back for Fried in March and “We expect to make up what we lost in January and February by the end of the first half,” she said.

Winter in the Chicago area was especially harsh, according to Rick Warman, owner of Rick Warman’s Flooring America with two Chicago area stores and a third in Schereville, Ind. “It killed us,” he stated. “There was no traffic and even today (first week of April) there’s still very little traffic. Weather isn’t that bad now, but temperatures are still below normal. We had snow banks eight feet high along the street. It snowed every Saturday in January and February and even into March. We are just trying to hold it together and wait it out. This has been the worst start to any year since we started in 1912. We were up five percent in 2013, but I don’t see how we can make up what we lost so far this year.”

The question is…
Conventional wisdom holds that delayed sales will be made up, but some are not so sure. “What will happened to the demand that hasn’t been filled?” queried Biedermann. “Will it catch up? Usually it does, but with the unprecedented weather of eight to ten weeks, the concern is that consumers will drop their flooring projects. We expect that some projects will be cancelled. In terms of new construction, will there be labor available when the weather conditions improve? Even the impact of increased heating costs could impact high ticket expenses for consumers — will their budgets allow for home projects?”

Optimism prevails
Merritt is confident that original, positive expectations for 2014 will be realized. “As soon as the ground thaws, builders will be building, consumers will be out shopping, the apartment peak season will kick in, and commercial business will gain momentum,” Merritt predicted. “As some areas are already seeing spring arrive, reports of traffic coming in are building. We are still optimistic that we will have a strong last three quarters of 2014.”

Biedermann agreed, saying that Armstrong’s customers — distributors and retailers — are optimistic and expect that a strong market will catch up when the weather clears. “Retailers are taking on inventory. We share that optimistic feeling,” he said.

Read the full article at http://bt.e-ditionsbyfry.com/article/Winter+weather+puts+freeze+on+flooring/1687962/205660/article.html.

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