The world’s biggest floorcovering maker said Monday it is cutting staff, production and capital spending to trim costs in response to a drop in carpet, ceramic and floor tile sales caused by the coronavirus pandemic and the shut down of many businesses to limit the spread of the virus.
“The world changed during the first quarter, and we are now managing through an unprecedented situation,” said Jeff Lorberbaum, CEO of Mohawk Industries. “Across all of our markets, demand has dropped dramatically, with residential remodeling being impacted the most up to this point and do-it-yourself products performing best, as some people started projects while staying home.”
Mohawk, the Calhoun, Georgia-based floorcovering company, said Monday that its first quarter sales fell 6.4% from a year ago to $2.3 billion, and its adjusted profits slipped to $119 million, or $1.66, per share, from $122 million, or $1.67 a year earlier. Mohawk results were a penny per share below the average estimate by analysts who follow the company.
Lorberbaum said Mohawk entered the year as the world’s leading flooring company “with a strong presence in all product categories, manufacturing in 18 countries and sales in more than 170 nations.
“Until the COVID-19 outbreak, our results for the quarter were in line with our plan, as we benefited from the initiatives we implemented in 2019,” he said. “As we progressed through the period, government actions to reduce the spread of the virus impacted all our markets, with some shutting down retail and manufacturing operations.”
As demand has dropped, Mohawk has reduced production. While Mohawk is benefitting from cheaper raw materials and energy costs, the drop in sales is still forcing cutbacks, Lorberbaum said.
“We are lowering our costs by implementing layoffs and furloughs, using government assistance where available and absorbing labor costs where mandated to do so,” he said.