Mohawk profits up, outlook tough

Calhoun, Ga. -- Getting a big lift from a recent acquisition, deep cuts in capital spending and an $8.8 million refund from U.S. Customs, Mohawk Industries pushed third-quarter profits up by 10.3%, to $127.7 million from $115.8 million last year – but operating profits in the core unit fell by 9.4% to $110.5 million from $121.9 million a year ago.

Sales, similar to earnings, were lifted by this year's acquisition of Unilin, a European hard flooring operation. Sales climbed higher by 19.2%, to $2.0 billion from $1.7 billion last year. Sales in the core Mohawk business declined by 1.2%, to $1.2 billion.

Dal-Tile division sales grew by 11.5%, to $501.2 million from $449.4 million, but operating profits hit the wall, unchanged at $69 million.

The added growth from Unilin comes at a price. Mohawk paid down $168 million in debt during the period, but long-term debt still more than tripled to $2.4 billion from $700,000 last year. Interest expense on the debt more than quadrupled to $44.7 million from $10.8 million during last year's third quarter.

Jeffrey Lorberbaum, chairman and ceo, said, "As all levels of the industry try to stimulate consumer purchases, we see more promotional activity," squeezing margins and leading to slowdowns in its plants. "Production schedules have been reduced to reflect lower demand and control inventory levels."

Wall Street was miffed by what it heard from one of the few bright lights in the American textiles industry, and knocked the stock down in heavy trading by 3.8% at mid-day, or $2.98 a share, to $74.81. Leading the retreat, brokerage house USB cut its rating on Mohawk shares to 'neutral' from a prior 'buy' rating.

Home & Textiles Today Staff | News & Commentary

 Home Textiles Today is the market-leading brand covering the home and textiles markets, offering a comprehensive package of print and online products. Home & Textiles Today provides industry news, product trends and introductions, exclusive industry research, consumer data, store operations solutions, trade show news and much more.

Featured Video

  • Live From New York: Fashion Comes Across the Pond

    Camera Icon More Videos

Subscribe to
Home & Textiles Today eDaily
Receive the news you need to know about the trends in the industry delivered right to your inbox.


HTT Cover October 2017

See the October 2017 issue of Home & Textiles Today. In this issue, we look at the Top 25 Online Retailers.  H&TT's exclusive annual ranking of the biggest online sellers of home textiles finds that while pure play etailers continue to fly, bricks & clicks are digging into omnichannel. See details!