Stifel Offers Analysis of Surfaces Show

Las Vegas, NV, January 25, 2016—John Baugh of Stifel offered his analysis of the Surfaces show, which took place last week in Las Vegas, Nevada.

“Flooring trends in 2015 ended the year in our view on a similar glide path to much of the year. Commercial markets were stronger than residential, and the construction side of residential was stronger than the retail side. Our best guess is that total industry flooring units grew in the 3% to 4% range last year with dollars a little better and that Q4 tracked closely to this level. Hard surface growth continues to greatly exceed carpet, particularly in the residential marketplace. Carpet tile continues to drive commercial carpet sales.”

The analyst believed attendance and mood at the show were both good and reports that expectations for growth in 2016 are on par with 2015.

Baugh also offered thoughts on each flooring category: noting that raw material prices remain a positive margin driver, particularly for the carpet side of the business; LVT production is beginning to come online domestically from four major players (IVC/Mohawk, Mannington, Armstrong and Shaw Industries), resulting in margin compression, though growth will help offset that pressure; laminates continue to suffer in volume but pricing and average sales price seem to be fairly robust allowing for reasonable profitability; ceramic volumes remain solid with mid-single digit plays gains; and lastly, wood production is growing in the U.S. as engineered wood floors grow at the expense of solids.

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