Mohawk Focusing on Value Products To Boost Sales

Calhoun, GA, Feb. 25, 2009--Although Mohawk CEO Jeffrey Lorberbaum painted a fairly challenging picture for 2009, it was clear the company continues to make significant adjustments to deal with the recession.

In addition to all the cost cutting and restructuring the company has previously implemented, Mohawk is also focusing on more value oriented products. It is pursing lower margin business it probably would have left to other firms in more prosperous times.

"We see trading down in all channels as customers use lower quality products to stay within their budgets," Lorberbaum said in a Tuesday conference call.

He noted that Mohawk polyester carpet products “continues to have greater value to the consumer, and is taking share from other fibers."

"In October, new promotions under Mohawk brand will be running on advertising our Smartstrand brands of polyester.”

He said Unilin has completed the start-up of the U.S. laminate line, which can produce higher value products, previously supplied from Europe.

"We are increasing our focus on retail and multifamily channels and all the different pieces," Lorberbaum said.

"We are significantly increasing our participation in the carpet tile offering and distribution, including, offering new products at lower values than the overall marketplace to try to expand the carpet tile category."

Mohawk’s quarterly net loss of $128 million, or $1.87 per share, included a pre-tax non-cash impairment charge of $124 million for goodwill and other intangible assets. Mohawk also recorded a $30 million pre-tax charge related to business restructuring as previously announced, the company said.

Quarterly sales of $1.485 billion were down 18%.

The full year net loss was of $1.458 million, or $21.32 per share, included pre-tax non-cash charges for goodwill and intangibles of $1.543 billion, and a deferred tax impairment of $253 million and a business restructuring charge of $30 million pre-tax.

Full year 2008 sales of $6.826 billion fell 10% from 2007.