Stifel Releases Deep-Dive Analysis of LVT Market
St. Louis, MO, September 5, 2018-Analyst Stifel has released an exhaustive analysis of LVT and its disruptive impact on the flooring industry.
The key points of the report are as follows:
* LVT is a roughly $2.5 billion industry in the U.S, growing 25% to 30%, and accounts for approximately 10% of the U.S. wholesale shipment value. Stifel believes that LVT can double its penetration in the next three to four years. Overseas markets are seeing growth in LVT but not the 30% pace.
* LVT is currently accounting for an estimated 75% to 100% of the domestic flooring industry growth. Stifel has never seen a category of flooring grow this fast, and the implications are profound. Demand is so strong and product innovation so impressive that the analyst has not seen an over-capacity/commoditization of the category as it feared a couple of years ago. In fact, LVT is quite hard to make, and the numerous capacity expansion announcements by U.S. players two years ago have struggled to come up to capacity.
* While carpet has been in secular decline for years, the impact on other flooring categories is clearly evident. In order of impact from greatest to least currently, Stifel assesses the impact as follows: sheet vinyl and vinyl tile, wood, laminate, carpet and ceramic tile.
* LVT currently wholesales and retails at a premium to the average ASP (average selling price) of all flooring. This is good. The average ASP of LVT at retail has actually risen slightly in the U.S. as product innovation and advancements have outpaced commoditization at the low end. Margins are attractive for manufacturers and retailers currently.
* Just over 50% of all LVT consumed in the U.S. is supplied currently by China. Stifel estimates only 25% of all LVT is made currently in the U.S., and it is all flexible LVT, not the faster growing multi layered flooring products that include WPS and SPC. The tariff issue, depending on the outcome, could benefit the six minor producers in the U.S., including Armstrong Flooring and Mohawk.
* The shift to LVT is so fast that is proving somewhat disruptive to manufacturers and retailers. Retailers of flooring, not to mention consumers, are only just learning about this product and its attributes as the definition of what comprises LVT is changing as the product evolves.