For many flooring retailers the best thing about 2024 is it’s almost over. The stench from high interest/mortgage rates hung over the industry all year and stifled retail sales for the vast majority.
Not even two interest rate cuts could move the needle. Standing in the way of progress were mortgage rates that hovered around 7%, high enough to bench would-be buyers and dissuade existing homeowners from moving.
“The year [for us] was marked by inconsistent momentum, ultimately ending slightly down from the previous year,” said Bruce Odette, president of The Carpet Exchange, with 17 locations across the Denver market. “Several factors contributed to this inconsistency, with elevated mortgage interest rates playing a significant role. These higher rates, coupled with steady house prices, led to decreased activity among potential new homeowners. Additionally, those transitioning to higher-interest loans found themselves with less disposable income for home remodeling projects due to increased mortgage payments. Despite these challenges, our product categories remained stable as a percentage of overall sales, with a notable spike in our hardwood business.”
For some, a fourth-quarter rally helped to offset a miserable start to the year; others said they were unable to string together extended periods of strong sales. “For us, 2024 was indeed a challenging year,” said Craig Phillips, president of The Flooring Edge, with three Ohio locations. “Our business will end up down high single digits but actually rebounded from a disastrous first quarter.”
The Flooring Edge is among the more diversified flooring businesses, with a presence in both residential and commercial segments. Roughly 40% of its business comes from single-family new home builders, a group that was greatly impacted by interest rates. “Even our custom builders saw a decrease in sales,” Phillips said. “Their customers are often cash buyers but in the challenging economic times that customer stopped contracting with custom builders to build their dream home, seemingly waiting for positive economic trends. Our retail business had a very strong second half while overall performance in the category was still of pandemic highs that brought many customers forward in the buying cycle. Our commercial business mirrored the performance of our retail business, posting a very strong second half. Lastly, our multi-family business was steady throughout the year and ended up our only bucket that was up year over year.”
For Floors and More in Benton, Ark., 2024 will represent its first down year after a string of record-breaking campaigns, with 2023 the high-water market with double-digit increases. “2024 will finish down from 2023—as expected and budgeted—but the business is comparable to pre-COVID-19 numbers,” said Carlton Billingsley, owner. On the bright side, Billingsley said laminate and carpet (higher price per square foot) have increased in sales for 2024, “and we look for that to continue at least for the first half of 2025.”
Johnson & Sons Flooring, Knoxville, Tenn., is another flooring dealer looking to latch onto winning products to help get out of the rut that was 2024. As owner Aaron Johnson explained, “2024 definitely fell flat of expectations with a complete stall out in the months leading up to the election. We’ll finish approximately 5% up on our previous year, but far short of expectations for 2024. Obviously, we were affected by the political environment, inflation, high interest rates and even supply issues. One bright note was the new PureTech product from Mohawk that eliminated some of the supply chain issues while offering a superior product at a good price so that we can make margin.”
For the second consecutive year, inflation and elevated interest rates hamstrung Barefoot Flooring, a Castle Hayne, N.C., retailer. The result: “overall disappointing and a struggle, with 2024 not too dissimilar to ’23,” said John Bretzloff, president. The bright spot came post-election with a stirring of business activity.
Inflation/interest rates are felt acutely most everywhere, but perhaps less so in southwest Florida, which has dealt with three major hurricanes in the last two years. These catastrophic storms historically lead to a spike in business for flooring retailers, and this year was no different. “When we have a major hurricane, we pick up significant business,” said Mike Montgomery, co-owner, Montgomery’s CarpetsPlus Colortile, Venice, Fla. “After the last hurricane we are just starting to see the traffic come through the door. We expect to be about the same in overall sales by end of year. We have had a few doors open for us on major renovations from one of the largest disaster companies in the country. That has pushed us to meet or possibly beat last year’s totals.”
As retailers happily close the book on 2024, they are ready to welcome in what they hope will be a more favorable landscape in 2025. “As we approach the year’s end, stability seems to be returning after the elections,” Odette said. “Looking ahead, we are optimistic that momentum will pick up next year, steering us in a positive direction once again.”
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