DOW JONES NEWSWIRES
Mohawk Industries Inc.'s (MHK) third-quarter earnings jumped 49%
on expense cuts as the floor-covering maker's revenue disappointed
analysts' expectations.
Shares fell 2.5% at $58.81 after hours in response. Through the
close, the stock had risen 27% so far this year.
Mohawk, which makes tiling, carpet and hardwood flooring for
both homes and commercial locations, struggled with weaker demand
as the housing market deflated and the recession postponed
remodeling projects. To cope, it increased prices on carpet, cut
costs and extended its international reach, moves that revived the
bottom line though sales have yet to truly rebound.
Chairman and Chief Executive Jeffrey S. Lorberbaum said Thursday
that the industry slowdown continued in the latest quarter.
Previously, Lorberbaum predicted remodeling in homes would expand
in the second half and declines in commercial markets would bottom
sometime before the end of the year.
To counter the ongoing weakness, Mohawk has reduced operating
costs, spurred sales with product promotions and launches, and
continued international expansion in Mexico, China and Russia.
In the most recent period, Mohawk posted a profit of $51.1
million, or 74 cents a share, up from $34.3 million, or 50 cents a
share, a year earlier, which included 14 cents of charges. In
August, the company predicted earnings between 70 cents and 79
cents excluding items.
Revenue decreased 5.3% to $1.31 billion. Analysts surveyed by
Thomson Reuters most recently expected $1.4 billion.
Gross margin fell to 26.3% from 26.7%.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com