Earning Forecast Lowered for Am. Woodmark
Winchester, VA American Woodmark Corp., the publicly-traded
cabinet manufacturing giant based here, announced that earnings per
share for the company's second fiscal quarter are expected to be
lower than earlier estimates.
Citing early-fall sales volume that "is proving to be disappointing," American Woodmark president and CEO Jake Gosa said that while demand for the company's kitchen and bath cabinetry "remains solid" in new construction markets, "the retail-remodeling sector has not experienced the normal fall increase in activity."
"While we continue to gain share with our major retail partners, the overall level of sales has fallen short of expectations," Gosa said.
In addressing current remodeling demand in the sectors American Woodmark serves, Gosa added, the lower level of overall activity "was amplified by a more pronounced shortfall at (major customer) The Home Depot," which recently launched a national appliance effort that, Gosa said, "reduced (the retailer's) focus on the special-order cabinet business."
In addition, a delay in the rollout of The Home Depot's new Thomasville cabinet line to be produced under the terms of an alliance with American Woodmark "eliminated incremental volume that could have been generated during the season," Gosa noted.
Gosa said that the lower-than-expected demand "comes at an inopportune time" for American Woodmark, which recently broke ground on a new manufacturing facility in Tennessee and is now seeing margins being unfavorably impacted by the combination of the sales shortfall and higher fixed costs resulting from the underutilized capacity.
Looking forward, he observed that indications are that the softness experienced by American Woodmark in the remodeling sector "is temporary," and that the company's new manufacturing capacity will eventually be required to meet expected product demand in the spring.