Feltex rolls out rewards in spite of cost cutting

Despite facing tough trading conditions and a year of serious cost cutting, carpet-maker Feltex found enough in its budget to shout one former sales manager a trip to Paris as a farewell gift.

The former Australia-based general manager of residential sales was given the all-expenses-paid trip for two - with a price tag estimated as high as $50,000 - as a retirement gift in January after 28 years with the company.

It topped a $1.3 million severance package made to him and three other senior executives who retired soon after the company's profit downgrade in July, and was presented at a function at the Australia Club in Melbourne, attended by carpet retailers, Feltex board members, former and present employees.

Feltex would not comment on whether the estimated cost of the trip was accurate, saying it was part of internal sales and marketing costs.

Farewell gifts were common with people who had been employed in the company for 30 years, it said through a spokesman.

However, Shareholders Association chairman Bruce Sheppard said that type of gift was unacceptable unless it was part of a negotiated severance on commercial terms.

"Frankly, a cake from the cheesecake factory and two bottles of reasonably cheap plonk should have done it because that's about all that company can afford," he said.

Since making two profit downgrades last year, Feltex has been fighting to curtail costs and last month posted an $11.8 million half-year loss, dragged down by $15 million in costs from widespread operational restructuring.

In recent weeks, Feltex has lost two of its most senior Australian sales managers to rival companies.

Melbourne-based Brendon Fall, national manager of residential sales who had been with the company 10 years, resigned to go to Victoria Carpets.

National sales manager Garry Mobbs has taken a job with Godfrey Hirst.

A former senior Feltex manager, who left the company late last year, described Fall as "the best carpet sales person in the country by the proverbial country mile".

He said the pair's departure was a nail in the coffin at a time when sales were suffering in the face of aggressive competition across the Tasman.

"It has created a huge vacuum within the business in terms of the sales side - to lose those sorts of salespeople, with no one in the wings to replace them."

Strategic planning general manager Julie Simon has also resigned and will leave Feltex at the end of the month.

Feltex said it wished the outgoing staff well with their careers and was confident it would proceed well without them.

In an update on market conditions on Monday, Feltex said tough competition from key rivals across the Tasman had squeezed profit margins for January and February.