Hills puts outside director on board

Willi Hill

Family-owned carpet retailer Hills Floorings and the group which owns Carpet Court have completed their pairing by taking reciprocal positions on each other's boards.

Flooring Brands New Zealand took a controlling stake in Carpet Court in 2007 and announced in November it had added Hills Floorings to its franchise stable.

Now Hills managing director Willi Hill has joined the board of Flooring Brands.

In return Flooring Brands chairman Rodney Martin takes up a position on the Hills board, the first independent director the company has had in its 48-year history.

The moves come at a time of intense competition in the carpet retailing sector.

In October 18 disaffected Carpet Court franchisees broke away to form rival retail group Flooring Xtra.

They had been unhappy with Flooring Brands' shift from a co-operative model to a franchise system.

It was a setback to Martin's plans to command 50 per cent of the New Zealand market. Flooring Xtra now has 52 outlets.

Flooring Brands has an annual turnover of $220 million and claims around 40 per cent of the flooring retail market with 70 stores - 45 Carpet Courts and 25 The Floor Stores.

Half the stores, mostly the Carpet Courts, are owned by the company while the rest of the network are franchises.

Martin has also put off plans to float Flooring Brands. As a result, its chief executive of just six months, Ed Connolly, who had been lured from The Warehouse Group, left at Christmas time. The group also lost financial controller Mark Moore and board member Sandy Maier.

Martin said market conditions meant the listing plans would be on the back burner for at least another year to 18 months.

"We're continuing to grow so when we do get there we'll be bigger than we expected to be."

Hill said the current downturn was "one of the more challenging" the longtime retailer had seen.

Residential sales had been hard hit, with people making household items like carpet and appliances last a bit longer.

"The market's down basically because that chunk of the market, the middle market, they're the ones that are choosing not to buy."

The key was to keep up the advertising, and potentially even increase market share.

Hills' three Auckland retail stores and four commercial outlets around the country are to be rebranded as Hills Floorings The Floor Store.

Hill said while Hills Floorings was well known in Auckland the group wanted more of a national brand.

Martin believed the market overall was down 17 to 20 per cent, but claimed Flooring Brands' own revenue was down 10 per cent.

Flooring Xtra chief executive Don Barry agreed the market was down about a fifth, but said it was close to the bottom.

He said the market was better outside the main centres.

ON THE CARPET

Flooring Brands NZ
* Owns Carpet Court and The Floor Store.

Hills Floorings
* 48-year-old family-owned business.
* Joined Flooring Brands as a franchisee in November.

The industry estimates the flooring market is down 20 per cent.