Q.E.P. Co. Inc. (Boca Raton, Fla.), owner of the Harris Wood Floors (Johnson City, Tenn.) brand, attributed its 26.7 percent drop in third-quarter earnings to cost increases and pressure within its distribution channels.
Q.E.P. Co. Inc. (Boca Raton, Fla.), owner of the Harris Wood Floors (Johnson City, Tenn.) brand, attributed its 26.7 percent drop in third-quarter earnings to cost increases and pressure within its distribution channels.
Q.E.P.'s 2012 fiscal year will end Feb. 29. Whereas the company reported net income of $3.0 million during the third quarter of its previous fiscal year, the company reported net income of $2.2 million during its latest third quarter. Net sales, meanwhile, rose 6.4 percent in the latest quarter to $64.9 million from $61.0 million reported during the third quarter of its 2011 fiscal year. The company attributed the sales increase to its growing flooring product lines in Europe and Australia, and especially in the U.S.
Still, Q.E.P. Co. Inc. noted record sales of $200.6 million during the first nine months of its 2012 fiscal year, which ended Nov. 30. This was an increase of 10.1 percent from net sales of $182.2 million reported in the same period of its 2011 fiscal year.
"This quarter … was disappointing to our company as the headwinds of cost increases reduced our margins and we saw substantially increased pricing pressure within our major distribution channels," said Lewis Gould, chairman of the company's board of directors."
Gould elaborated on how the company would rectify pricing pressures, and he reiterated his company's seeking acquisitions.
"While we expect continued pricing pressure from customers, we have taken very positive steps to confront these issues by aggressively looking to moderate the impact of cost increases throughout our worldwide supply chain, expand our distribution channels and look carefully for synergistic acquisitions that are complementary to our existing business," he said.
In addition, the company reported lower earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of its 2012 fiscal year. Its EBITDA dropped 31.1 percent to $4.2 million from $6.1 million in the third quarter of its 2011 fiscal year.
