Earning Forecast Lowered for Am. Woodmark

by WOHe

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.

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