Cavalier moving back to wool

Flooring consultant Sarah Eckhoff with wool carpet from Cavalier Bremworth. Photo: Gregor Richardson
Flooring consultant Sarah Eckhoff with wool carpet from Cavalier Bremworth. Photo: Gregor Richardson
The price of strong wool may be flagging at the farm gate but carpet manufacturer Cavalier Corporation is betting on the natural fibre to turn its business around.

Reporting a loss of $16.8million off revenues of $135million for the year to June yesterday, the company said it would be focusing its marketing efforts back into one of its core competitive advantages, wool flooring.

The company said soft market conditions had been felt acutely in Australia, in particular, which accounted for 40% of its Australasian revenues. Demand from New Zealand had softened in the latter part of the year, as well.

Excluding goodwill impairments and a $12million loss on last October's sale of its wool scouring business, ''normalised'' profit of $1.9million had been in line with guidance issued in May 2019. The company said the results reflected reduced sales of low-margin synthetic carpets, while high-end wool carpet sales were increasing as consumer demand changed.

Cavalier CEO Paul Alston said consumer preferences were shifting back to wool, which was reflected in growth in demand for the company's top end Bremworth Collection wool carpets.

''It's off a relatively low base but while volumes are small, these high-quality, higher-margin carpets provide a significant contribution to group profits.''

The company said New Zealand revenue also came under pressure from the decline in low-margin synthetic carpets, which affected volumes and margin. Mr Alston said locally manufactured wool carpets accounted for around 20%-30% of its market across Australasia.

''We consider ourselves the world's best manufacturers of wool carpet, so it isn't a hard decision to increase our focus on wool, which offer a host of natural benefits to its synthetic equivalent.''

Cavalier's renewed focus on wool was highlighted by last week's announcement of a tie-up with New Zealand Merino (NZM), which Cavalier said would support its move to a ''design led'' business and ''enhance commercial performance and deliver long term sustainable returns''.

''NZM has a 20-year track record in transforming New Zealand's sheep industry from producing commodities to partnering with and supporting the growth of premium brands globally. It has extensive sales, marketing and innovation expertise, applied through its ZQ ethical wool brand and has worked closely with leading brand partners including Icebreaker, Smartwool, Loro Piana, Reda and Allbirds,'' Mr Alston said.

''Together with NZM, we will be looking to revitalise the demand for wool carpets as a natural, more sustainable, healthier alternative to synthetic fibres, further delivering to our 'world of difference' vision.''

brent.melville@odt.co.nz

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