Mohawk Net Falls 10.5 Percent in Second Quarter
CALHOUN, Ga.-Income-tax expenses and an increase in cost of goods sold spoiled what otherwise was a decent quarter for Mohawk Industries.
The floor-covering manufacturer posted a 10.5 percent decline in net income for its second quarter, which ended on July 2 and which brought the bottom line to $60.9 million. The company reported income-tax expense of $13.5 million, compared to a non-recurring income-tax benefit of $18.8 million in last year's second quarter. In addition, gross margin fell 90 basis points to 25.9 percent.
Other numbers for the quarter were more positive. Net sales increased 5.6 percent to $1.5 billion. Jeffrey Lorberbaum, Mohawk's chairman and CEO, said the company's top line benefited from sales growth in all of its businesses, in spite of the rough economic environment in both the United States and Europe.
In addition, selling, general and administrative expenses dropped 1.6 percent in dollars and 137 basis points as a percentage of sales, to 19 percent. This pushed the company's operating margin up 50 basis points to 7.3 percent, its highest level in three years. Cost reductions, productivity gains and increases in selling prices provided the booster to Mohawk's operating margin, Lorberbaum said.