Friday, July 31, 2026 from Floor Covering Weekly

Commentary
By Sharyn Bernard

There’s good news and bad news in the flooring numbers. On the downside, the market has continued its now three-year slump from its COVID-induced peak of 2022. But on the other hand, the drop is not as steep as in prior years. It’s a glass half full viewpoint, however, as several of the market factors impacting the business are not going anywhere anytime soon.

From the seemingly never-ending tariff situation — which still is unresolved and confusing — to vexing high interest rates, inflation rates and fuel prices, also with no end in sight, consumer sentiment remains at historical lows. Add in some geopolitical tensions and it’s no wonder consumers are rattled.

As someone once famously said, “it’s the economy, stupid.” While economists dicker over whether we are in a K-shaped, E-shaped or some other alphabet-shaped economy, consumers are watching their wallets and prioritizing purchases, and if it’s a choice of groceries or carpet, they are opting for groceries.

Big Picture

The flooring picture is directly related to the big economic picture, particularly the housing picture. And that picture is not great by almost all measures. According to the National Home Builders Association (NAHB), new housing starts were 1.36 million, down 0.6 percent from 2024. And multifamily starts are anticipated to fall 5 percent in 2026.

What’s more, total sales of homes in 2025 across the U.S. hit their lowest levels in 14 years at 4.74 million, according to Realtor.com.

These figures are due to the obvious culprits — ongoing affordability challenges, high housing price-to-income ratios and high interest rates, which impact mortgages and construction costs.

And the laws of supply and demand aren’t helping. There is a historic — and widening — gap of housing supply. In 2025, the gap was more than 4.03 million homes, according to Realtor.com. With increased costs and high interest rates, many homeowners are staying put, stressing the supply. This impacts Millennial consumers the most as available homes are increasingly out of reach.

The bad news doesn’t end there. Economist Kermit Baker points out that since 2020, home prices have increased by 54 percent nationwide and more than 50 percent in 73 of the nation’s 100 largest markets. The median sales price in 2025 for an existing single-family home was nearly five times the median household income, dramatically exceeding the price-to-income ratio of 3.2 averaged throughout the 1990s.

And for many homeowners, increases in non-mortgage expenses, including insurance premiums, energy bills, and property taxes, are straining household budgets.

But on the glass half full side, the remodeling business remains solid, which bodes well for flooring. NAHB noted that over the past 25 years, the number of remodeling companies has nearly doubled, to more than 128,000 and remodelers now represent over half (56 percent) of all residential building construction companies. Even more encouraging, the NAHB/Westlake Royal Remodeling Market Index (RMI) for the fourth quarter of 2025 was 64, up four points compared to the previous quarter.

There may be relief on the horizon as Congress just passed the 21st Century ROAD to Housing Act which aims to expand the nation’s housing supply by reducing regulatory barriers, but there is no timeline for when to expect actual results.

Tariffs & Shutdowns

While most companies braced for wide-ranging impacts of the proposed tariffs, for the most part it never came. But the timeline made everyone’s head spin:

In February, the U.S. levied a 25 percent tariff on products from Mexico and Canada.
In March, the U.S. implemented a 34 percent tariff on China.

The so-called “Tariff Liberation Day” came on April 2, 2025, and was supposed to impose across-the-board 10 percent tariffs on all goods imported in the U.S., as well as reciprocal tariffs of anywhere from 11 to 125 percent on more than 80 countries.
In October a 10 percent levy was implemented on lumber and some wood products.

What followed was a dizzying array of announcements from the government, politicians, industry executives and pretty much everyone. The proposed tariffs, coupled with supply chain disruptions and ballooning fuel and freight costs, led to several companies hiking prices, whether across the board or as a line item. All told, about $300 billion tariffs were collected, until . . .

The Supreme Court struck down the extensive use of the International Emergency Economic Powers Act (IEEPA) that was used to implement these tariffs in early 2026. This, of course, created more chaos when the International Court of International Trade (CIT), determined that companies that paid the tariffs are due a refund — but only importers of record. Who that importer of record is has caused even more confusion. If every company raised prices due to tariffs — and those increases trickled all the way to the consumer — who is due a refund? Unsurprisingly, there are now dozens of lawsuits, both by importers, retailers (including Amazon and Costco) and consumers, to recoup that money. At the end of the day, the lawyers will likely be the biggest beneficiaries.

2025 saw the exit of one of the big carpet players as Mannington’s Phenix discontinued the brand completely and exited the business in October. Mannington entered the residential carpet segment in 2020 when it acquired Phenix Flooring in Dalton and Pharr Fibers and Yarns in McAdenville, N.C. In 2022, the company also purchased Georgia Carpet Finishers in Chatsworth, Ga.

At the time, Tom Pendley, president and CEO of Mannington Mills, told Floor Covering Weekly that the loss of Stainmaster and Invista irreparably damaged the business. “When we bought [Phenix], Invista was still in the Stainmaster business. Stainmaster was a critical product in the Phenix product line,” and Mannington had already been a longtime Invista fiber customer. “That was a drastic impact,” Pendley said.

And while COVID helped lift the line for two years, losing Stainmaster deeply impacted the business, Pendley added. “We knew carpet had lost a lot of market share, but we thought carpet had found the bottom. And those were the two fundamental pieces — we lost the [Stainmaster] brand and carpet was not at the bottom,” he told FCW.

Big Behemoths

The big — and bigger — box stores are also a good bellwether for the market. These numbers, too, have good and bad sides. Bad news first:

Lowe’s flooring sales in 2025 were $4.1 billion, down 4.9 percent from 2024. What’s remarkable about this is this is after Lowe’s acquired Artisan Design Group for $1.33 billion, which was done to bolster Lowe’s commercial business. The deal, announced in April, closed in June, so time will tell how this acquisition pans out in 2026 and beyond. Lowe’s certainly is banking on it, saying in a release at the time, “With more than 18 million homes needed in the United States by 2033, we expect new home construction will be a major driver of pro planned spend for the next decade,” said Marvin R. Ellison, Lowe’s chairman, president and CEO. “The acquisition of ADG allows us to build on our momentum with Pro planned spend and is expected to expand our total addressable market by approximately $50 billion.”

Tile Shop Holdings sales were down 3 percent in 2025 to $336.8 million. What’s more, gross margin declined to 63.8 percent from 65.7 percent due to increased product costs and tariffs. The company also closed two stores and a distribution center in 2025. And, at the end of 2025, the stockholders voted for a series of stock splits as it was delisted from NASDAQ and is now private. Time will tell what that means for the company, but it will save $2.4 million annually in regulatory costs.

Now for the (semi) good news: Floor & Decor, reported a 5.1 percent sales increase in 2025 to $4.69 billion, with a gross profit of $2.04 billion, up 6 percent. However, the retailer added 20 stores, closed one and added a distribution center to its arsenal during the year, which bolstered sales. All told, the company now has 276 warehouse and design stores and five distribution centers across 39 states. One indication is that same store sales decreased by 1.8 percent due to the same economic pressures everyone else is facing, resulting in lower ticket prices and reduced customer traffic. This is after a decrease of 7.1 percent in 2024.

In fact, the company stated this quite directly in its annual report. “In the past few years, we have faced a challenging environment as mortgage interest rates remain high and existing home sales remain low, which together have reduced home remodeling activity. Many homeowners are staying in their homes rather than moving or undertaking renovations due to factors including high financing costs and home affordability concerns. These conditions have directly contributed to softer demand for hard surface flooring. We have seen pressure on customer traffic and average ticket sizes, resulting in negative comparable store sales and weaker performance from new stores.”

Floor & Decor also warned about future results if the economy doesn’t turn. “If interest rates remain elevated or climb further, if housing turnover stays depressed, or if broader economic growth slows, consumers may continue deferring flooring purchases. High inflation over the past two years has also eroded discretionary income and savings, making budget-conscious consumers more hesitant to undertake big ticket projects. Any sustained weakness in consumer demand — whether due to prolonged high borrowing costs, low housing turnover, reduced consumer confidence, or an economic downturn — would adversely affect our sales and profitability. Prolonged macroeconomic headwinds could lead to continued negative same store sales, inventory build-up, and the need for heavier promotions to stimulate demand, which in turn would further pressure our margins and cash flow and could continue to adversely affect our business, financial condition, and operating results.”

And with 4,200 SKUs and approximately $2.7 million of inventory on hand — plus an additional $486.3 million of inventory outside its stores — the company is particularly susceptible to geopolitical supply
chain disruptions.

Rise of the Super Store

It seems like every year there is a saga about Lumber Liquidators, LL Flooring, or whatever iteration they are in at the time. This year is no different. Launched in 1994 by Tom Sullivan, Lumber Liquidators became a high-flying success story. Until it wasn’t. The company changed its name LL Flooring in 2021 to distance itself from negative publicity surrounding formaldehyde in its laminate flooring. It went downhill from there. By 2023 sales had plummeted and by 2024 the writing was on the wall. LL Flooring declared bankruptcy in August of 2024, closed nearly 100 stores and hoped to continue operations. When a deal didn’t happen, LL Flooring prepared to shutter. But Sullivan’s F9 Investments bought about 220 stores and other assets and returned to its Lumber Liquidator roots. However, the damage was done. The business never re-appeared — a quick Reddit search tells the tale of massive, unceremonious layoffs, closings and other sagas.

One would think this was the end of the line for LL Flooring/Lumber Liquidators. One would be wrong. In April 2026, Bed Bath & Beyond — yes, the store that filed Chapter 11 and shut down in 2023 and came back after Overstock.com bought its digital assets — acquired nearly all F9 Brands’ assets, including Lumber Liquidators, for $150 million. That deal also included F9’s Southwind Building Products.

The deal was part of what is now called Beyond Inc.’s move to create a Beyond Home Services group, that will include storage, closets, cabinets, flooring, installation, renovation and distribution. This deal came literally days after Beyond bought The Container Store for $150 million.

Marcus Lemonis, executive Chairman and CEO of Bed Bath & Beyond said at the time, “With the anticipated addition of Lumber Liquidators and Cabinets To Go to Elfa and Closet Works, Beyond Home Services is established with the brands, the capabilities, and the team to serve the homeowner from concept to completion.”

Bed Bath & Beyond and The Container Store have unveiled co-branded stores and apparently the company plans to allow customers at the “Custom Spaces” section of The Container Store/Bed Bath & Beyond locations to access products and services from F9 Brands. In addition, the company plans to maintain stand-alone Cabinets To Go and Lumber Liquidators stores as well and will “leverage more than 2.2 million square feet of retail space to create full-service home project centers where customers can design, purchase, finance, and install complete home solutions,” per a statement. It is unclear if Bed Bath & Beyond’s ubiquitous 20 percent off coupons will apply!

While TJ Maxx doesn’t sell flooring (yet), the stores, particularly parent company TJX’s Home Goods, has an impressive assortment of area rugs. And the model of fast-moving inventory coupled with a treasure hunt shopping feel, is something that most retailers can’t replicate. Target and Walmart must plan, source and buy in massive amounts to stock their thousands of stores. TJX stores get weekly shipments which go to different stores — no two stores are alike, and you can’t count on finding anything twice — the shopping and discovery is part of the plan. Can this be done for LVT? No. Can it be done for more area rugs, a bright spot in flooring? Yes.