Armstrong Floor Products is made of tough stuff. It is our largest business segment, with 42 percent of total sales and 30 percent of operating profits. In 2000, it faced many difficulties: high raw-material costs, unfavorable rates of exchange on European sales and slowing growth rates for vinyl flooring.
The business proved its resilience by introducing innovative products and focusing on becoming a more efficient organization. Sales for 2000 were down 7.5 percent, primarily reflecting the negative impact of foreign currency translations. In the Americas, sales were on par with the previous year, bolstered by Armstrong ToughGuard™ vinyl sheet flooring, laminate products and the reintroduction of linoleum into the Americas.
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Innovative products ToughGuard flooring is a proprietary Armstrong product that delivers superior durability and raises the stakes in the vinyl industry. Builders can install ToughGuard floors with confidence, knowing that it's less likely to be gouged or dented by tradesmen while construction is underway. ToughGuard flooring alleviates builders' headaches because it reduces callbacks for ripped or torn flooring.
Just as innovative is Armstrong SwiftLock™ Laminate Flooring. With laminates being one of the fastest-growing flooring segments, SwiftLock boasts quick and easy installation. Using a patented locking design, SwiftLock planks lock together without glue. Installation time is cut in half, and there's no waiting before furniture or appliances can be replaced. These product innovations are just a few examples of ways in which Floor Products is working to retain its leadership standing and strengthen its position worldwide. A new leadership team appointed toward the end of 2000, set clear goals to achieve this end. The first is to become a more customer-focused organization, making it easier for homeowners, retailers, builders, distributors and other decision-makers to do business with Armstrong. The second involves invigorating the product line with innovations that attract and delight customers, with the colors, designs and performance features they're looking for.
Product line introductions in 2000 include:
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It takes a tough product to win over a tough crowd like the builder market. But many home builders and flooring subcontractors are quickly developing a soft spot for Armstrong ToughGuard™ vinyl sheet flooring.
After unveiling ToughGuard floors at the national home builder show in January 2000, builders voted with their orders. Within three months, 158 builders representing 38,000 homes switched from competitive vinyl to Armstrong. The momentum continued throughout the year, making ToughGuard floors one of the highlights for Armstrong Floor Products Operations.
Builders are switching to Armstrong ToughGuard flooring because it saves them time and money. With its pressure-laminated inner core, ToughGuard flooring is so sturdy that it virtually eliminates costly callbacks to repair damage. Property managers, who typically have to replace flooring every two or three years, can pocket substantial savings by stretching out the replacement cycle. Consumers like the durability, but love the hundreds of beautiful designs and colors.
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Building brand presence As product innovations continue in 2001, a greater emphasis is being placed on building brand presence. The Armstrong brand is the strongest in the industry, and Floor Products continues to bolster that position with marketing strategies like national advertising and Web sites. At www.armstrong.com, the "Residential Products" link allows customers to use an interactive Room Viewer to try more that 1,000 floors in their choice of 22 rooms. The "Commercial Flooring" link brings up an information-rich site for architects, designers and specifiers with information created to meet their 24/7 needs.
The e-power floor solutions™ program introduced in 2001 creates free Web sites for key Armstrong retail dealers, giving them a 24-hour online showroom that displays their offerings to consumers and increases traffic to their stores. Participating retailers benefit from a powerful Web-based business tool that gives them direct access to consumer leads, marketing support and enhanced communications among dealers, distributors, manufacturers and customers. Further marketing strategies focus on what customers see when they walk into their local retail store. The emphasis in 2001 will be on merchandising systems that make Armstrong products stand out, helping customers make the buying decision. In some national and regional home center chains, commercial displays will be placed alongside residential displays to gain more visibility. Supporting this effort will be ongoing training for salespeople about Armstrong products, both commercial and residential.
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Strengthening the business In September, Armstrong announced the reorganization of the European floor products group to strengthen the business and better serve customers of Armstrong DLW Europe. Key elements of the reorganization plan include implementing a focused manufacturing strategy throughout Europe; eliminating approximately 300 positions in production, administration and sales; closing or combining sales offices; closing the Team Valley, U.K., commercial tile plant; discontinuing unprofitable products and leveraging global development and design synergies.
In 2000, Floor Products was resilient in maintaining its leadership position in an increasingly difficult market. In 2001, we will bring excitement back into the business through innovative new products and merchandising.
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