Interface Announces Restructuring Plan
Interface, Inc. (Nasdaq: TILE), a worldwide carpet tile company and global leader in sustainability, on Jan. 5 announced a new restructuring plan that will result in pre-tax restructuring charges in the fourth quarter of 2016 and first quarter of 2017.
Many of the changes in the restructuring efforts will be focused on the company’s FLOR business model. After careful consideration, the Company has decided to exit the specialty retail channel and will eventually close the majority of its FLOR retail stores between January and the end of April 2017. Interface also will relocate FLOR’s headquarters from Chicago to Interface’s headquarters in Atlanta. Additionally, the charges will include workforce reductions of approximately 70 FLOR team members and a number of other employees in the commercial business in the Americas and Europe regions, and write-downs of certain underutilized and impaired assets.
In connection with the restructuring plan, the Company expects to incur a pre-tax restructuring and asset impairment charge in the fourth quarter of 2016 of approximately $17-19 million, followed by an additional charge in the first quarter of 2017 of approximately $7-9 million. The planned charge in the first quarter of 2017 is primarily related to exit costs associated with the FLOR retail stores, a majority of which are expected to remain open for the first quarter of 2017.
The anticipated charges, which total approximately $25-27 million, are part of a continued effort to streamline costs and more closely align the company’s operating structure with its business strategy. The charges are expected to be comprised of approximately $10-11 million of severance expenses, $6-8 million of lease exit costs, $7-8 million for impairment of assets and $1 million of other items. The plan is expected to be substantially completed in the first half of 2017, and is expected to yield annual cost savings of approximately $13-14 million beginning in fiscal year 2017, with approximately $9 million of the savings realized in selling, general and administrative expenses, and $4 million realized in cost of sales.
Jay Gould, Interface’s President and Chief Operating Officer commented, “FLOR is a vital part of the Interface family. This shift represents an important step in ensuring that the brand continues to thrive while capitalizing on our expertise in business-to-business and opportunities in e-commerce. We will maintain design and innovation hubs with our locations in Upper East Side Manhattan, SoHo NYC and San Francisco.”
Mr. Gould concluded, “While we are excited about the opportunities ahead, these decisions are never easy, but are necessary to accelerate our strategic plan. As we complete the restructuring process, we are working closely with both affected team members and those who will remain to ensure a smooth transition.”
In conjunction with this announcement, Interface hosted a conference call on Jan. 6, 2017. An archived version of the webcast may be accessed at http://www.interfaceglobal.com/Investor-Relations/Calendar-of-Events.aspx.
Interface, Inc. is the world’s largest manufacturer of modular carpet, which it markets under the Interface and FLOR brands. The Company is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value.