Cavalier gears up for Aussie push
Cavalier Corporation is gearing up for an aggressive push into Australia as it comes to the end of its flirtation with synthetic carpets and focuses on wool and natural fibres.
The NZX-listed company has sold its Auckland property, paid off its debt, and at its December 31 balance date had $26.3 million of cash hand to invest in its new strategy.
Cavalier announced last July that it was exiting the synthetic carpet market as it bets on increased demand for more sustainable products. It had to move into synthetic carpet in 2013 to remain viable as consumers switched to synthetics.
As people become more aware of plastics and their impact on the environment, ‘‘the world is now a different place’’, said chief executive Paul Alston.
The company will end production of synthetic carpet in a month or two.
The move to natural fibres will essentially halve its volumes, which is ‘‘exciting but also scary at the same time’’, Alston said.
The change meant Cavalier dropped a shift at its Auckland factory at the end of last year, resulting in the loss of about 30 staff. Alston said the company asked for voluntary redundancies, which suited many staff who were coming to the end of their careers.
Cavalier expects the switch will result in reduced revenue this year. However, increased wool carpet sales are expected to lift revenues from its 2023 and 2024 financial years. The full benefits of the transformation are expected from 2025.
The company is preparing for an ‘‘aggressive’’ wool marketing campaign that will run mid-year, Alston said. ‘‘There are a number of pros [for] wool over synthetics or plastic, which people don’t realise or have forgotten. We are gearing up for quite a large promotion,’’ he said.
Cavalier is preparing its factories to cope with any increase in demand. ‘‘We have been adding more capacity, particularly to our yarn mills, to increase our volumes so when we do launch, if there’s any jump in demand we can cope with it,’’ Alston said.
The company is targeting Australia, a market six times bigger than New Zealand, and where it is a much smaller player than Godfrey Hirst, owned by the New York Stock Exchange-listed firm, Mohawk Industries.
While Cavalier is also seeking to grow in New Zealand, there are more opportunities in Australia, Alston said.
The company’s marketing will target women aged 30 to 60, online and through magazines, using influencers and across various media, including Facebook and Instagram.
Cavalier plans to sell its more affordable carpet range through an additional 300 retail outlets in Australia, adding to its 700 to 800 existing retailers.
The company will offer training and incentives such as rebates to retailers to help them promote woollen carpets, he said.
Cavalier’s biggest challenge will be convincing consumers that wool is a better product, he said.
‘‘Plastics are bad for the environment,’’ he said, noting one house-lot of nylon synthetic carpet was the equivalent of 22,000 plastic bags.
‘‘People are going to the supermarket and not taking plastic bags, but laying a house-lot of carpet is the same as [taking plastic bags to] the supermarket for the rest of your life.’’
Sales of wool carpet in New Zealand have fallen to about 15 per cent of the market, from about 80-90 per cent 25 years ago, he said.
‘‘We have the best products in the world sitting on our back doorstep and we’re not using them,’’ Alston said.
Farmers facing low wool prices were considering whether to keep their flocks and people could support them by choosing wool carpets over synthetic, he said.