Carpet maker Bremworth reverses wool only policy
Photo:
Bremworth
Carpet maker Bremworth has reversed its wool only policy and will soon start making synthetic carpets again.
The NZX-listed company, which
stopped producing synthetic carpets in 2020 in favour of a wool-only policy
, will restart production of synthetic carpets at its Auckland facility in the next financial year.
It comes following a recent shake-up of the Bremworth board, with
group of unhappy shareholders, led by new chair Rob Hewett, prompting the departure of three sitting directors
. Its chief Executive Greg Smith has also stepped down after four years.
Hewett earlier said the coup was prompted by the
company's slumping profits
, with revenue falling from $148.1m in 2018 to $80.3m in 2024.
The dissenting group said the decision to stop selling synthetic carpets in favour of wool-only products had not resulted in improved sales, while operating costs remained high.
Hewett, who replaced former chair George Adams, said there was strong demand from major New Zealand and Australian carpet retailers for Bremworth to produce both synthetics and wool.
He said by not having synthetics in their portfolio they had made things more difficult.
"The challenge that we have with the business is about 85 percent of the carpet floor covering market is not wool and we're missing out on it. We need to spread our costs across a wider base. Our customers are clearly looking for a synthetic product."
He said they were also very mindful of stakeholders.
"I am a farmer of wool and I do this with a heavy heart but the company's viability quite frankly is at stake here."
It also follows Bremworth settling with rival carpet maker Godfrey Hirst, settling court proceedings in relation to a past marketing campaign Bremworth initiated in 2020 when it ceased producing synthetic carpet and moved to manufacturing wool carpets only.
Godfrey Hirst alleged that aspects of that campaign mischaracterised the relative environmental and health impacts of synthetic and wool carpets and breached the Fair Trading Act.
Bremworth denied breaching the Act, but acknowledged certain parts of its past advertising from the 2020 marketing campaign may have misled some consumers. These had been removed and would not be used again.
The new synthetic range, which will initially comprise a small, but carefully curated, number of products, will be distributed under a separate brand to distinguish these products from its Bremworth-branded all-wool products.
No new capital expenditure is required and the company anticipates a minor increase in headcount to support the additional volume.
Hewett expected having a complete portfolio will actually help them grow wool product sales.
However, Federated Farmers meat and wool chair Toby Williams said the wool industry was teetering and this would further knock farmer confidence.
"It's a tough pill to swallow for the industry."
He said it was disappointing but understandable.
Williams acknowledged Bremworth was a business though and shareholders had a right to expect returns.
He said it was important for people to start recognising the environmental benefits of wool, especially with
declining sheep numbers
and
farmland being converted to carbon forestry
.
Andy Caughey, chief executive of industry group Wool Impact, said Bremworth manufacturing synthetic carpets again didn't minimise their commitment to wool or their wool carpet offering.
"This range extension, which includes synthetics, will strengthen the company's operating model by optimising its manufacturing capacity and generating more revenue as it continues to invest and expand its wool business," he said.
"The world needs more wool."
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