Continued losses, cash burn at Bremworth as improvements don’t materialise

Wednesday, 25 February 2026

Listed carpet and rug maker Bremworth has this morning had to pitch up to shareholders and explain why a bold strategic change of direction instituted last year has not quite worked out yet.

In March last year, a group of investors and industry players, fed up with low earnings and high operating costs at the company over several months, launched a coup against the existing board, and CEO Greg Smith left after that.

Rob Hewett, the outgoing co-chairperson of meat company Silver Fern Farms as well as chairing WoolWorks and Farmlands Co-operative, became Bremworth’s chairperson, bringing on three new independent directors and replacing three existing board members “with immediate effect” after shareholders voted in favour of the plan.

But in reporting Bremworth’s half-year result this morning, the new board had to admit trading conditions had remained challenging and the anticipated improvement in sales performance had not come through, “resulting in continued losses and cash outflows during the half.”

Read more:

• Weak carpet sales thin out Bremworth’s expected US sale payout

• US flooring giant Mohawk suggests its offering a ‘lifeline’ to Bremworth in buying company

• Bremworth starts down path to bring yarn-making back to NZ

• Bremworth ditches 100% wool carpet, reintroduces some synthetic product

Revenue for the period was $44.7 million, up 6% on the prior comparable period, with the increase attributable to a solid performance by its wool buying subsidiary, Elco Direct.

But “while the volume of carpet sold was up on the prior comparable period, a bias in sales mix towards lower margin products and clearances of excess inventory adversely impacted carpet revenue (slightly down) and gross profit (also lower),” the company said.

“Sales of premium wool and synthetic carpets fell short of our expectations. This was primarily because of the ongoing subdued demand for consumer durables like carpet across both the New Zealand and Australian markets.”

Also factored in were delays to the reinstatement of the Napier production plant that had been seriously disrupted by Cyclone Gabrielle in 2023, and the reintroduction of synthetic carpets into Bremworth’s product mix after it tried an “all wool” direction during Covid.

A net loss of $6.4m was sustained in the half, 21.4% worse than the prior comparative period.

The company has upped its investments - helping reinstate the Napier plant with the help of a large insurance payout, the reintroduction of synthetic carpets, and growing its Australasian salesforce.

“However, the targeted benefits from most of these investments are not yet reflected in our financial results, with the lead time to volume growth and return to profitability taking longer than anticipated.”

The company remained committed to its initiatives, but “the timeline to reach targeted benefits remains uncertain and there are some risks to achieving these.”

Bremworth has entered into a “scheme implementation agreement”, or a sales agreement, to be purchased by Floorscape, a vehicle owned by US-based Mohawk Industries, the company that also owns Bremworth’s main domestic rival, Godfrey Hirst.

At the time of signing of the agreement, Bremworth said the likely range of the capital return to shareholders as part of the deal would be between $0.30 to $0.40 per share, as well as $0.75 per share paid by Floorscape. The capital return part of the equation has now been reduced to between $0.20 and $0.30 per share (in addition to the $0.75 per share payable by Floorscape)

This deal is still waiting to clear certain hurdles including the approval of the high court and shareholders, as well as Commerce Commission clearance and an IRD ruling on the tax implications of a capital return from the sale. The commission published a Statement of Issues just prior to Christmas outlining the outstanding issues, and a decision date has been set down for March 13, although it may be extended.