American Woodmark Corp., one of the nation's largest kitchen and bathroom cabinet makers, said yesterday that it will cut staff and raise prices on some products to combat continued weak financial performance.
Shares of the Winchester company fell 15.5 percent after it announced that its second-quarter profit fell 46 percent from the comparable period last year. The company said home remodeling slowed as labor, transportation and manufacturing costs jumped. About two-thirds of the cabinet maker's sales are to homeowners who are remodeling; the rest are to home builders.
Sales rose 8 percent, to $214.5 million, in the quarter ended Oct. 31; the company had predicted an increase of 8 to 12 percent.
"Higher interest rates, higher energy costs and uncertainty over jobs have contributed to a consumer that's not spending on big-ticket items as robustly as last spring and summer," James J. "Jake" Gosa, American Woodmark's chief executive, told Wall Street analysts.
American Woodmark said it had a profit of $6.2 million (37 cents per share) in the quarter, down from $11.4 million (67 cents). The company's profit has dropped from the previous year for four consecutive quarters.
The company's chief financial officer, Jonathan H. Wolk, told analysts that there are mixed signals about the future. While new-home sales have been strong, mortgage rates have been climbing, and several large builders have lowered expectations for 2006, he said. Wolk also speculated that "record-high fuel costs as we approach the winter heating season" may discourage spending on remodeling.
About 1,000 of the company's 6,500 employees are in Virginia and Maryland. Company Treasurer Glenn Eanes said the workforce will be cut "mostly through attrition" but with "minor layoffs." He declined to elaborate.
American Woodmark shares closed at $25.50, down $4.66.