KEY POINTS:
The flooring group which owns the Carpet Court stores has added the country's largest independent carpet retailer, Hills Flooring, to its stable.
Flooring Brands' franchise partnership with Hills Flooring gives it 62 outlets around the country, a revenue of more than $200 million annually and control of more than a third of New Zealand's retail flooring industry.
Hills Flooring will join Carpet Court's sister brand, The Floor Store, doubling the size of the relatively new franchise overnight to $60 million.
The addition of the family-run business is a boost to Flooring Brands, which under Auckland businessman Rodney Martin embarked on an acquisition plan to command 50 per cent of the New Zealand market.
The group suffered a setback last month when disaffected Carpet Court store owners - unhappy over the shift from a co-operative model to a franchise system - broke away to form rival 45-store group Flooring Xtra.
Martin said Xtra's formation meant control of half the New Zealand market was no longer feasible, but 40 per cent and a total group revenue of $250 million remained achievable.
The group was also planning to head to the capital markets in the next 12 to 18 months, he said.
Hills Flooring will become the flagship for The Floor Stores franchise, with managing director Willi Hill taking up the chairmanship of its advisory council.
Hill and his brothers David and George, who are also involved in the business, are well known in the flooring industry. "The Hill brothers are icons, with over 120 years of industry experience between them," said Martin. "Having them make this decision is a vote of confidence, an endorsement if you like, of what we're trying to achieve."
Willi Hill said he had been in talks with Martin for three years, and was finally convinced after witnessing what he had achieved. In light of the industry's ongoing consolidation, the move gives the company better buying power, along with savings in areas such as warehousing, he said. It also meant a larger advertising budget.
"We're already quite a big player within the industry anyway, but this gives us better access."
Hill - the frontman for the company's television commercials where he speaks passionately of having "fluff in his veins" - joked he was "not sure if we'll give them fluff in their veins, but maybe they would like a transfusion from us".
Martin said that while sales are down, profits have stayed "bang on budget" in the year to September. This, he said, was attributable to a big television advertising campaign for Carpet Court, savings from combined warehousing, and a rationalisation of product lines and suppliers.
HILLS FLOORING
* Largest independently owned flooring business in New Zealand with revenue of $30m.
* Three retail stores in Auckland and three commercial outlets in Hamilton, Wellington and Christchurch.
* Family-run business started by Bill Hill 48 years ago in a 60sq m store in Otahuhu.
* Now run by his sons, Willi, David and George Hill.
