Please ensure Javascript is enabled for purposes of website accessibility

Why Interface, Inc. Shares Came Unraveled Today

By Alex Planes - Oct 8, 2014 at 12:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The carpet-maker's disappointing third-quarter forecast, and its costlier restructuring plan, have investors running scared.

This article originally appeared as part of ongoing coverage in our premium Motley Fool Rule Breakers service... we hope you enjoy this complimentary peek!

What's happening?
Shares of Interface (TILE 0.47%) have fallen by more than 17% on Tuesday morning after the carpet-maker issued a disappointing  third-quarter forecast and expanded its restructuring plan.

Why it's happening
Interface expects third-quarter revenue to range from $250 million to $255 million, which falls below both the year-ago quarter's result of $255 million and analysts' expectations of $275.2 million. The company also warned that its adjusted earnings would likely range from $0.12 to $0.14 per share, well below expectations of $0.25 in adjusted EPS.

CEO Daniel T. Hendrix noted that "preliminary results... have not shaped up to our expectations" due to more deferred orders and fewer orders in general. To cope with this disappointment, Interface broadened the scope of its restructuring plan, which is now expected to cost $12.5 million rather than the $3 million to $5 million range it had been expected to cost when first announced in late July. This plan should shave off roughly $14 million in costs beginning in 2015, which will help the company begin a buyback plan that calls for repurchasing 500,000 shares per fiscal year, starting with the current year.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Interface, Inc. Stock Quote
Interface, Inc.
$12.75 (0.47%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.