Ramstad: Tile Shop learned its lesson in the first Trump administration

Cabell Lolmaugh arrived in the corporate office at Tile Shop Holdings Inc. eight years ago just as it was being forced to adjust to anti-dumping penalties against China, the source of about half the tiles it sold.

Today, Lolmaugh is CEO of the Plymouth-based retailer and the U.S. is again raising import barriers, not just on China but many other countries.

Tile Shop’s defense strategy is diversification and innovation. China is a small source for the company today, chiefly for natural tile that can’t be found anywhere else. It closed an office it had there in 2021.

“It was a lesson learned that you can’t have too many eggs in one basket,” Lolmaugh told me last week. “We were resourcing in 15 different countries then and now we’re up over 30. We also buy more domestically than ever in our history.”

President Donald Trump’s imposition of tariffs on goods from many countries is forcing American manufacturers and retailers to re-examine their supply chains. Tile Shop and other firms heavily exposed to China learned that lesson during Trump’s first term, when he concentrated his animus to trade on that country.

“As Americans, we’re paying anti-dumping fees or higher costs on thousands of products, not just tile but on things like tires and metal shelves,” Lolmaugh said. “And I agree with the practice. We have to have fair trade and, when they dump on our shores, it doesn’t help the American people.”

Tile manufacturing isn’t just any global industry, it’s one of the oldest global industries, dating back thousands of years.

And Lolmaugh and his colleagues don’t just watch the latest tweets and bleats from Washington. They’re keeping track of anything that slows production and movement of goods. For instance, since January traffic in the Suez Canal has been cut in half following attacks by Houthi rebels in Yemen on U.S.-flagged ships, cutting off shipments of tile from India.

“We’ve had the Suez Canal and we still aren’t bringing ships through there. There’s been drought in the Panama Canal, which is now good, but there was a yearlong backup because it just had no water,” Lolmaugh said.

Russia’s invasion of Ukraine three years ago led to a prolonged disruption of product from Europe.

“The best clay in the world comes from Ukraine,” said Joe Kinder, senior vice president of supply chain and distribution at Tile Shop. “All of Italy, all of Spain, all of Poland were buying their clay from Ukraine. Quality started getting affected, so they had to know a second and third source and that changed the clay.”

While the prospect of more trade disruptions dominates the news, the top challenge facing Tile Shop is the ongoing stall-out of residential homebuilding and transactions in the U.S.

The company grew strongly from 2020 through 2022 as pandemic-related lockdowns led many people to invest in remodeling their homes. Low mortgage rates kept the U.S. home market relatively frothy.

When interest rates rose as the Federal Reserve tried to tame inflation, mortgages became more expensive and churn in the housing market slowed. That has meant less spending on home construction and remodeling.

For Tile Shop, revenue peaked at $395 million in 2022, then fell in both 2023 and 2024, when it was $347 million. In response, the company has halted its store expansions and cut some of its corporate jobs.

“The nice thing about tile, it doesn’t spoil and it’s not an iPhone with a new version coming out. We can sit on it,” Lolmaugh said. “We don’t like to. But it does give us a competitive edge that we own our own inventory. We can do with it what we please once we land it. That helps.”

Tile, like other decorating elements, is shaped by fashion and color trends. If you haven’t shopped for it lately, you’ll be surprised at how quickly the business changes. High-performance vinyl and laminate wood have been rising for some time.

The trend now is toward larger tiles, 4 feet or 6 feet long. “I can buy 10-foot tiles, but how am I going to warehouse and move them?” Lolmaugh asked as we walked around the store next to the corporate office.

And the biggest thing in tile these days is the influence of an innovation from the world of computing: inkjet printing. Colors are sprayed onto tile just as it goes into a kiln.

Even the lowest-cost producers are able to make tile that’s decorated to look like it came out of a quarry or a fashion designer’s imagination. Tile Shop has collections from eight designers or brands, including Laura Ashley and Morris & Co., with more on the way.

“This is a fashion industry,” Lolmaugh said. “It’s hard for people to wrap their head around fashion and tile. But it’s color, it’s texture.”

He added, “There are these up-and-coming designers across the country that have been successful in fabrics. We work that into tile and it’s proprietary to us and we give them a royalty and it’s been working well.”