Dixie stock falls as losses widen in 2017
Shares of the Dixie Group plunged nearly 9.7 percent Thursday after the carpet maker reported that its net losses widened last year to nearly $9.6 million, or 60 cents per share, despite a gain in company sales.
Dixie’s stock fell by 30 cents per share to close Thursday at $2.80
— the lowest price in eight years and 21.1 percent below the company’s share price of a year ago.
The Dalton, Ga.-based company said it improved operations during the year and boosted overall sales by 5.2 percent to $412.4 million. But that was not enough to avoid increasing the company’s net loss by 81 percent from $5.3 million in red ink for all of 2016 to nearly $9.6 million of losses last year.
Dixie CEO Dan Frierson said the company plans to cut its capital spending in 2018 to only $6 million, less than half of what it spent this year, and will work to further consolidate its yarn operations to cut costs and get back in the black. But the company said it will likely have higher labor costs this year as it tries to staff its plants in an increasingly tight labor market.
“Despite this difficult year from a profitability perspective, we have put in place the foundation of operational capabilities that should benefit us in the future,” Frierson said in today’s earnings announcement. “In 2018, we are continuing to work on achieving all of the benefits of these new capabilities as we focus on better on-time execution, lower waste and higher production efficiencies from these changes.”
Dixie said it raised prices at the end of 2017 and expects the economy and sales to continue to improve this year. Last year, residential carpet sales for Dixie rose 9.3 percent and commercial carpet sales were up just slightly.
“Fortunately, as we move into 2018, consumer confidence, the economy, and housing appear to be headed in the right direction and the new tax law changes add to this momentum,” Frierson said. “While we did improve our operational performances in 2017, the improvement was not at levels that is acceptable long-term. Therefore, 2018 will be a year focused on refining the operational changes we made in 2017 to fully realize those planned operational savings.”
Frierson said sales in the first couple of months of 2018 “were flat” compared with a year ago.
“We are well positioned to continue to be the style leader in the flooring industry,” he said.