Dixie Group losses widen
Residential carpet sales up, but commercial carpet sales off 9 percent
The Dixie Group, Inc. reported bigger first quarter losses this year than a year ago as the Dalton, Ga.,-based floorcovering maker faced higher labor and interest expenses in the improving economy.
Despite an overall 1.4 percent gain in sales during the quarter to $98.6 million, Dixie said Thursday it lost more than four times what it did a year ago with losses from continuing operations in the first quarter of 2018 of nearly $2.9 million, or 18 cents per share. In the same period, a year ago, Dixie lost $575,000, or 4 cents per share.
The results were 2 cents per share below what analysts had forecast and led to a 6.25 percent drop, or 20 cents per share, in the value of Dixie’s stock, closing Thursday at $3 per share.
Dixie CEO Dan Frierson said the company’s residential carpet sales were up 7.3 percent in the first quarter, which was better than the industry as a whole. But Dixie’s commercial carpet sales were down by more than 9 percent for Dixie, which was worse than the industry average.
“Our residential sales had solid growth with all three brands showing high single digit improvement during the quarter,” Frierson said in the company’s earning report.
Dixie said it plans to launch 150 new products in 2018, including 67 carpet styles and 86 hard surface designs.
But Dixie’s profit margins fell in the first quarter due to adverse weather, production challenges and rising pressure on labor and borrowing expenses. In response, Dixie raised prices in January and has announced another price increase in May.
“One area of particular difficulty in 2018 has been the attraction and retention of talent in our various facilities,” Frierson said. “We anticipate further cost increases relative to associate costs as we deal with a tight labor market. “
The Dixie Group makes and markets carpet and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets, Dixie Home, Atlas Carpet Mills, Masland Contract, Masland Hospitality and Dixie International brands.