Dixie Cuts Loss, Sees Improving Residential Market

Chattanooga, TN, Feb. 24, 2010--The Dixie Group reported a net loss of $3,480,000, or $0.28 per share, for the fourth quarter, compared with a net loss of $31,868,000, or $2.60 per share, for the year-earlier period.

Sales for the were $52,782,000, down 15% from $61,916,000 in the year-earlier quarter.

For the year, Dixie reported a net loss of $42,098,000, or $3.41 per share, compared with net loss of $31,403,000, or $2.52 per share, for the year-earlier period.

“The fourth quarter performance was comparatively better than the third quarter," said CEO Daniel Frierson.

"While carpet sales were down about 14% from the prior-year period, income from continuing operations improved. The residential market improved during the quarter; however, the commercial sector continued to show weakness.

Since 2008, the company has taken several cost-cutting steps, including reducing salaries, combining manufacturing operations, realigning its three residential businesses, and reducing its head count 28%.

The company also noted that raw material prices have continued to increase, which has resulted in carpet price increases for residential products.

“We have continued to emphasize new product introductions that we believe better positions us for growth as the market improves," Frierson said.

"During the year, we experienced solid growth in our new wool collections at the upper end and strong growth from our new polyester products in the Dixie Home line. We have been able to take advantage of new technologies, such as the recently introduced ColorTron hollow needle tufting technology that provides a woven look with tufting flexibility. This and other new technologies enable us to offer differentiated products that separate us from the competition."

The company said its residential business is rebounding ahead of its commercial business.

"We cannot predict how long the current economic downturn will last or its impact on the markets we serve, but we continue to make changes that will allow us to weather the current economic storm and benefit our business when market conditions improve,” Frierson said.