Dixie Group 4Q Sales Dip Beats Industry Average

Chattanooga, TN, February 26, 2008—The Dixie Group earnings from continuing operations slid 46 percent in the fourth quarter compared to a year ago, the company reported Tuesday.

For the fourth quarter, income from continuing operations was $1,746,000, or $0.14 per diluted share, compared to income of $3,234,000, or $0.25 per diluted share, for the fourth quarter of 2006.

Sales for the fourth quarter of 2007 were $79,517,000, down less than 1.0% from sales of $80,275,000 in the year-earlier quarter.

For the fiscal year ended December 29, 2007, income was $6,778,000, or $0.52 per diluted share, compared $7,891,000, or $0.61 per diluted share, for the previous year. Sales for 2007 were $320,795,000, down 3.1% from sales of $331,100,000 in the prior year.

“Continued weakness, particularly in residential carpet markets, has had a negative impact on the industry and our business,” said CEO Daniel K. Frierson.

“The industry reported that carpet sales declined 6.5 percent in the fourth quarter and 8.0 percent for 2007, compared with the prior-year periods. During these same periods, our sales continued to outperform those of the industry, with year-over-year carpet sales comparisons that were relatively flat for the fourth quarter and down only about 2.8 percent for the full year.

“Our commercial carpet business continued to show relatively strong results, growing 11 percent in the fourth quarter and 10.5 percent for fiscal 2007. Broadloom commercial carpet products grew for both the fourth quarter and year, and our new modular/carpet tile products continued to gain momentum – posting sales of over $2.7 million during the fourth quarter. Our carpet tile operation was profitable for the fourth quarter of 2007.”

The company said 2008 also looks to be challenging.