Dixie Group Q2 Sales Down 7%, Loss of $4.5 Million
Dalton, CA, August 15, 2022-For Q2 2022, The Dixie Group reported net sales of $83.7 million, a 7% decline compared to $90 million in Q2 2021.
For Q2 2022, the company reported a net loss of $4.5 million, compared to earnings of $3.3 million in Q2 2021.
Net sales for the first half of 2022 were $161.3 million, a decrease of 1% from net sales of $162.7 in the same period of the previous year.
For the first half, the company reported a net loss of $7.8 million, compared to earnings of $1.3 million in the first half of 2021.
Commenting on the quarter, Daniel K. Frierson, chairman and chief executive officer, said, “We are excited to announce our formation of a joint venture to begin production of luxury vinyl flooring within our manufacturing plant in Atmore Alabama. This domestic production will enable us to better serve our customers and more quickly respond to market changes.
“During the second quarter of 2022, our net sales decreased 7.0% compared with the same period of the prior year. This was primarily attributable to a $7 million year over year loss of sales volume with our largest mass merchant retail customer. Our sales with this customer ended in the first quarter of 2022 as the result of their change in strategy to focus on lower price point products. This loss in sales in the mass merchant business contributed to the lower sales volume in our Dixie Home brand which was offset by growth in our Fabrica, Masland and Trucor brands.
“Similar to the first quarter of this year, the gross margins in the second quarter of 2022 were negatively impacted by two major items. First, our cost of goods sold reflected the impact of unprecedented price increases from our primary raw material supplier, coupled with their decision to exit the business. We have identified other suppliers to replace this volume and bring our costs down in line with the market. This conversion was substantially complete at the end of the second quarter, and we expect to work through most of the remaining balance of the higher cost inventory within the third quarter. Second, margins from our sales of hard surface goods reflected the negative impact from dramatic increases in ocean freight costs. Fortunately, beginning with the end of the first quarter, these freight costs have continued to decline but remain substantially above prior year levels.”