Dixie Group Sales Down 6%, Earnings Negative
Dalton, GA, November 7, 2019-The Dixie Group reported a year over year (YOY) Q3 2019 net sales decrease of 6.0%. In Q3 2019 sales, exclusive of sales through the mass merchant channel, were down 1.5% relative to Q3 2018. The company has seen changes in our mass merchant sales as this channel has shifted more to hard surface flooring products, and the company did not repeat a large initial stocking order to this channel, which occurred during this period in 2018.
In addition, the sales loss was due in part to the fact that Lowe’s licensed more Stainmaster branded (non-nylon 6.6), lower-cost carpet from other suppliers.
For Q3 2019, adjusting for costs associated with facility restructuring and related inventory impairments, the company had a loss of $1,452,000 for Q3 2019, compared to a Q3 2018 loss from continuing operations of $2,922,000.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, “Our residential carpet product sales were down 10.9% for the quarter as compared to the prior year. Our residential carpet sales, without our mass merchant channel, were lower for the third quarter year over year period by 5.1%, thus significantly stronger than our mass merchant channel.
“Our residential luxury vinyl flooring and wood sales experienced a greater than 40% increase in sales in the third quarter of the current fiscal year as compared to the same period in the prior year.
“Our commercial carpet product sales in the third quarter were down less than 1% while the industry we believe was down in the low single digits as compared to the same period in the prior year. Our commercial luxury vinyl flooring sales were up over 40% comparing the third quarter of 2019 with the same quarter in 2018.”
Early in Q4 2019, the company sold its Susan Street facility and signed a lease with options for a period of up to twenty years. The gain on the sale is approximately $25 million, and its senior credit facility was paid down by $36 million as a result of the sale. Its total debt reduction from Q3 2018 through the completion of this transaction is $55 million. Its total debt, after the completion of the sale of the Susan Street facility, was $86 million. Its equity, after the completion of this transaction, has risen by over 50%.
Over 85% of Dixie's business is carpet and the U.S. carpet business is down 7% (in units) year to date.
Related Topics:The Dixie Group