Dixie Group's Income Down
Chattanooga, TN, July 30--The Dixie Group, Inc., today reported net income of $1.4 million, or $0.12 per diluted share, for the second quarter ended June 28, compared with net income of $3.0 million, or $0.25 per diluted share, for the prior-year period.
Sales for the second quarter of 2003 were $132.1 million compared with $140.0 million in the year-earlier period.
For the first six months of 2003, the company reported net income of $1.1 million, or $0.09 per diluted share, compared with net income of $3.5 million, or $0.30 per diluted share, for the first half of 2002. Year-to-date sales in 2003 were $244.1 million compared with $263.3 million in the first six months of 2002.
"Results for the second quarter and first half of 2003 were negatively affected by raw material cost increases, expenses associated with the start-up of our north Georgia residential retail initiative, and lower overall sales volume," commented Daniel K. Frierson, chairman and chief executive officer. "To help offset higher raw material costs, we implemented price increases during the second quarter.
“The timing of the cost and price increases caused a delay in recouping the higher raw material cost. In response to continued softness in the factory-built housing and home center markets, we have reduced fixed costs and are continuing our efforts to expand in other markets.
“In July 2003, we reduced the salaried workforce in our north Georgia operations by 16%. This action should lower fixed costs by approximately $4.0 million annually. The charge associated with the workforce reduction is expected to be approximately $1.4 million and will be recorded in the third quarter 2003.
"We have made remarkable progress with our initiative to expand our participation in residential retail markets at price points below those of Fabrica and Masland through introduction of the Dixie Home collection of products.
“Reception of this new collection and the placement these products have achieved among retailers have exceeded our expectations. We are beginning to see sales generated by this initiative and continue to be optimistic that this strategy will make a sound contribution to north Georgia's sales and margins in the last half of this year."
Related Topics:The Dixie Group, Masland Carpets & Rugs