Recovery is in the air at The Dixie Group, the Chattanooga-based carpetmaker that on Thursday announced its first profitable year since 2008.
The high-end carpetmaker posted profits in each quarter except the fourth -- a loss that was due to increased research and marketing as well as slower sales, said chairman and CEO Dan Frierson.
"The upper-end business is in the process of recovering from this historic downturn," Frierson said, after experiencing "a decline of unprecedented magnitude."
For all of 2011, Dixie reported income from continuing operations of $1.27 million, or 10 cents per share, on sales of $270.1 million. In 2010, Dixie lost $4.37 million from continuing operations, or 35 cents per share, on sales of $231.3 million.
For the fourth quarter, however, Dixie announced a loss of $203,000, or 2 cents per share, on sales $65.3 million. A year ago in the same period, Dixie earned $638,000, or 5 cents per share, on sales of $65.1 million.
Even so, Dixie's sales are up by a third, "while the industry is up less than 5 percent," Frierson said. "This is further evidence that the luxury end of the market is returning faster than the overall soft floorcovering market."
For 2011, Dixie's total carpet sales were up about 15 percent while the industry was up in the low single digits, he said.
"You've been gaining market share for some time now, largely as a result of your mix of the high end compared to the industry," Raymond James & Associates analyst Sam Darkatsh told Frierson during a conference call.
Still, future profits could be slowed by rising petroleum costs, which force carpetmakers to raise prices to compensate. The hike in fuel costs also could slow consumer spending at a critical time for the industry, analysts say.
"It always takes us a while to get these increases passed along to all our customers," Frierson said.
Even with those headwinds, he says the company still is on track in 2012.
"In the first nine weeks of this quarter we're slightly ahead of a year ago," Frierson said. "That's pretty reflective of where the market is."