Dan FriersonThe Dixie Group, Inc. said today it lost more than $4.7 million from continuing operations in the first quarter after sales dropped by 6.9 percent to $89.2 million.
In response to the lower than expected results, the Chattanooga-based carpet maker said it is cutting its capital spending plans in half this year and the company said it had cut its staff by 72 employees in the past year.
"Though the first quarter of the year is historically our weakest quarter, this year our sales were substantially weaker as compared to the same period in 2015," Dixie CEO Dan Frierson said in a statement after the market closed today. "Though there have been modest improvements in housing activity, we have not seen a corresponding improvement in the soft floorcovering market we serve and continue to evaluate our expectations for future sales growth."
Dixie said commercial carpet sales fell by 8.5 percent while residential carpet sales dropped by 4.8 percent from a year ago. Frierson said the company's cost structure "has been impacted by very low production levels in the plants as we had both low sales volume and low productivity from product development activities."
Last year in the first quarter, Dixie lost nearly $2.5 million of sales of $95.8 million.
In response to lower sales, Frierson said Dixie will vacate a smaller rented facility and reduce staff and overtime.
"We will continue to implement appropriate cost reductions as we refine our sales expectations for this year," he said.
The Dixie Group is a leading marketer and manufacturer of carpet and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets, Dixie Home, Atlas Carpet Mills, Masland Contract, Masland Hospitality and Avant brands.