Carpet sales fell for the Dixie Group, Inc. in the first three months of 2019, cutting company revenues by more than 10 percent from a year ago and producing a net loss from continuing operations of $6.6 million, or 42 cents per share, in the quarter.
But shares of the Dalton, Georgia-based floorcovering firm rose nearly 3.3 percent Friday after company CEO Dan Frierson said Dixie is moving forward with consolidations and is seeing improved sales in the past couple of months.
Dixie said Friday residential carpet sales were down 5.5 percent in the first quarter, reflecting adverse weather and economic concerns in the period as well as the continuing shift in many homes to harder floor surfaces. Dixie’s commercial sales were off 20 percent from a year ago, due in part to changes by a key yarn supplier, production shifts and consolidation of some of its lines.
Dixie’s net loss was more than double the $2.9 million loss the company had in the first quarter of 2018. Sales fell in the period from $98.8 million a year ago to $88.6 million this year.
“The early part of the quarter was impacted by poor weather conditions in the northern half of the United States as well as a lack of retail traffic which we believe was due to uncertainties relative to the economic environment and international trade issues,” Frierson said. “We did see a significant pickup in order activity starting in late first quarter, and for the first four weeks of April our orders in 2019 exceeded our sales as compared to 2018 for the residential business.”
Frierson said the company is gaining momentum by tripling its residential hard surface business this year with the launch of TruCor, a new solid polymer core or “SPC” luxury vinyl flooring line, and expanding the company’s distribution of hard surface products to Dixie’s west coast distribution center.
In Dixie’s commercial business, Frierson said the exclusive supplier of yarns to the company’s Atlas contract operation has decided to reduce the supply of white dyeable yarns, which have been the major source of differentiation and supported the majority of Dixie’s Atlas product line.
“The change in piece dyed yarn availability along with other product trends in the market place has caused us to change our business model,” Frierson said. “We have responded by merging our two commercial businesses; first by consolidating the marketing, product development, and support functions followed by consolidating our sales team and manufacturing operations.”
Despite Friday’s gains in trading, Dixie’s closing price Friday of 80.5 cents per share is down more than 73 percent from a year ago.