Chattanooga-based Dixie Group Inc., a higher-end carpet manufacturer, reported Wednesday that it had beat analysts’ expectations with continuing operations losses of $1.3 million or 10 cents per diluted share in fourth quarter 2009 compared to analysts’ expectations of an 11 cent per diluted share loss.
Fourth-quarter sales were down 15 percent, to $53 million from $62 million a year earlier. Fourth quarter sales, however, were better than the third quarter, according to Dan Frierson, chairman and CEO.
For the year, sales were down 28 percent to $203 million from $283 million in 2008.
“Two housand and nine will go on record as a challenging period in the history of the carpet business,” Mr. Frierson said during a conference call. “Starting in 2008 and continuing in 2009, we have taken a number of options to lower our costs and return to profitability.”
Mr. Frierson said the company has reduced staff by 28 percent, lowered inventories and capital expenditures, combined manufacturing operations and ceased matching 401(k) funds in an effort to bring expenses into line with sales. These steps, along with increasing order levels, could see the company out of the red in 2010, he said.
“We began to see order entry above year ago levels really starting in the late November early December timeframe, and that has continued in the first quarter,” he said. “We certainly hope and believe 2010 will be a very different year from 2009, and we’re working to make it that way.”
Dixie reported a net loss of $3.5 million or 28 cents per diluted share for the fourth quarter of 2009 compared with a net loss of $32 million or $2.60 per diluted share for the year-earlier period.
For 2009, Dixie had a net loss of $42 million or $3.41 per diluted share vs. $31 million or $2.52 per diluted share for the preceding year.
Company CFO Jon Faulkner said that while he expected to see a slight dip in first-quarter sales for 2010, improved margins brought about by cost cutting and increasing sales volume would help the company in the second half of the year.
“Gross margins have improved every quarter this year,” he said. “As we look forward, the commercial carpet business will continue to experience a difficult environment in 2010. Our residential business is beginning to improve as the confidence level of the upper end consumer is returning.”
Dixie’s shares closed Wednesday at $2.60 a share, up 4 percent from Tuesday’s closing price.