The Dixie Group, Inc., which cut 283 jobs last year, plans to eliminate another 46 jobs this year as part of an overall cost reduction program to improve company profits.
The Dalton, Georgia-based carpet manufacturer said Monday it is increasing its previous cost reduction programs by another $6 million, which is expected to save the company a total of $17.1 million when fully implemented.
The moves will bring the total job cuts at Dixie to about 17 percent, or 329 jobs, since the start of 2018. The cost-cutting plan was welcomed by investors, who bid up Dixie's stock Monday by more than 31.1 percent to the highest level in two months. Shares of Dixie rose Monday by nearly 28 cents a share to $1.16. Monday's gains helped lift Dixie's stock price to a level 63 percent above the start of 2019.
Dan Frierson of the Dixie Group talks about the carpet industry's state during a 2012 business roundtable at the Times Free Press.But after five years of consecutive losses, Dixie's stock price is still down by more than 90 percent from where it was at the start of 2014.
Despite the long-term gain for the company's net income, the reductions announced by Dixie Monday will result in a pre-tax restructuring and impairment charge for the fourth quarter of 2018 of $6.1 million, the company said.
Dixie is yet to report its fourth quarter results for 2018, but the company is expected to report its fifth consecutive year of annual losses for all of 2018 when those results are released later this month.
"We updated the plan after a review of all departments and operations to speed our return to profitability," Dixie Group CEO Dan Frierson said. "We will have incurred substantially all of the costs of implementing the revised plan by the end of the first quarter with anticipated ongoing cost reductions being substantially realized by the third quarter of 2019."
As part of its cost reductions, Dixie has previously closed two commercial manufacturing plants and consolidated those operations with other facilities and consolidated a Chattanooga office with its Dalton, Georgia headquarters.
Dixie said the cost of the entire cost-reduction plan is estimated to total about $11.1 million, including $2 million in severance costs, $780,000 for facility shutdown expenses, $3.1 million for equipment relocation, $2.7 million for inventory impairments and $2.5 million for non-cash impairment of equipment and intangible assets.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.