Shares of the Dixie Group Inc. plunged by more than 18.5% Thursday after the company reported another quarterly loss from continuing operations of nearly $2.6 million, or 16 cents per share.
Hurt by the fall off in its residential carpet sales to major big box retailers like Lowe's, the Dalton, Georgia-based carpet maker said net sales in the third quarter of this year were down 6% from a year ago to $95.4 million. A double-digit drop in residential carpet sales was offset, to some extent, by higher luxury vinyl flooring sales.
Dixie's operating loss in the past three months was down from the $2.9 million, or 19 cents per share, that Dixie reported from ongoing operations in the third quarter of 2018.
Dixie Group CEO Dan Frierson said the company has strengthened its balance sheet by the recent sale of its California production plant and by cost cuts and refinancing of debt.
Nonetheless, investors who bid up Dixie's stock two weeks ago by more 43% after the California plant sale was announced sold off shares on Thursday and cut Dixie's value 18.55% in trading on the Nasdaq exchange.
Dixie shares, which closed down 36 cents a share to $1.55 a share Thursday, are still up 118% so far this year, however.
"Our residential carpet product sales were down 10.9% for the quarter as compared to the prior year," Frierson said in the earnings report. "Our residential carpet sales, without our mass merchant channel, were lower for the third quarter year over year period by 5.1%, thus significantly stronger than our mass merchant channel."
Freierson said the company's residential luxury vinyl flooring and wood sales grew by more than 40% in the third quarter from year-ago levels and the company is expanding its vinyl flooring product lines in the fourth quarter.
Dixie's commercial carpet product sales in the third quarter were down less than 1% and Dixie also is introducing new commercial carpet products this fall, Frierson said.
Dixie has lost money over the past five years, but it has cut its staff and costs over the past couple of years to help shore up its finances and introduce better-selling hard surface and carpet flooring.
Last month, Dixie sold its Susan Street facility in Santa Ana, California to the CenterPoint Properties Trust and signed a 20-year lease on the facility. The sale helped reduce the company's debt and resulted in a gain of $25 million, or $1.50 per share.
"Our total debt, after the completion of the sale of the Susan Street facility, was $86 million," Frierson said. "Our equity, after the completion of this transaction, has risen by over 50%. Total accessible borrowing availability, subsequent to our closing of the sale of Susan Street, was $22 million."
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.