The Dixie Group Inc., which completed the sale of its commercial carpet business in September, reported higher sales and profits in the third quarter and said as a residential carpet and tile company it expects to continue to improve its financial results.
The Dalton, Georgia-based floorcovering manufacturer reported Friday it earned net income of $6.4 million, or 35 cents per share from its continuing operations, on sales of $89.3 million in the fiscal quarter ended Sept. 30. Sales of Dixie's surviving residential carpet lines were up 27% in the quarter.
The company completed its sale of its commercial carpet business on Sept. 13.
"With the sale of our commercial business, the third quarter was the beginning of our company as a residential floorcovering only focus," said Daniel K. Frierson, chairman and CEO of the Dixie Group. "During the quarter, we continued to gain market share and began significant changes, which we believe will enhance our future prospects."
In response to the earnings announcement, Dixie shares jumped by more than 15% by midday in trading on the Nasdaq exchange. But Dixie's stock closed Friday up just 3.3%, or 17 cents per share, to $5.32. Shares of Dixie closed the week at more than three times what the company's stock price was a year ago.
For the first nine months of the year, Dixie's net sales of residential carpets and tiles were up 49% over the same period in the prior year. Frierson attributed the jump in residential carpet sales to the impact of the COVID-19 pandemic in 2020 and strong growth in new and existing home sales and home remodeling in 2021.
Dixie discontinued its Stainmaster line of carpets, but the company is implementing strategies to help customers transition to our new brands, EnVision6 and EnVisions Pet Solutions.
"With additional cutting-edge products and focus on domestic sourcing, we feel we can continue growing faster than the marketplace," Frierson said.
Dixie said its sales momentum has continued into the fourth quarter. For the first five weeks of the quarter, Dixie sales are up 20% compared to a year ago. Due to increased cost pressure on many fronts, Dixie and other floorcovering companies announced price increases during the third quarter.
"Additional price increases have been announced for year-end as raw material, labor and transportation costs have continued to escalate," Frierson said.