Dalton, Ga.—The Dixie Group reported net sales decreased 10.4% for the first quarter of 2019 to $88,606,000 as compared to $98,858,000 in 2018. The company had a loss from continuing operations of $6,641,000 compared to a loss of $2,884,000 in the same quarter last year.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, “Our residential product sales were down 5.5% for the quarter with the industry, we estimate, being down mid to high single digits as compared to the prior year. The early part of the quarter was impacted by poor weather conditions in the northern half of the U.S. as well as a lack of retail traffic which we believe was due to uncertainties relative to the economic environment and international trade issues.”
“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. Residential order activity in the second quarter is also benefiting from the earlier introduction of new products relative to product introductions in 2018. Of note is our new EnVision 6,6 collection. This new program is an extension of our Dixie Home product line with nicely styled products at moderate price points to reach a wider range of consumers. These products are made with type 6,6 nylon to ensure the highest quality and performance standards.”
“For 2019, we are building on the momentum we gained by tripling our residential hard surface business in 2018 with the launch of TruCor, our new solid polymer core or “SPC” luxury vinyl flooring line. This latest addition to our rigid core luxury vinyl flooring offering is designed to create an extremely durable and waterproof luxury vinyl flooring product. To facilitate this growth, we are expanding our distribution of hard surface products to our west coast distribution center to complement our east coast service center.”
The company reported commercial business in the first quarter was down more than 20% on a year-over-year basis.
“Our commercial broadloom sales were most heavily impacted while our commercial modular carpet tile sales were flat for the comparative periods,” Frierson said. “We did benefit from the reorganization of our commercial business this past fall with lower selling and administrative expenses.”
Frierson said the exclusive supplier of yarns to the company’s Atlas contract operation has decided to dramatically reduce the supply of white dyeable yarns, which have been the major source of differentiation and supported the majority of the company’s Atlas product line.
“The Atlas business model had been to make piece dyeable products on a build to order model,” he said. “The change in piece dyed yarn availability along with other product trends in the market place has caused us to change our business model. 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. That consolidation is now complete. We are still in the process of introducing new products to replace those being phased out and will continue this transition for several years.”
“Our commercial sales during the period were impacted by the completion of moving equipment from the commercial west coast tufting center into the company’s Atmore, Ala., facility.”
Gross profit for the first quarter of 2019 was 21.4% of net sales as compared to a gross profit of 21.8% in 2018. Our gross profit was impacted by several major issues during the quarter.
For more information, visit www.thedixiegroup.com.