The Dixie Group reported sales were $67 million, down 14%, in the first quarter of 2022 for the period ending April 1, 2023. Gross profit in the first quarter of 2023 was 26.6% of net sales compared to 19.6% of net sales in the first quarter of 2022.
Commenting on the results, Daniel K. Frierson, Chairman and Chief Executive Officer, said:
"Our results from the first quarter reflected the positive impact of the restructuring efforts we initiated in 2022. Although net sales in the first quarter of 2023 were 14% below the same period in the prior year, we had strong gross margins driven by more efficient operations from our manufacturing plants during the quarter. A significant factor in the year over year sales decline was a loss of volume in the mass merchant channel, with Lowe's strategy shifting toward lower price points. Excluding our mass merchant sales, net sales were down 7% over prior year. This decline in year over year sales was primarily the result of high inflation and increased interest rates impacting consumer confidence and demand in the first quarter of 2023.
During the first quarter, the company celebrated the 20th anniversary of Dixie Home and created a fresh new look including a new logo and a subtle shift in the brand name to "DH Floors". Within DH Floors, the company began the launch of the Elements Collection, made with Durasilk solution dyed polyester, which aligns with the DH Floors brand promise of "affordable fashion", Frierson said.
The company launched 21 new styles in higher brands, which kicked off the second-year plan of the decorative segment. This included eight new styles in Décor by Fabrica, seven in 1866 by Masland, and six in the new 1866 All Seasons Collection. Frierson reported the company has 21 new decorative styles to be launched during the second and third quarter this year.
The traditional soft surface categories for Masland and Fabrica continued development of the EnVision Nylon and EnVisionSD Pet Solutions product lines, with two new styles in the first quarter and seven additional styles to be launched in the coming months.
The hard surface segment expanded distribution of key collections, which were launched into the market late last year, and included Boardwalk, which features lighter colors, clean visuals, and a new rolled-edge bevel for an authentic wood look. During the first quarter, we launched Trucor Refined, which combines a melamine resin top layer with a mineral fiber core that is impervious to water or moisture.
Frierson reported that gross margins improved thanks to diversifying raw material suppliers at lower comparative costs.
"In the first few weeks of the second quarter in 2023, we have seen order entry increase to 14% above first quarter levels," he said. "We anticipate a stronger sales level in the second quarter with typical seasonality and many of our new products hitting retail floors."
See more coverage from Dixie: What's Next for Dixie and The Dixie Group: Founders of Fashion.
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