Carpet and rug maker the Dixie Group reported a 6 percent drop in sales during the first quarter, posting about $74.5 million compared to nearly $80 million a year ago. The Chattanooga-based company, which is best known for its Fabrica International, Masland Carpets and Dixie Home brands, said sluggish carpet sales at Home Depot triggered the sales dip.  

            “Almost 60 percent of our carpet sales decline was due to lower sales to one customer – the Home Depot – where carpet business was extremely weak,” said Daniel K. Frierson, Dixie’s chairman and ceo. “Residential carpet sales to our other customers were down only about  4 percent, and our commercial carpet sales were off less than one half of 1 percent.”

            “Nevertheless, our sales continued to outperform the carpet industry as a whole, where sales were off almost 10 percent compared with the year-earlier period,” he added.

     The Dixie Group also posted a loss in its income from continuing operations. The first quarter tally ended at $237,000 or 2 cents per diluted share, compared to last year’s $926,000 or 7 cents per diluted share. First quarter net income was also soft: $171,000 or 1 cent per diluted share compared to last year’s $835,000 or 6 cents per diluted share.

            "Despite lower revenue and the effect on fixed costs of the drop in unit volume, our gross margin as a percentage of net sales improved compared with the first quarter a year ago,” Frierson noted. He added that Dixie plans to roll out an ambitious mix of new commercial and residential carpets later this year.

“These new products should fuel sales growth,” he said. “The improvement we are seeing in our commercial business and the anticipated effect of our new residential products make us optimistic that our sales will continue to outpace those of the rest of the carpet industry.”