The Dixie Group (DXYN) Sees Q3 Earnings Below Street Estimates; to Cut Additional 5-7% of Workforce
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The Dixie Group, Inc. (NASDAQ: DXYN) today announced that its earnings for Q3 will be adversely affected by continuing weakness in the sales of new and existing homes and deteriorating credit conditions. In response to the difficult economic environment, the Company has developed cost-reduction initiatives that will begin to be implemented during Q408 to better utilize its facilities and reduce costs.
Dan Frierson, Dixie's Chairman and CEO, said "We are disappointed that residential carpet markets have continued to weaken and commercial carpet sales have declined faster than anticipated. As a result, we expect to report a loss from continuing operations for the third quarter, which will result in earnings well below current analyst estimates.
"The cost reduction initiatives include consolidating our carpet tufting operations in Eton, Georgia, into our tufting, dyeing and finishing facility in Atmore, Alabama, and consolidating our California tufting and custom rug operation into our West Coast dyeing and finishing facility. We are in the process of quantifying the costs of completing these consolidations. Although the costs of these consolidations will have a negative impact on results until they are completed in the first quarter of next year, these actions should reduce ongoing fixed costs, improve operating efficiencies in both our East Coast and West Coast operations, and significantly improve our operating results, with only a slight, if any, impact on our production capacity and flexibility.
"We are also in the process of evaluating our entire organization to determine what additional expenses can be reduced or eliminated, without compromising our ability to grow or affecting our leadership position in high-end markets. Our total employment was reduced by approximately 9% in the second quarter of this year. The anticipated effect of the facility consolidations and other contemplated organizational changes should reduce total employment by an additional 5% to 7%."
The Dixie Group, Inc. engages in the manufacture, marketing, and sale of carpets and rugs to residential and commercial customers in the United States.
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