Dixie Group loses $2 million in 3Q

Dixie Group Inc. the parent company of Masland Carpets, lost $2 million in its third quarter, which ended Sept. 26, marking five straight quarters in the red.

Based in Chattanooga, Tenn., Dixie's loss was 140 percent worse than the $833,000 loss in 2008's third quarter. The firm lost 16 cents per share. The only analyst who posts estimates with Thomson Reuters had been expecting an 8-cent loss.

Masland employs about 340 people in Saraland and 325 people in Atmore.

Sales fell to $50.5 million in the quarter — down 31 percent from the same period of 2008 — about the same drop as in the first half of 2009.

The carpet-maker is consolidating the sales forces for its residential brands, including Masland, in an effort to cut costs by $8 million to $10 million a year. This second round of restructuring, following an earlier one that focused on manufacturing, is supposed to be complete after the company spends another $380,000 on it in the fourth quarter, officials told analysts on a conference call.

"Obviously, our costs should be somewhat lower in the fourth quarter and lower still in 2010," said Chairman and Chief Executive Daniel K. Frierson.

He noted that the company's cost reductions should allow it to be profitable in the future at lower volumes.

Though the company warned that it expects demand for carpet in office and commercial buildings to stay weak through the end of 2010, Frierson said residential demand usually rebounds first, and that such an uptick may be under way, though it may be slow.

"The current activity level is up from the third quarter, and we hope that trend will continue," he said.

The company leased new equipment instead of buying it, saving $3.2 million out of its already slashed capital budget, Chief Financial Officer Jon Faulkner said.

Dixie has lost $38.6 million this year, mainly because it wrote down the value of businesses it bought earlier by $28.4 million in the first quarter.

The company has lost more than $70 million over 15 months, a big loss for a firm likely to post sales just over $200 million in 2009.