Dixie Group residential carpet business fall in Q1
29 Apr '08
4 min read
"The first quarter typically is the slowest and most difficult quarter for our business. This seasonal weakness, together with soft conditions in the residential portion of our business, has put pressure on our margins and our ability to leverage costs. However, improved operating performance and reductions in selling and administrative expenses offset most of the effect of lower fixed cost absorption and higher raw material and other costs.
Our gross margin percent declined a modest 0.2% to 29.1% while selling and administrative expenses increased only 0.2% to 26.8%. The price increases we announced in the first quarter should be fully implemented by the end of this quarter; however, additional raw material and other price increases are predicted for the industry.
"Although severe weakness in the housing industry and tough credit conditions will likely persist throughout this year, we expect improved sales volumes during the second quarter as a result of the normal seasonality of the carpet industry and our business.
We believe that conditions in the residential portion of our industry will improve somewhat in the last half of this year, but the rate of growth of commercial carpet sales is expected to slow. We anticipate our sales to continue to outpace those of the carpet industry as a whole, due to the performance of our commercial business and the projected effect of our new residential products," Frierson concluded.
During the first quarter of this year, the Company purchased 137,975 shares of its Common Stock at an average price of $8.26 per share pursuant to the program authorized by the Board of Directors to repurchase up to $10.0 million of the Company's Common Stock. Current stock prices suggest that repurchases of the Company's Stock represent an excellent investment.
The Company's loss from discontinued operations was $69,000, or $0.01 per diluted share, for the first quarter of 2008, compared with a loss of $66,000, or $0.01 per diluted share, for the first quarter of 2007. Including discontinued operations, the Company reported net income of $13,000, or $0.00 per diluted share, for the first quarter of 2008 compared with net income of $171,000, or $0.01 per diluted share, for the first quarter of 2007.
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