Dixie Group moves to offset losses

Published 7:32 pm Wednesday, July 29, 2009

Chattanooga-based Dixie Group will undergo a major senior executive reorganization, combine its three residential carpet units into one business and shave more costs to help offset losses. The moves are expected to save the company $8 million to $10 million next year, said Daniel K. Frierson, chairman and chief executive officer.

The Dixie Group has a plant in Eton that employs about 60 workers but has no operations in Whitfield County.

The moves announced Wednesday coincided with the release of the company’s second quarter financial results. The company had a loss from continuing operations of $984,000 from April to June compared to income from continuing operations of $1.28 million for the same period in 2008. Sales for the second quarter 2009 were $52.57 million, down 32 percent from $77.15 million in the second quarter of 2008.

To become profitable, The Dixie Group will cut costs more steeply than the company has in previous years, Frierson said.

“The actions taken to reduce costs in 2008 and 2009 have resulted in 25 percent fewer associates and approximately $15 million in cost reductions, which has had a positive impact on our second quarter results; however, at current business activity levels, we need to reduce expenses further in order to become profitable,” Frierson said.

The company has fewer than 1,000 employees. Kennedy Frierson will become chief operating officer, in charge of sales and manufacturing; Paul Comiskey will head residential sales and marketing; Gary Harmon, chief financial officer, will retire later this year and will be replaced by Jon Faulkner, currently vice president for planning and development; and David Polley, vice president for marketing, will also retire later this year.

The three residential carpet units — Dixie Home, Fabrica and Masland Residential— will combine into one business with three distinct brands. The company’s residential business “will be organized much like our commercial carpet business and more like the rest of the industry,” Daniel K. Frierson said.