The Dixie Group, Inc. reported a net loss of $3.998 million for its third quarter of 2025, translating to earnings of $0.28 per diluted share. Net sales for the quarter were $62.379 million, a 3.9% decline from $64.877 million in the same period a year earlier. The loss reflects a combination of weaker demand in the flooring market, higher interest costs, and ongoing cost‑control efforts that have yet to fully offset revenue erosion.
Quarter‑over‑quarter, the company’s gross margin held steady at 24.8%, slightly above the 24.6% margin recorded in Q3 2024. Operating loss for the quarter was $2.025 million, a modest improvement from the $2.107 million loss in Q3 2024, driven by a 0.8% reduction in operating expenses. Interest expense rose to $5.4 million from $4.8 million year‑to‑date, reflecting the impact of higher borrowing rates on the company’s $75 million revolving credit facility that was secured in May 2025.
Over the nine‑month period ending September 27, 2025, net sales totaled $193.9 million, down 3.3% from $200.6 million in the same period a year earlier. Net loss for the nine months was $4.325 million, an improvement from the $5.473 million loss reported for the prior year. Gross margin for the nine‑month period remained near 24.8%, and operating loss was $6.5 million, reflecting the company’s ongoing effort to tighten costs amid a sluggish housing market.
CEO Daniel K. Frierson said the quarter began with a “slow start” due to high interest rates and elevated housing prices, but a rebound in September helped the company gain momentum heading into the fourth quarter. CFO Allen Danzey noted that while the first part of the quarter saw lower sales volumes, the company’s gross margin remained slightly favorable to the prior year, and interest expense increased in line with the higher cost of capital. Both executives emphasized the importance of disciplined cost management and operational efficiency.
The company’s liquidity position was bolstered by the new $75 million revolving credit facility, which provides a safety net for working‑capital needs. Management also outlined a profit‑improvement plan targeting over $10 million in cost reductions for fiscal 2026, aiming to offset the headwinds from a soft flooring market and high financing costs.
Investors reacted negatively to the earnings, citing the decline in net sales and the widening net loss as evidence of continued financial strain. The company’s guidance for the remainder of the year was not disclosed, leaving uncertainty about whether the cost‑control measures will translate into profitability in the near term.
The results underscore the challenges facing the flooring industry, where high interest rates, low home sales, and weak consumer confidence have dampened demand. The Dixie Group’s focus on cost discipline, operational efficiencies, and a robust credit facility positions it to weather the current downturn, but the company must still navigate a difficult macroeconomic environment to return to sustainable profitability.
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