CHATTANOOGA, Tenn. — Dixie Yarns Inc., hit by a huge operating loss in its textile segment, posted a loss of $4.3 million in the first quarter ended April 2. The loss was steeper than Dixie Yarn’s earlier estimate that ranged from $1.8 million to $2.6 million. In the year-ago quarter, Dixie Yarns earned $907,000, or 10 cents a share.
Sales climbed 36.4 percent, to $164.8 million from $120.8 million, reflecting the acquisition of two carpet makers last year.
The textile group, which includes yarns, industrial sewing threads and knit fabrics, suffered an operating loss of $7.1 million in the quarter against a profit of $2.9 million a year earlier. Sales dipped 2.9 percent to $81.6 million from $84 million.
Daniel K. Frierson, chairman, said the textile segment’s results were battered by lower selling prices, higher cotton costs and approximately $1 million in severance and other expenses to lower administrative and manufacturing costs.
Gary A. Harmon, treasurer, said the company cut 250 jobs, mainly hourly employees, in the textile division in the quarter. He estimated that with increased manufacturing efficiencies, the company will cut an additional 250 jobs in the textile area this year. The textile division had about 5,000 employees.
Frierson noted that the firm has shifted responsibilities in underperforming textiles areas, consolidated distribution and manufacturing plants and placed a limited freeze on hiring.
“While we believe we have made significant progress in streamlining the majority of our textile operations, management is continuing its efforts to further reduce costs,” he added.
He said improved demand for textile products in March has resulted in increasing unit volume and higher selling prices on new orders.
“Most of our textile operations are now running on a full schedule and the higher selling prices are anticipated to take effect gradually throughout the remainder of the year,” Frierson said.
At the carpet segment, operating profits more than doubled to $4.8 million from $2.2 million. Sales jumped to $83.9 million from $37.1 million reflecting the acquisition of Carriage Industries Inc. and Masland Carpets Inc. last year.