Donna Shook replaces used spools of thread in the creeling area of the Dixie Group plant in Eton, Georgia, in this file photo.

The Dixie Group, Inc., lost $404,000, or 3 cents per share, during the second quarter due primarily to a drop in commercial carpet sales and extra expenses preparing for new carpet lines coming out this summer.

The Chattanooga-based carpet maker said today overall sales were down 3.8 percent from a year ago to $66.6 million. A year ago, Dixie earned $808,000, or 6 cents per share, from continuing operations.

"Favorable activity early in the year slowed as we got later into the quarter," Dixie CEO Dan Frierson said in the quarterly earnings report released today. "We expect this slower pace to continue throughout the summer months."

Dixie said sales of upper-line residential carpets are improving, however, and Frierson said new carpet lines being introduced this summer should help the company this fall.

"Our strategy of continuing to invest in new products during this slow economic recovery has proven successful, and we will continue to do so with the launch this quarter of both our line of Stainmaster TruSoft products, as well as our new "permaset" wool dyeing process," Frierson said.

Although earnings were below an industry analyst forecast, Dixie shares are trading higher this morning on the Nasdaq exchange.

But Dixie said said it will not repeat the merchant special sales offer made last fall, which the company estimates boosted carpet sales in the third quarter of last year by 6 percent.

"Sales early in the third quarter appear to be following the same trend as the second with our higher-end residential lines doing better than the market but continued weakness in the mass merchant and commercial sectors," Frierson said.