Stifel Downgrades Dixie to Hold

New York, NY, May 2, 2007–Analysts at Stifel Nicolaus & Company downgrade The Dixie Group Inc from “buy” to “hold,” while reducing their estimates for the company.

In a research note published this morning, the analysts mention that the company has posted its 1Q EPS from operations significantly short of the estimates.

Dixie’s carpet sales declined by 6.3% y/y due to the company’s substantial exposure to the residential market environment, the analysts say. The downgrade in rating reflects the weak trends in the industry, which are likely to remain challenging in the forthcoming quarters, Stifel Nicolaus & Company adds.

The EPS estimates for 2007 and 2008 have been reduced from $0.95 to $0.61 and from $1.20 to $0.93, respectively.