Culp Reports Net Loss in Third Quarter

Faced with soft demand and weakening consumer confidence, fabric supplier Culp Inc. said sales tumbled 34.6% to $52.5 million in the quarter that ended Jan. 29.

The company, a major supplier of mattress ticking, also reported a net loss of $9 million or 73 cents per share for the period, the third quarter of its fiscal year. That compares with a net loss of $289,000, or 2 cents per share, in the same quarter of the previous fiscal year.

Sales in its mattress fabrics segment fell 35.8% to $24.7 million, which the company said reflected “significant unit contraction” in the mattress industry.

“As expected, our sales and operating results for the third quarter reflected demand weakness in the domestic mattress and residential home furnishings industries, specifically related to unit volume,” said Iv Culp, president and CEO. “Our performance was affected by fewer billing days during the quarter due to our customers taking longer than normal holiday shutdowns in the face of high retail inventories and reduced consumer demand.”

He said the company concentrated on cash preservation and working capital management, noting the company recorded cash from operations of $4.6 million and free cash flow of $2.5 million in the first nine months of the fiscal year. That reversed negative cash flow in both categories during the first nine months of the previous fiscal year.

“We remain focused on the long term and continue to diligently manage the aspects of our business we can control,” Culp added. “We are especially pleased with the business transformation plan underway in our mattress fabric segment, and we expect sustained sequential improvement in the business as we implement management changes and new processes tailored to improve operational efficiencies.”

For the nine months ending on Jan. 31, companywide sales totaled $173.5 million, down 27.1% from $237.9 million in the prior year period. The nine-month net loss totaled $26.8 million or $2.19 per share. That compares with a net income of $2.8 million or 23 cents per share in the first nine months of the previous fiscal year.

Culp’s mattress fabrics segment recorded nine-month sales of $80.3 million. That was down 34.4% from $122.4 million in the first nine months of the previous fiscal year.