Fabric supplier Culp Inc., with headquarters in High Point, N.C., reports that net sales for its fiscal second quarter of 2011 were 48.9%, a 2% drop from the same period in the prior fiscal year. Culp’s second quarter ended Oct. 31. Mattress fabric sales were even with the prior–year period; upholstery fabric sales were down 5%.
Pretax income for the fiscal second quarter was $3.2 million, or 6.5% of sales, compared with $3.5 million, or 7% percent of sales in the prior–year period—an 8.6% decline.
Net income was $4 million, or $0.30 per diluted share, in second–quarter 2011 compared with net
income of $2.9 million, or $0.22 per diluted share, for the second quarter of fiscal 2010.
“While second–quarter results reflect a much weaker U.S. retail environment, our year–to–date sales, profitability and return on capital are up from the prior–year period,” said Frank Saxon, Culp president and chief executive officer. “The uncertainties surrounding the economic outlook, a continued weak housing market and high unemployment are all keeping U.S. consumers on the sidelines for now. However, we have continued to perform well during this period and we have strengthened our business models in both of our businesses.”
Year–to–date sales were $104.8 million, up 10% from the same period a year ago. Year–to–date pretax income was $7.5 million, or 7.1% of sales, compared with $5.5 million, or 5.8% of sales for the same period last year—an increase of 36%.
Year–to–date net income was $7.7 million, or $0.59 per diluted share, compared with net income of $4.8 million, or $0.37 per diluted share, for the same period a year ago.
Looking at mattress fabrics specifically, Culp’s sales for the second quarter were $28.3 million—relatively flat compared with $28.2 million for the second quarter of fiscal 2010.
“Our mattress fabrics business delivered a consistent performance, in spite of the weaker demand in the bedding industry,” Saxon said. “While sales were about the same level as the second quarter of last year, these results reflect the planned discontinuation of a product line since a year ago. On a comparable basis, we are pleased with the favorable sales trends in our continuing product lines.”
The company has completed a multiyear effort to expand production capabilities for knit mattress fabrics. The company spent about $25 million on capital expenditures and about $20 million for two corporate acquisitions.
Culp projects that overall sales will be down 5% to 10% in the third quarter of fiscal 2011. Mattress fabric sales are expected to be comparable to last year, but upholstery fabrics sales are expected to be down 10% to 20%. Pretax income for the third quarter of fiscal 2011 is expected to be between $2.6 and $3.3 million, compared to $3.8 million in the prior–year period.