Culp’s first-quarter sales up, net income down

Fabric supplier Culp Inc., with headquarters in High Point, N.C., reports that net sales for the first quarter of its fiscal year 2012 were $60.3 million, a 7.8% increase compared with the first quarter of fiscal 2011. Culp’s first quarter of fiscal year 2012 ended July 31.

Sales in Culp’s mattress fabrics segment were $32.2 million, up 4% over the prior–year period. Upholstery sales were $28.1 million, an increase of 12.4% over the same period a year ago.

“We are especially pleased with the increased sales to many key customers who are leaders in the bedding industry,” said Iv Culp, president of Culp’s Mattress Fabrics division. “We continue to benefit from our recent investments to expand and modernize the internal production capacity of both our knitted and damask woven product lines.”

Culp reported pretax income of $3 million, or 4.9% of sales, in the first quarter, compared with $4.3 million, or 7.7% of sales in the prior–year period.

Net income was $1.8 million, or $0.14 per diluted share, compared with net income of $3.7 million, or $0.28 per diluted share, for the first quarter of fiscal 2011. Net income for first–quarter 2012 reflects a significantly higher tax rate, primarily due to noncash U.S.–related tax expense, according to the company.

“We are pleased with our year–over–year sales improvement for the first quarter, especially in the face of an uncertain economy,” said Frank Saxon, Culp president and chief executive officer. “As a result of our sales and marketing initiatives, we expect this sales momentum to continue into the second quarter and full year. Both of our businesses continued to deliver solid results, even though profitability is down somewhat from the same quarter of last year, primarily due to higher raw materials costs in mattress fabrics and lower than expected results in our U.S. upholstery fabrics operation. Our financial position remains strong and supports our ability to invest in growing our businesses in fiscal 2012.”

The company added $2 million to the $5 million share repurchase program announced in June. Culp has repurchased 364,000 shares, or 2.7% of the shares outstanding at the beginning of the program, for approximately $3.2 million.

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