In its second fiscal quarter of 2019, which ended Oct. 28, Culp Inc. reported revenue of $77 million, a 4.6% decline compared with the prior-year quarter, but above Wall Street analysts’ expectations (Zack’s Investment Research) of $76.32 million.
Sales in the High Point, North Carolina-based company’s ticking segment were down 13.6% and upholstery fabrics sales rose 9.1%.
Culp’s second-quarter earnings per diluted share were $0.23 on net income of $2.9 million. This compares with $0.32 per diluted share and earnings of $4 million in the prior-year quarter. Culp also announced an 11% increase in its quarterly cash dividend from $0.09 to $0.10 per share, or $0.40 per share on an annualized basis, commencing in the next quarter.
Culp said its financial position for the second quarter was strong, despite challenging conditions in its mattress fabric business. At the quarter’s close, the company reported $41.5 million in total cash and investments, no debt, and $6.6 million in cash flow from operations.
Results for the quarter included a net benefit of approximately $543,000 in restructuring and related charges and credits due mostly to the closure of the company’s production facility in Anderson, South Carolina. Excluding this net credit, pretax income for the second quarter of fiscal 2019 was $3.7 million, the company said.
“As expected, our results for the second quarter reflect the ongoing challenges facing the bedding industry related to the significant increase of low-priced imported mattresses from China,” said Frank Saxon, Culp president and chief executive officer. “We believe the recent petition approved under U.S. trade laws to address this situation will ultimately be favorable for the domestic mattress industry. … We will begin to see improvement in our quarterly results during the fourth quarter of the fiscal year. We will continue to execute on our product-driven strategy as we expand our reach into new markets.”
Iv Culp, chief operating officer and president of the ticking division, said: “The second quarter marked the first full quarter to include the operations of eLuxury. We are excited about this important new sales channel for Culp and the opportunity to participate in the growing e-commerce direct-to-consumer space. We are working hard to develop and create innovative bedding accessory items to be marketed through this exciting platform.”