In its third fiscal quarter of 2019, which ended Jan. 27, Culp Inc. reported net sales of $77.2 million, a 9.5% decline compared with its third quarter of fiscal 2018. Ticking sales fell 27.1% to $35.7 million. Upholstery sales rose 2.3% to $37.1 million.
New business segment Culp Home Fashions Accessories had sales of $4.4 million, with no comparable prior-year sales. The tally includes eLuxury, Culp’s e-commerce and finished products business, which sells sleep accessories and home goods.
Net income using generally accepted accounting principles was $3.2 million, or $0.25 per diluted share. This compares with a net loss of $748,000, or $0.06 per diluted share, in the third quarter of fiscal 2018.
The High Point, North Carolina-based company’s financial position reflected total cash and investments of $40 million and no debt.
“As expected, our results for the third quarter reflect the ongoing significant challenges for the bedding industry, primarily related to the high volume of low-priced imported mattresses from China,” said Frank Saxon, president and chief executive officer. “The current supply of these products has disrupted the market and affected most of our major customers and the industry, which has continued to reduce demand for our mattress fabrics and covers. We are pleased that our upholstery fabrics business had another solid performance for the third quarter.
“We continue to believe the domestic mattress industry will ultimately benefit from relief sought under U.S. trade laws to address the low-priced imported
mattresses from China.” At the same time, Saxon expressed concern with delays in the announcement of the antidumping findings caused by the recent U.S. government shutdown, and noted, “we continue to monitor the ongoing tariff discussions and the potential impact any additional tariffs will have for our upholstery fabrics business.”
Iv Culp, chief operating officer and president of the mattress fabrics division, added that “in spite of the challenges we faced … we are especially pleased with the continued progress for CLASS, our mattress cover business with repetitive production capabilities in North Carolina, Haiti and our Culp China platform. Demand trends for mattress covers have been favorable, and we continue to develop new products with both new and existing customers and reach growing market segments.”
Culp added: “Since investing in eLuxury, we have worked hard to establish Culp Home Fashions Accessories and create a combined platform that supports both business-to-consumer and business-to-business sales of finished products.”
For the fourth quarter of fiscal 2019, Culp Inc. projects overall sales will be down slightly, compared with the same period last year. Free cash flow for fiscal 2019 is expected to be comparable to last year’s results, even with significant headwinds in the mattress fabrics segment, the company said.