Culp 4th-Quarter and Full-Year Results Hit Headwinds

Culp 4th quarter results

In its fourth fiscal quarter of 2019, which ended April 28, Culp Inc. reported pretax income of $1.5 million, compared with pretax income of $6.5 million in the fourth quarter of fiscal 2018. Excluding a nonrecurring charge of $500,000 (a donation to the University of North Carolina at Chapel Hill in honor of the late Robert G. Culp III, company founder and former chair), the High Point, North Carolina-based textile supplier’s pretax income was $2 million in its fourth quarter.

Net sales in the fourth quarter totaled $71 million, a 9.2% decline compared with the prior-year period. Mattress fabric sales were down 18.9% and upholstery fabric sales were down 8.3%.

Net sales of home accessories — which include the operation of eLuxury, Culp’s e-commerce and finished products business — were $4.2 million. The figure is comparable with third-quarter results. 

“We faced a number of significant challenges in the fourth quarter, primarily related to global trade disruption and an overall weaker retail environment,” said Frank Saxon, Culp chair and chief executive officer. “There were continuing headwinds associated with low-priced imported mattresses from China, and the excess supply of these mattresses disrupted the market and affected many of our customers. The outcome for Culp was reduced demand for our mattress fabrics and sewn covers. Our upholstery fabrics business was affected by the softer retail environment for home furnishings and uncertainties surrounding international tariffs and the associated geopolitical risks.”

Commenting on fourth-quarter ticking and accessories sales, Iv Culp, president and chief operating officer, said: “While we saw sequential sales improvement in our mattress fabrics business compared with the third quarter of fiscal 2019, the influx of low-priced mattresses from China has continued to affect the domestic mattress industry. … We are continuing to learn about and develop (the home accessories business). Our operating results were lower than expected due to additional product roll-out costs and reduced demand for legacy products, primarily mattress pads. We believe this legacy business was affected by the import turmoil in the overall mattress industry.”

Culp’s full-year pretax earnings were $12 million, compared with $26.9 million for fiscal 2018. Excluding certain nonrecurring items totaling $2.7 million, pretax income was $14.7 million.

Company full-year sales declined 8.4% to $296.7 million, with mattress fabric sales down 24.7% and upholstery fabric sales up 3.5%.

Net sales in home accessories were $16 million with no comparable prior-year sales because Culp invested in eLuxury in June 2018.

“We will continue to diversify both our product and customer mix in mattress and upholstery fabrics, with unique opportunities to expand in the hospitality market,” Saxon said. “We also have the ability to extend our market reach through Culp Home Accessories.”

Commenting on full-year mattress fabric results, Iv Culp said: “Our varied product mix of mattress fabrics and sewn covers across most price points and style trends supports our diversification strategy with favorable results. Importantly, CLASS, our mattress cover business, continues to perform well.”

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