Fabric supplier Culp Inc. said a dip in demand for mattresses and upholstered furniture resulted in a double-digit sales decline and a net loss of $4.9 million, or 39 cents per share, in the final quarter of its fiscal year.
The loss, which included $200,000 in restructuring expenses, exceeded the $4.7 million, or 38 cents-per-share loss, in the same quarter last year.
Sales for the fourth fiscal quarter totaled $49.5 million, down from $61.4 million in the comparable quarter. The company said mattress fabric sales fell 16.1%, while upholstery fabric sales were off 22.6%.
“We posted solid year-over-year sales gains in both businesses during our fiscal third quarter, and we were making progress toward our stated improvement goals,” said Iv Culp, president and CEO. “However, we faced a significant decline in order levels during our fourth quarter, related to demand pressures our customers faced early in the calendar year.”
For the fiscal year that ended April 28, company-wide sales were $225.3 million, down 4.1% from the prior year. Mattress fabric sales were up 4.8% for the year but were more than offset by the 12.1% drop in upholstery fabric sales.
The company reduced its net loss to $13.8 million or $1.11 per share, from $31.5 million or $2.57 per share the previous fiscal year.
Culp said a restructuring plan announced May 1 is well underway and should be largely completed by the end of the calendar year. He said it should save $10 million to $11 million annually and will allow the company to return to break-even operating results — even at the currently depressed industry demand levels.
“This won’t inhibit our ability to grow the company once demand returns to normal levels,” Culp said.
A key element of the restructuring is the closing of the company’s mattress fabrics plant in Quebec. Production of knitted fabrics made there will be shifted to its Stokesdale, North Carolina, factory, while woven fabrics that have been made in Quebec will be sourced globally from factories in China, Turkey and Vietnam, among other places.
In addition, the company’s factory in Haiti is being consolidated from two buildings into one, and its upholstery fabrics finishing operation in China is being restructured so it operates more efficiently. The plan will result in the loss of about 240 jobs, or roughly 35% of the workforce in the mattress fabrics segment.
Get caught up on Culp’s financial reporting: Culp’s Sales Increase in 3rd Quarter.
