Fabric supplier Culp Inc. said sales fell 10.3% during the quarter ended Aug. 3, but the company reversed an operating loss and substantially reduced its net loss from the same quarter last year.
Even though demand for its mattress and upholstery fabrics remained weak, the company said the bottom-line improvement was driven by a restructuring effort that was completed earlier this year.
Sales for the quarter – the first quarter of Culp’s fiscal year – totaled $50.7 million, down from $56.5 million in last year’s first fiscal quarter.
The net loss totaled $231,000, or 2 cents per share. In the same period last year, the loss was $7.26 million, or 58 cents per share.
Gross margin rose to 14.3% from 9%, and the company recorded operating income of $1.62 million. In last year’s first fiscal quarter, it had an operating loss of $6.85 million.
In the most recent quarter, mattress fabric sales were essentially even with last year’s first quarter at $28.05 million, while upholstery fabric sales tumbled 20.4% to $22.6 million.
Iv Culp, president and CEO, said the upholstery fabric decline was exacerbated by a five-week pause in shipments from its Chinese operation due to uncertainty about tariffs. Shipments have resumed, but he said demand remains weak for both mattress and upholstery fabric.
“But because of the costs we have taken out during our restructuring, we can return to profitability in this environment,” said Culp. “And when things turn around, we’ll be in a strong position.”
The company has undertaken further restructuring by integrating its mattress fabric and upholstery fabric businesses, which had been two separate divisions. As a result, its domestic upholstery operations are being moved from a leased facility in Burlington, N.C., to a company-owned, 500,000-sqaure-foot factory in Stokesdale, N.C., where mattress fabric also is produced.
Culp said the move should be completed by the end of the calendar year, and said it should benefit the company’s bottom line in the third and fourth quarters of its fiscal year, which ends in April.
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