Culp, Inc. Reports $5.6 Million Net Loss and 5.2% Revenue Decline for Quarter Ended October 27, 2024

Culp, Inc. reported a net loss of $5.6 million for the three months ended October 27, 2024, compared to a loss of $2.4 million in the same period last year. Revenue for the quarter decreased by 5.2% to $55.7 million, down from $58.7 million in the prior year. The company's gross profit also fell significantly, dropping 24.7% to $6.0 million, resulting in a gross margin of 10.8%, down from 13.5% a year earlier. For the six-month period, Culp's net loss widened to $12.9 million from $5.8 million, with total revenue declining 2.8% to $112.2 million.

The decline in revenue was attributed to reduced demand in both the mattress and upholstery fabrics segments, reflecting ongoing challenges in the domestic mattress industry and the residential home furnishings market. The mattress fabrics segment saw a 4.2% decrease in sales for the quarter, while upholstery fabrics sales fell by 6.4%. The company has been implementing a restructuring plan, which includes consolidating operations and transitioning to a strategic sourcing model, particularly in its mattress fabrics segment. This restructuring is expected to incur approximately $7.2 million in charges during fiscal 2025.

Operationally, Culp's average shares outstanding increased slightly, with basic shares rising to 12.5 million from 12.4 million year-over-year. The company reported a significant increase in accounts payable, reflecting a strategy to manage cash flow amid rising inventory levels. As of October 27, 2024, Culp's cash and cash equivalents totaled $10.5 million, a slight increase from $10.0 million at the end of the previous fiscal year, bolstered by $4.0 million in cash proceeds from a line of credit and $527,000 from equipment sales.

Looking ahead, Culp anticipates continued pressure on sales due to macroeconomic conditions affecting consumer spending and housing markets. The company is focused on executing its restructuring plan to align its operations with current demand levels and improve profitability. However, it acknowledges that external factors, including geopolitical tensions and inflation, could further impact its financial performance. Culp remains committed to optimizing its manufacturing capabilities and enhancing its product offerings to position itself for future growth.