High Point fabrics maker Culp lowers expectations – Triad Business Journal – The Business Journals

High Point mattress and upholstery materials maker Culp Inc. downgraded its expectations for its current quarter because of inflation, macro-economic pressures, and changes in consumer spending.
In a press release filed Tuesday with the Securities and Exchange Commission, Culp said it expects net sales of approximately $58 million for its second quarter when it reports its financials in early December. Culp (NYSE: CULP) expects a loss of $11.7 to $12.2 million for the quarter.
This includes approximately $5 million in inventory impairment charges and loss on the sale of raw material and finished-goods inventory in the company’s mattress fabrics segment.
The expected loss also reflects $1 million in higher-than-normal inventory markdowns in the residential upholstery fabrics business and $700,000 in charges related to restructuring a cut and sew platform in China in the upholstery fabric segment. The company closed a leased facility.
The company expects to end the quarter with an improved cash position of $19 million in cash and investments and no outstanding borrowing.
“The ongoing industry softness due to macro-economic pressures and changes in consumer spending, combined with inflationary pressures and our customers’ increased desire for new product offerings to roll out at the consumer level, has led us to take inventory markdowns and impairment charges on unproductive and overvalued inventory,” President and CEO Iv Culp said in the release.
“While these decisions will result in a higher operating loss for the second quarter, we believe having the financial impact behind us will position us for improvement during the second half of fiscal 2023.
“The current business environment remains challenging, but our team is continuing its diligent focus on free cash flow and generating cash through working capital management, including ongoing inventory reductions, as well as reducing costs and improving efficiencies. …. We remain optimistic about CULP’s future as the macro environment improves, and we believe we are taking the necessary steps to improve profitability going forward.”
For the quarter that ended July 31, Culp reported a nearly 25% decrease in net sales in its fiscal first quarter and a net loss of $5.7 million.
Culp has approximately 450 employees in Guilford County and about 30 in a warehouse and design facility in Burlington.
It’s time to nominate a female business leader who is making a difference in the local economy and in the Triad community.
© 2022 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated January 1, 2021) and Privacy Policy and Cookie Statement (updated July 1, 2022). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American City Business Journals.


Sharing Is Caring:

Leave a Comment