Culp to take steps to achieve profitability in upholstery fabrics

04 Sep '08

5 min read

Culp Inc reported financial and operating results for the first quarter ended August 3, 2008.

Overview:
For the three months ended August 3, 2008, net sales were $59.3 million compared with $65.2 million a year ago. The company reported net income of $781,000, or $0.06 per diluted share, for the first quarter of fiscal 2009, compared with net income of $851,000, or $0.07 per diluted share, for the first quarter of fiscal 2008.

The financial results for the first quarter of fiscal 2009 included $267,000, or $0.02 per diluted share, in restructuring and related charges, after taxes. Excluding these charges, net income for the first fiscal quarter was $1.0 million, or $0.08 per diluted share.

The financial results for the first quarter of fiscal 2008 included $624,000, or $0.05 per diluted share, in restructuring and related charges, after taxes. Excluding these charges, net income for the first fiscal quarter of 2008 was $1.5 million, or $0.12 per diluted share. (A reconciliation of net income and net income per share has been set forth on Page 6.) The results for the first quarter of fiscal 2009 reflect 14 weeks as compared to 13 weeks for the same period a year ago.

Frank Saxon, chief executive officer of Culp Inc, said, "The results for the first quarter of fiscal 2009 reflect outstanding performance in our mattress fabrics business and a greater than expected loss in our upholstery fabrics business.

The retail climate we are facing so far this year, particularly in the furniture industry, is as difficult as we have seen in many years. However, during these challenging times we are working diligently to strengthen our business models in both divisions and increase the value we are providing our customers in terms of product innovation, delivery performance and quality."

Mattress Fabrics Segment:
Mattress fabric (known as mattress ticking) sales for the first quarter were $35.6 million, a 2.7 percent decline compared with $36.5 million for the first quarter of fiscal 2008. On a unit volume basis, total yards sold decreased by 4.7 percent compared with the first quarter of fiscal 2008.

The average selling price of $2.49 per yard for the first quarter of fiscal 2009 increased 2.1 percent over the same period a year ago due to a shift in product mix. Operating income for this segment was $4.2 million, compared with $3.8 million, for the prior-year period.

"Mattress fabrics have been a driving force in Culp's business and accounted for 60 percent of the company's sales in the first quarter," added Saxon. "Above all, we are committed to building upon our value proposition to customers. We have now completed a $5.0 million capital project to significantly strengthen our woven mattress fabrics manufacturing operations and provide further reactive capacity for our customers.

The August 11, 2008, acquisition of the knitted mattress fabrics operation of Bodet & Horst USA, or B&H, will further enhance Culp's strong service platform with improved supply logistics from pattern inception to fabric delivery, allowing accelerated responsiveness and greater stability.

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