Sheila Long O’Mara// Executive Editor, Furniture Today// December 8, 2022
Mattress, upholstery sales decline delivers Culp a Q2 loss Matrress Protector
Sheila Long O’Mara// Executive Editor, Furniture Today// December 8, 2022
HIGH POINT – Upholstery and mattress fabric supplier Culp Inc. posted a net loss of nearly $12.2 million for the second quarter ended Oct. 30, a 20.9% decline from net income of $851,000 in the same quarter last year.
The company’s second quarter net sales were down 21.7% to $58.4 million compared with the second quarter last year that netted revenue of $74.6 million. Ticking sales were down 35.8% for the quarter, and upholstery fabric sales dropped 4.5% compared to the same quarter last year.
Culp posted a $11.9 million loss from operations, compared with income from operations of $1.6 million in the prior-year period. The company said the loss from operations for the quarter incudes $5 million in inventory impairment charges and a loss on the sale of raw material and finished goods inventory associated with bedding fabric segment. The company also noted about $1 million in higher than normal inventory markdowns in its upholstery fabrics segment and a $713,000 restructuring expense and related charges from the closure of the upholstery fabric segment’s cut-and-sew facility in Shanghai.
“Our sales and operating results for the second quarter reflected ongoing pressure from the continued slowdown in consumer demand in the domestic mattress industry and, to a lesser degree, in the residential home furnishings industry,” said Iv Culp, president and CEO. “As previously announced, our operating performance was significantly affected by inventory impairments and inventory closeout sales for our mattress fabrics division, as well as higher than normal inventory markdowns and restructuring and related charges associated with our upholstery fabrics segment. The timing of this inventory impact was mostly driven by our customers’ focus on new product offerings to introduce at the retail level, as well as inflationary pressures, changes in consumer spending, and ongoing macro conditions. We expect to ultimately benefit from a focus on new products, as we continue to win new placements in both divisions, but it is difficult to predict the timing of new product rollouts due to the ongoing excess of retail and manufacturer inventory.”
Looking ahead, the company sees continued economic headwinds from the impact inflation is having on consumer spending, high inventory levels at manufacturers and retailers, an inexperienced labor forces and other macroeconomic factors.
Culp said it expects third quarter net sales to be lower that those reported in the second quarter.
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