Culp, Inc. has announced its financial results for the second quarter of fiscal 2025, reflecting a mixed performance shaped by significant restructuring efforts in its mattress fabrics segment and continued challenges in the upholstery fabrics market. While consolidated net sales declined by 5.2% year-over-year to $55.7 million, the company highlighted a notable sequential improvement in its mattress fabrics business, alongside steady restructuring progress.

Key financial and operational highlights

- Net Sales: $55.7 million, a 5.2% decrease from the prior-year period.

- Mattress Fabrics Segment: Sales grew sequentially by 7.1% but were down 4.2% year-over-year. The segment reported a 70.7% sequential reduction in operating losses, reflecting restructuring-related efficiencies.

- Upholstery Fabrics Segment: Sales fell 6.4% year-over-year and 10.0% sequentially due to weaker residential demand and customer inventory adjustments. However, the segment-maintained profitability.

- Net Loss: $(5.6) million, or $(0.45) per diluted share, compared with $(2.4) million, or $(0.19) per diluted share, in the prior year.

Iv Culp, President and CEO, acknowledged the ongoing challenges in the residential upholstery fabrics market and inefficiencies tied to restructuring in the mattress fabrics segment. However, he emphasized the company’s progress:

“While industry conditions remain challenging, we are encouraged by the strides we’ve made in restructuring our mattress fabrics operations. Sequential improvement in sales and reduced losses in this segment demonstrate the impact of our strategic initiatives. Despite near-term pressures, we remain confident in our ability to enhance profitability and capitalize on growth opportunities as market conditions stabilize.”

Restructuring progress

The restructuring plan announced in May 2024 is advancing on schedule. Key milestones include:

- Completion of the sewn mattress cover operation consolidation in Haiti.

- Phased wind-down and closure of the Canadian manufacturing facility, with certain knitting and finishing production equipment relocation to Stokesdale, North Carolina, nearing completion.

The company anticipates $10.0–$11.0 million in annualized savings once these initiatives are fully implemented by the end of Q3 FY2025, with most benefits expected to materialize in Q4.

Segment performance

Mattress Fabrics (CHF)

Sequential growth was driven by increased order volumes, attributed to product innovation and a stronger market position. While year-over-year sales remained pressured by softness in the domestic mattress industry, operational improvements reduced losses significantly.

Upholstery Fabrics (CUF)

Residential fabric sales were impacted by decreased demand and customer inventory adjustments, including a significant reduction in orders from a key client. However, the hospitality and contract fabric business demonstrated resilience, contributing 35% of total upholstery fabric sales.

Financial outlook

Looking ahead, Culp expects flat-to-slightly-down sequential net sales in Q3 FY2025, reflecting continued pressure on residential upholstery fabric sales. However, the company anticipates positive adjusted EBITDA in the second half of FY2025 and a return to profitability in Q4, driven by ongoing restructuring benefits.

As the company navigates a challenging macroeconomic environment, its strategic focus on operational efficiencies, restructuring, and market share expansion positions it for long-term success.

www.culp.com