Culp 2Q Income Climbs on Lower Sales

November 29, 2010  by in UnCategorized   

By Home Furnishings Business in Financial Reports on November 30, 2010 Fabric supplier Culp (NYSE: CFI) reported net income of $4 million for the second quarter ended Oct. 31, compared to net income of $2.9 million during the same quarter last year.

Net sales for the quarter were $48.9 million, a 2 percent decline from net sales of $49.7 million in the same quarter last year.

"While second quarter results reflect a much weaker U.S. retail environment, our year to date sales, profitability and return on capital are up from the prior year period," said Frank Saxon, president and chief executive officer. "The uncertainties surrounding the economic outlook, a continued weak housing market, and high unemployment are all keeping U.S. consumers on the sidelines for now. However, we have continued to perform well during this period and we have strengthened our business models in both of our businesses. Additionally, we are pursuing international sales and marketing initiatives in our upholstery fabrics business, especially in Europe and China. We are excited about the global appeal of our products and the opportunity to reach new customers. Our strong financial resources are enabling us to pursue a more active growth strategy during these challenging times."

Mattress ticking sales for the quarter were $28.3 million, relatively flat compared with $28.2 million for the second quarter of fiscal 2010.

Upholstery fabric sales were $20.5 million, a 4.5 percent decline compared with $21.5 million in the second quarter of fiscal 2010. Sales of China-produced fabrics were $17.2 million in the second quarter of fiscal 2011, a four percent decline over the prior year period, while sales of U.S. produced fabrics were $3.4 million, down 6.8 percent from the second quarter of fiscal 2010.

Looking ahead to the third quarter, Saxon said the company expects the economy, housing market and unemployment to continue to impact consumer demand for furniture and mattresses.

"Additionally, our third quarter of last year was exceptionally strong, especially in upholstery fabrics," he said. "Overall, we expect our sales for the third quarter of fiscal 2011 to be 5 to 10 percent lower than the third quarter of last year."

The entire earnings release can be found online.