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From Home Furnishing Business

Culp Sales up Double Digit Percentage in Q3

February 26, 2014  by in Financial Reports, Industry   

For the third quarter ended Jan. 26, High Point-based Culp reported net income of $8.4 million, or $0.68 per diluted share, compared with net income of $2.8 million, or $0.23 per diluted share, for the third quarter of fiscal 2013. Net income for the third quarter of fiscal 2014 included an income tax benefit of $3.8 million, which includes a $5.4 million income tax benefit to recognize U.S. foreign tax credits net of the income tax effects of the undistributed earnings associated with the company’s China operation. Net income for the third quarter of fiscal 2013 included an income tax expense of $1.7 million.

“These favorable results are primarily product related, as we continue to experience excellent customer response to our creative designs and innovative fabrics," said Culp President and CEO Frank Saxon. "We have worked diligently--as our top strategic priority--to drive product innovation throughout our company. It is very encouraging to see significant tangible progress resulting from these efforts with increased sales to existing key customers as well as new customers. We compete in a product and fashion oriented business that is always changing. Our ability to adapt quickly to such changes and to create innovative fabrics, season after season, is the key to our long-term success.

“We are on track to have another outstanding year of solid sales growth, consistent profitability and excellent free cash flow. As a result, we have the financial strength to invest aggressively in capital expenditures and working capital to drive organic growth, as well as to provide added value to shareholders through dividends and share repurchases.”

Mattress fabric sales for the third quarter were $38.5 million, up 8.5 percent compared with the third quarter of fiscal 2013.

“Our mattress fabrics business had a solid sales performance in the third quarter of fiscal 2014,” said Iv Culp, president of Culp’s mattress fabrics division. “These results reflect the growing consumer demand for ‘better’ designed bedding products and strong market penetration. Culp is well positioned to meet this demand with our extensive design capabilities and technical expertise, supported by a scalable manufacturing platform and reactive capacity. We now offer a complete array of innovative fabrics and mattress covers to all major players across all categories in the mattress industry."

Third-quarter upholstery fabric sales of $33.8 million were 20.1 percent ahead of 2013's third fiscal quarter.

“Our upholstery fabrics business had an outstanding performance in the third quarter of fiscal 2014,” said Saxon. “The higher than expected sales primarily reflect continued positive customer response to our innovative designs and diverse product offering. In addition, we experienced a greater than expected level of sales in the third quarter as customers anticipated longer lead times related to the Chinese New Year holiday, which occurred in late January of this year. Notably, sales of China produced fabrics accounted for 92 percent of upholstery fabric sales in the third quarter.

“Our 100% owned China platform offers significant manufacturing flexibility to produce a variety of product categories, and we have continued to leverage this capability to meet changing customer demand in line with furniture style trends. As a result, we have increased sales to our key customers with our outstanding designs and new product offerings. We are also excited about our ability to reach new customers and expand our market presence. Culp is well positioned for continued growth, especially as business conditions improve with a more stable housing market.”

Click here for Culp's full third-quarter release.