Culp Profits Jump Nearly 19% Despite Sales Decline

December 2, 2016  by Larry Thomas in Financial Reports, Industry   

The company attributed the bottom-line increase to more efficient operations, noting that it is starting to reap the benefits of recent capital improvements in its mattress ticking business.

Net sales totaled $75.3 million, down from $77 million in the same quarter last year. The company said mattress fabric sales edged up 0.2%, while upholstery fabric sales fell 5.4%.

“Overall, our second quarter sales were slightly lower than the same quarter of last year, reflecting softness in the retail market for home furnishings,” said Frank Saxon, president and CEO. “We have continued to drive product innovation and creativity and leverage the strength of our efficient manufacturing platform with favorable results.”

Iv Culp, president of the mattress fabrics division, noted the company is nearing completion of the latest expansion of its North Carolina plants, which will “enhance production capacity and significantly improve our distribution capabilities. In addition, we are planning further consolidation and equipment relocation to streamline our production platform to more effectively support our continuous improvement initiatives and long-term growth strategy.”

He said the company also is making progress on an expansion of its Canadian facilities, and said the company plans to begin shipping directly to its Canadian customers in the fourth quarter of the current fiscal year, which ends in April.

Boyd Chumbley, president of the upholstery fabrics division, said softer retail demand for furniture crimped sales, but said he was pleased with the overall operating performance.

“We have continued to drive innovation and creativity as we execute our product-driven strategy,” Chumbley said. “Our global platform supports this strategy with the flexibility to meet changing customer demand trends and provide exceptional quality and service.”

He noted that he was especially pleased with the positive feedback to the company’s newest line of performance fabrics at the October High Point Market.

For the six months ended Oct. 30, net sales fell 0.7% to $156 million. Six-month net income totaled $9.8 million or 78 cents per share. That was up from $8.5 million or 68 cents per share in the first six months of the previous fiscal year.

Culp’s board of directors also approved a 1 cent increase in the quarterly cash dividend to 8 cents per share. The new dividend, which represents a 14% hike over the previous payout, is payable Jan. 17 to stockholders of record on Jan. 3.