Reduced Demand, Labor Challenges Lead to $5.7M Loss at Culp

September 1, 2022  by HFBusiness Staff in Business Strategy, Industry   

The producer of upholstery fabric and mattress ticking said a host of economic headwinds, including inflation, high inventory levels among retailers and manufacturers, and a challenging labor market, contributed to the loss.

In the same quarter last year, Culp recorded net income of $2.25 million or 18 cents per share.

In the most recent quarter, net sales totaled $62.6 million, down from $83 million in the same quarter a year ago. Mattress ticking sales were down 31.8 percent, while upholstery fabric sales were off 16.9 percent.

“The impact of this industry softness on demand for our products is exacerbated by an excess of retail and manufacturer inventory that continues to delay the timing of shipments and new product rollouts,” said Iv Culp, president and CEO. “Operating performance was also affected by continued inflationary pressures, as well as reoccurring labor challenges within our mattress fabrics business and our Read Window Products business that resulted in increased employee training costs and operating inefficiencies during the quarter. We also had additional costs associated with increasing capacity at our new upholstery fabrics cut and sew facility in Haiti.”

Culp said he believes the industry softness will continue to impact the business through the next two quarters but said the company’s market position remains solid due to new product placements and ongoing product development.

“We are working diligently to generate cash, reduce costs, improve efficiencies, and retain talent in the face of these significant challenges, while also ensuring we can maintain our competitive advantages and meet the needs of our customers when conditions normalize,” he said.