Culp, Inc. Reports Operating Results for First Fiscal Quarter 2026

September 11, 2025  by Karen Parrish in Business Strategy, Industry   

Fiscal 2026 First Quarter Financial Highlights

- Continued market softness and a tariff-driven pause in residential upholstery shipments from China drove consolidated net sales of $50.7 million during the quarter, which included an extra week, compared to prior-year period net sales of $56.5 million.

- Consolidated gross profit of $7.2 million, or 14.3% of sales, compared to prior-year period gross profit of $5.1 million, or 9.0% of sales, a 530-basis point improvement driven by the cost and efficiency gains from restructuring initiatives in the bedding segment completed last year.

- Operating income of $1.6 million, compared to the prior-year period’s loss from operations of $(6.9) million.

- Adjusted for restructuring credits and expenses, including a net credit of approximately $3.5 million driven by a gain on the sale of the company's Canadian manufacturing facility, non-GAAP operating loss of $(1.9) million, compared to the prior-year period’s non-GAAP operating loss of $(4.1) million (see reconciliation table on page 11).

- Net loss of $(231) thousand, or $(.02) per diluted share, compared to a net loss of $(7.3) million, or $(.58) per diluted share, in the prior-year period.

- Adjusted for the impacts of restructuring and related credits and expenses, EBITDA of negative $(1.1) million, compared to negative $(2.7) million in the prior-year period (see reconciliation table on page 12).

Management Commentary
Iv Culp, president and chief executive officer, commented, “Despite the continued low-demand environment across the home furnishings industry and tariff volatility, our improving operating performance further confirms the effectiveness of the restructuring initiatives we completed last year. Thanks to the hard work of our team, we made substantial, double-digit improvement at both the gross profit and operating levels during the quarter.

"We have several other initiatives underway related to the integration of our two former divisions that should strengthen our operating profile further as we progress through fiscal 2026. During our second quarter, we expect to start seeing the benefits from the transition of upholstery operations at our leased facility in Burlington, North Carolina, to a shared management model within our owned Stokesdale, North Carolina, location. We also recently initiated the transition of our Read Window operations from a leased facility in Tennessee to a more cost-effective platform within the same owned U.S. location, which should begin to positively impact our results in the third quarter. In addition, we recently increased prices to mitigate tariff costs and right-size margins in certain areas. Once fully implemented this year, we expect these integration and price actions to generate approximately $6 million of additional cost and efficiency enhancements annually.”

"While the macroeconomic and global trade landscapes continue to present challenges for CULP and everyone in our industry, we’ve been able to leverage our size and scale advantages to win market share in key segments, particularly in bedding. In the current tariff environment, our strategy to supplement a strong U.S. manufacturing platform with a foreign footprint spread across nearshore and offshore jurisdictions gives customers increasingly attractive supply chain alternatives and provides us with better pricing flexibility.”

Culp concluded, “Our highest priorities are to return CULP to profitability and reduce our current net debt position, regardless of any rebound in demand and improved market conditions. We believe that our efforts to reinvent our company and go to market with a leaner and more unified operating model, along with the additional integration initiatives now in motion, position us to not only meet that objective in the near term but also accelerate profitability as market conditions improve.”

Financial Outlook
Due to macro-economic uncertainty and the fluid global trade and tariff environment, the Company is providing only limited forward guidance. The Company’s expectations are based on information available at the time of this press release and reflect certain assumptions by management regarding the Company’s business and industry trends, the projected impact of restructuring and integration initiatives, and ongoing market headwinds. The Company's expectations also assume no further meaningful impacts from tariffs and trade negotiations.

The Company expects sequential sales growth throughout the year in what is expected to remain a low-demand environment for home furnishings.

The Company expects the cost and efficiency benefits of its restructuring and division integration initiatives, along with price increases, to drive EBITDA results (adjusted for integration, related expenses and other items) in a range from near breakeven to slightly positive for the second quarter of fiscal 2026, and for operating performance and profitability to improve sequentially throughout the remainder of the year.

While the Company intends to continue utilizing borrowings as necessary under its domestic and foreign credit facilities during fiscal 2026 to fund working capital needs and growth, as well as integration and efficiency initiatives, it will continue to aggressively manage liquidity and capital expenditures and prioritize free cash flow.

Fiscal 2026 First Quarter Business Segment Highlights
Following the integration of the Company’s two formerly separate divisions, Culp Home Fashions and Culp Upholstery Fabrics, the Company now refers to its mattress fabric and upholstery fabric businesses as its Bedding and Upholstery segments, respectively. Moreover, the Company now manages selling, general and administrative (“SG&A”) expenses on a consolidated basis following the division integration and, as a result, will no longer report operating performance at the segment level.

Bedding
Sales in this segment were $28.0 million for the first quarter, generally flat compared with sales in the prior-year period. While the overall low-demand market environment persisted during the quarter and affected sales, this segment continued to win market share with larger customers.

The newly restructured cost platform in this segment drove gross profit of $2.9 million, or 10.5% of sales, a significant improvement from the prior year period’s negative $(326) thousand, or negative (1.2%) of sales.

Upholstery
Sales in this segment were $22.6 million for the first quarter, down approximately 20% compared with sales of $28.5 million in the prior-year period. The decline was driven by the well-known softness across the home furnishings market and several additional factors including the historically high tariffs on China-produced products in the prior quarter, which essentially grounded residential upholstery order flow for approximately five weeks and subsequently impacted sales in the first quarter. In addition, a large residential fabric customer concentrated most of its purchasing in the first half of last year, with a notable spike in the first quarter, resulting in an uneven year-over-year comparison this quarter that we expect to normalize in the second quarter and ensuing periods.

Gross profit was $4.3 million, or 18.9% of sales, down from $5.5 million, or 19.4% of sales, in the prior year period, and driven largely by lower comparable sales.

Conference Call
Culp, Inc. will hold a conference call to discuss financial results for the first quarter of its fiscal year 2026 on Thursday, September 11, 2025, at 9:00 a.m. Eastern Time. A replay of the webcast will be available for 30 days under the “Past Events” section on the “Investor Relations” page of the Company’s website.