Culp, Inc. Reports Operational & Financial Results for Second Fiscal Quarter

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

Fiscal 2026 Second Quarter Financial Highlights

—Consolidated net sales of $53.2 million, a sequential improvement from first quarter net sales of $50.7 million (which included an extra week) and decline from prior-year period net sales of $55.7 million, with bedding segment sales up both sequentially and year-over-year.

—Consolidated gross profit of $5.8 million, or 10.9% of sales, compared to prior-year period gross profit of $6.0 million, or 10.8% of sales.

-Excluding restructuring and related expenses, adjusted consolidated gross profit of $6.7 million, or 12.6% of sales, compared to prior-year period adjusted gross profit of $6.8 million, or 12.1% of sales, with the percentage of sales improvement driven primarily by cost and efficiency gains from restructuring initiatives in the bedding segment (see reconciliation table on page 11).

—Selling, general and administrative (SG&A) expense of $8.7 million, or 16.4% of sales, an approximately 7%improvement compared with SG&A expense of $9.4 million, or 16.8% of sales, in the prior-year period.

—Loss from operations of $(3.5) million, compared to prior-year period loss from operations of $(5.4) million.

-Excluding restructuring and related expenses, adjusted operating loss of $(2.0) million, compared to prior-year period adjusted operating loss of $(2.6) million (see reconciliation table on page 11).

—Net loss of $(4.3) million, or $(.34) per diluted share, compared to a net loss of $(5.6) million, or $(.45) per diluted share, in the prior-year period.

- Excluding the impacts of restructuring and related expenses, stock-based compensation and non-cash foreign exchange impacts, adjusted EBITDA of negative $(1.0) million, an improvement on lower sales compared to negative $(1.1) million in the prior-year period (see reconciliation table on page 13).

Executive Commentary

Iv Culp, president and CEO, commented, “We continue to make aggressive adjustments to our cost structure in this challenging macro demand environment that seems to be acutely affecting housing affordability and, therefore, furniture and mattress purchases. Through our platform optimization, we are also positioning CULP to grow, without the need for additional capacity or investment, when conditions in the home furnishings market ultimately improve. The consolidations of our U.S. distribution and window treatment operations are on track for completion by calendar year-end. Moreover, price adjustments to mitigate baseline tariffs are successfully in place and we are initiating additional surcharges along with strategic purchasing decisions in response to new tariffs on imports from Haiti, Turkey and elsewhere during the quarter. We have long stated that tariffs are manageable for us with our global footprint, but reacting at the pace of government implementation has been challenging.

“Additionally, we are moving forward with incremental measures including the reduction of our facility footprint in China that should be completed in the third quarter, and we are identifying further cost reductions through our integration project Blaze within SG&A and other expenses. All told, beginning with the bedding restructuring in fiscal 2025 and continuing through the completion of other ongoing initiatives, we expect to enter fiscal 2027 with the benefit of over $20 million in annualized cost savings and enhancements.

“Our restructured bedding platform has already been extremely impactful, with gross profitability in that business almost tripling year-over-year in the first half of fiscal 2026 and driving over 20% improvement in our consolidated operating results for the quarter despite added cost and complexity from the global trade and tariff situation. Our bedding sales during the quarter increased both sequentially and year-over-year, and we saw encouraging trends within our knit fabric and sewn cover product lines as we continued to win market share in key customer segments. Looking ahead in this business, we anticipate market conditions to remain soft in the near term, but there are some indications that the bedding market is stabilizing. We expect to deliver steady sales performance driven by our growing market position, and we remain well prepared for any eventual uptick in unit activity driven by historical product replacement cycles.

“Conditions in the upholstery market continue to be unsettled, with consumer uncertainty, a weak housing market and tariff volatility still pressuring demand. Despite the difficult environment, we were able to maintain solid gross margins in upholstery and relatively stable sales within our U.S. customer base during the quarter, offset by more challenged revenue conditions within China and other markets. We expect our integration actions and China footprint reduction in the back half of this year to further improve profitability in this business and, much like our restructured bedding business, position it to accelerate when market conditions cycle favorably.”

Culp concluded, “We are in the homestretch of a comprehensive, multi-phased transformation of our business designed to generate sustained profitability across industry cycles, and we are committed to making more changes within our business as necessary to adjust to market demand. Thanks to our team’s commitment and dedication, we will finish the fiscal year with a fully optimized global platform for bedding and upholstery products that is unique to the home furnishings industry and that we believe will create significant long-term value for shareholders. We will continue to leverage our scale and strengths in product development, supply chain and customer service to gain market share, and our highest priorities remain returning CULP to profitability and effectively managing debt.”

Financial Outlook

Due to macroeconomic 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 steady consolidated sales performance throughout the remainder of fiscal 2026, with higher expectations for the bedding segment, given what is anticipated to remain a challenged demand environment for home furnishings.

—The Company expects the cost and efficiency benefits of its continuing restructuring and division integration initiatives, along with recent pricing action, to drive improving gross profit and lower SG&A, resulting in continued significant improvement in operating loss and near break-even to positive adjusted EBITDA for the third quarter.

—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. Additionally, the $4.7 million balance due from the sale of the Company’s facility in Canada is scheduled to be paid during the fourth quarter and the Company currently anticipates that those funds may be received earlier than contractually required.

Fiscal 2026 Second 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 SG&A expenses on a consolidated basis following the division integration and, as a result, no longer reports operating performance at the segment level.

Bedding

—Sales in this segment were $30.8 million for the second quarter, up approximately 10% sequentially and over 2% year-over-year.

—The restructured cost platform in this segment drove gross profit of $3.1 million, or 10.1% of sales, a 27% improvement from the prior year period’s gross profit of $2.4 million, or 8.1% of sales.

Upholstery

—Sales in this segment were $22.4 million for the second quarter, sequentially flat with the first quarter and down approximately 12% year-over-year. The decline stemmed from continuing softness across the global home furnishings market driven by consumer uncertainty and a weak housing market, as well as additional pressure on demand from tariffs.

—Gross profit was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales, in the prior year period and driven primarily by lower comparable sales.

Conference Call

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.