Culp, Inc. Reports Financial & Operating Results for Third Quarter

March 15, 2026  by Karen Parrish in Business Strategy, Industry   

Iv Culp, president and CEO, commented, "Market softness remains the headline across the home furnishings industry, and the impacts of that dynamic were evident in our results for the quarter. We’re confident that the economic cycle for bedding and furniture will eventually turn within our core markets, and we have seen some green shoots on the bedding side recently, but key catalysts in housing affordability and discretionary consumer spending still need to level up for the needle to move meaningfully. Our team has effectively used this low demand period to further reset our platform, refine our go-to-market strategies, and position CULP to scale quickly and profitably, without adding capacity or cost, as volume stabilizes.

“Despite the challenging industry conditions, including multiple Southeast snowstorms that caused us to lose the final week of shipping at our largest facility during the quarter, we continue to win programs with major customers and increase our share of the available business. Prior to the lost week from weather in January, we were on pace for a neutral year-over-year performance in bedding revenue, which is notable in this current market trough. We were pleased to see growth in our sewn mattress cover and upholstery kit product categories during the quarter, both of which are key growth areas that carry higher sales dollars and solid margin.

“Customers continue leaning into our flexible supply chain offering reliable capacity and strategic tariff mitigation even before the most recent tariff developments. We believe our global footprint, anchored with robust U.S. capabilities, provides customers the most balanced solution in the market and enables us to support them regardless of whether they prefer to source domestically, nearshore or offshore. Regarding our own tariff costs, we are covered with our pricing relative to current rates after several periods absorbing the profitability impacts created by tariff volatility and the resulting lag between effective dates and price action. We are also encouraged by what appears to be an increasing prospect of reimbursement for the estimated six to seven million dollars we’ve paid toward IEEPA tariffs. If we ultimately receive those funds, and we understand the uncertainty there, it would be significant and offset some of our previous period losses.”

Culp concluded, “Our team completed several key projects during the quarter, including the integration of both our U.S. distribution operations and window treatment business and the consolidation of our footprint in China. With these actions and the restructuring of our bedding business now behind us other than some related inventory build-up that we are working through, we move toward the end of our year with a streamlined platform and management team, neutralized pricing and tariff rates, and disciplined manufacturing operations. We believe CULP is ready to run and generate significant value for shareholders as the macro and trade environment cycles favorably, with any resulting volume increase expected to benefit our bottom line at enhanced levels given the lower fixed costs and added efficiencies in our platform. In the meantime, we remain committed to maintaining a disciplined approach to cash management, our balance sheet and fixed costs."

Fiscal 2026 Third Quarter Financial Highlights

+ Consolidated net sales of $48.0 million, a decline from prior-year period net sales of $52.3 million driven by continued industry-wide demand challenges along with reduced shipping days from severe weather conditions at quarter end.

+ Consolidated gross profit of $5.3 million, or 11.1% of sales, compared to prior-year period gross profit of $6.4 million, or 12.1% of sales, with the decline driven by lower comparable sales and adjustments related to excess inventory stemming from the Company’s restructuring and integration initiatives.

+ Loss from operations of $(3.7) million, compared to prior-year period loss from operations of $(3.9) million.

- Excluding restructuring and related expenses, adjusted operating loss of $(3.1) million, compared to prior-year period adjusted operating loss of $(1.6) million (see reconciliation table on page 10).

+ Net loss of $(3.4) million, or $(.27) per diluted share, a sequential improvement of approximately 20% from the prior quarter and a year-over-year improvement of 17% compared to the prior-year period’s net loss of $(4.1) million, or $(.33) per diluted share.

- Excluding the impacts of restructuring and related expenses, stock-based compensation, and non-cash foreign exchange, as well as proceeds from a legal settlement, adjusted EBITDA of negative $(2.2) million, compared to negative $(457) thousand in the prior-year period (see reconciliation table on page 12).

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, ongoing market headwinds, the projected impacts of economic or political instability in the Middle East, and current tariff rates applicable to U.S. imports.

+ The Company expects sequential consolidated sales growth for the fourth quarter of fiscal 2026, with solid expectations for the bedding segment despite what is anticipated to remain a challenged demand environment for home furnishings.

+ The Company expects its recent pricing action to balance tariff pressure and for the cost and efficiency benefits of its completed restructuring and integration initiatives to drive improving gross profit and lower SG&A for the fourth quarter and beyond. The Company is not providing more specific operating guidance at this time due to the uncertainty around the potential tariff refunds and, if received, the meaningful impacts on its operating results and prior quarter losses.

+ 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, it will continue to aggressively manage liquidity and capital expenditures and prioritize free cash flow. Additionally, the $4.8 million balance due from the sale of the Company’s facility in Canada is scheduled to be paid during the fourth quarter.

Conference Call
A replay of the conference call webcast will be available for 30 days under the “Past Events” section on the “Investor Relations” page of the Company’s website.