Culp Suffers Stinging Quarter
By Staff -- Home Textiles Today, 6/27/2005
Greensboro, N.C. — Fabric producer Culp Inc. recorded a $7.7 million fourth fiscal quarter loss, hard hit by a double-digit slide in sales and $6.4 million in restructuring costs as it overhauls U.S. operations and reduces capacity in the face of import pressures.
The results included an after-tax charge of $6.4 million, or 55 cents per diluted share, for restructuring and related costs. Excluding the charges, net loss for the quarter ended May 1 would have been $1.4 million, or 12 cents per share. The quarter's results were positively effected by an after-tax credit of $700,000, or 6 cents per share, related to the company's restructuring reserves.
Sales at the producer of decorative fabrics and mattress ticking fell 12.9 percent, to $74.2 million from $85.1 million last year.
Culp closed the fiscal year in the red, with a net loss of $17.9 million, or $1.55 per diluted share, compared with the prior year's net include of $7.2 million, or 61 cents per share. Sales dropped nearly 10 percent to $286.5 million from $318.1 million in fiscal 2004.
“Throughout fiscal 2005, we have worked hard to address both the challenges and opportunities facing our industry and Culp's business, said Robert Culp III, CEO.
“Many of the strategic changes we now have under way are affecting our bottom line in the short term as we position Culp for improved profitability in fiscal 2006,” he added.
Culp has consolidated its manufacturing, merging key functions for its two divisions within the upholstery fabrics segment to slash costs and improve efficiencies. The process, which Culp expects to complete in August, should yield savings of about $11 million — $6 million in selling, general and administrative costs and $5 million in fixed manufacturing costs.
Looking ahead, Culp predicted demand for domestically produced fabrics will continue to decline due to imports.
“We continue to gain momentum with respect to our offshore produced business,” he said, noting that sales of fabric produced at its facility in China and other offshore locations rose 75 percent during the fourth quarter and 200 percent for the year.
