After Restructuring, Culp Turns a Profit

High Point, N.C. —Helped by gains in its mattress ticking business, diversified fabrics producer Culp Inc. recorded a small second-quarter profit of $812,000 — despite a continuing slide in sales. This reversed a year-before loss of $4.2 million stemming from an overhaul of operations.

Sales continued to decline, falling by 11.9%, to $59.0 million from $67.0 million last year. But paring costs and beefing up margins, Culp recorded a profit in both its mattress ticking and upholstery fabrics divisions. Sales of mattress fabrics trailed off by 2.1%, to $23.5 million, but helped by sales of higher-margin product, operating profit jumped up by 48.3% to $2.5 million from $1.7 million last year.

The core upholstery fabrics business continued to lose ground at the top line, sales falling off by 17.4%, to $35.5 million from $43.0 million last year. But helped by cost cuts, the business yielded a modest operating profit of $393,000, compared with a small year-before loss of $69,000.

Driving the second-quarter profit, the company slashed restructuring costs, putting up a $264,000 credit in this year's second quarter, compared with $4.4 million in restructuring costs a year ago. Average gross margin widened by 520 basis points, or 5.2 percentage points, to 13.5% from 8.3% last year. Costs were pared by 3.9% to $6.3 million, yielding a cash savings of $253,000.