Due to high retail inventories and decreased consumer demand for mattresses and upholstery products, fabric supplier Culp Inc. to a third-quarter loss of $9 million, a decline from the reported net loss of $289,000 in the prior-year quarter.
For the third quarter that ended in January, the business reported net sales of $52.5 million. 29, a 34.6% decline compared with net sales of $80.3 million in the same quarter last year. Third quarter sales of Culp’s mattress fabrics dropped 35.8% compared to those in the same quarter last year, and upholstery sales dropped 33.5% in the quarter compared to the same period last year.
“As expected, our sales and operating results for the third quarter reflected demand weakness in the domestic mattress and residential home furnishings industries, specifically related to unit volume,” said Iv Culp, president and CEO. “Our performance was affected by fewer billing days during the quarter due to our customers taking longer than normal holiday shutdowns in the face of high retail inventories and reduced consumer demand.
“Sales were also affected by the timing of the Chinese New Year holiday, which this year fell primarily within the third quarter, rather than the fourth quarter.”
At the end of the third quarter, the company offered new customer programs “priced in-line with current market costs and expects to benefit as these new programs expand.”
For the nine-month span that ended in January. 29, Compared to net income of $2.8 million, Culp reported a net loss of $26.8 million. In comparison to net sales of $237.9 million in the first nine months of the previous year, the nine-month total for sales was $173.5 million, a 27.1% decrease.
“We remain focused on the long term and continue to diligently manage the aspects of our business we can control,” Culp said. “We are especially pleased with the business transformation plan underway in our mattress fabrics segment, and we expect sustained sequential improvement in this business as we implement management changes and new processes tailored to improve operational efficiencies, optimize our supply chain and strengthen customer relationships.”
The company predicted that demand would be challenging because of high inventory levels and declining consumer confidence. For the fourth quarter, the company was limited in its guidance saying net sales for the quarter are expected to be “moderately higher” compared with the third quarter results. It added that it anticipates a consolidated operating loss for the fourth quarter to be less than the $7.8 million loss from operations reported in the third quarter.
“Looking ahead, while we expect current macro conditions will affect our business through at least the end of this fiscal year, our market position remains solid, and we continue to gain new product opportunities with customers,” Culp said. “We are diligently focused on returning to profitability and taking the necessary steps to withstand the current market challenges, while also engaging in a holistic business improvement strategy that will position us to emerge stronger when conditions normalize.”
Source: https://www.furnituretoday.com/
