Culp 4Q sales down 12.9%
By Susan M. Andrews -- Furniture Today, June 26, 2005
High Point — Declining demand for domestically produced fabrics and costs related to its restructuring contributed to fourth-quarter and year-end net losses at major fabric and ticking supplier Culp Inc.
Culp reported a net loss of $7.7 million on sales of $74.2 million in its fourth quarter ended May 1, and a net loss of $17.9 million on sales of $286.5 million for the year.
Fourth-quarter sales were down 12.9% from the year-earlier period, and the sales decline for the year was 9.9%.
Excluding restructuring and related charges and goodwill impairment, the net loss for fiscal 2005 was $3.4 million. The latest year included 52 weeks, versus 53 weeks for fiscal year 2004.
CEO Rob Culp said the company is focused on becoming profitable and believes it has taken the necessary steps to enhance its competitive position in the global marketplace.
"We are committed to taking whatever additional steps are necessary to keep our U.S. manufacturing capacity in line with demand and achieve profitable domestic operations," he said.
In the past year, Culp has shifted some production offshore, closed or consolidated plants and sold buildings, and combined sales, design and customer service for its two upholstery fabric divisions, Culp Decorative Fabrics and Culp Velvets/Prints. These strategic moves ultimately are expected to save the company $11 million annually.
Sales in the company's upholstery segment were off 18.6% in the fourth quarter to $47.2 million from $57.9 million the year before. The segment's operating loss was $2 million, compared with operating income of $2.8 million in the comparable period a year ago. Margins were affected by significant manufacturing variances related to restructuring, continued underutilization of domestic capacity, and higher raw material costs.
The primary factor affecting the upholstery segment, Culp said, was a decline in demand for domestically produced fabrics.
"We continue to gain momentum with respect to our offshore-produced business," he said. "Sales of upholstery fabrics produced outside of our U.S. manufacturing plants, which include the popular microdenier suedes as well as fabrics produced at our China facility, were up 75% during the fourth quarter compared with the same quarter last year, and were up 100% for the year. These fabrics accounted for almost 25% of Culp's overall upholstery fabric sales during the fourth quarter."
Mattress ticking sales were $27 million in the fourth quarter, about even with $27.2 million in the year-ago quarter. Operating income for the segment improved to $2.2 million, or 8.2% of sales, compared with $1.6 million, or 6.2% of sales, in the third quarter of fiscal 2005. Operating income was $3.6 million, or 13.1% of sales, for the prior-year's fourth quarter.
Ticking also has been affected in fiscal 2005 by industrywide pricing pressures and higher raw material costs.
"We continue to be optimistic about our mattress ticking business," said Culp. "We are on schedule with our capital project designed to enhance efficiencies and further reduce our operating costs."
Looking ahead, "We are encouraged by the early indications for the first quarter of fiscal 2006 as we begin to see signs that the strategic moves we have made are starting to show positive results," he said. "Reduced operating costs and greater efficiencies make us optimistic about the future."
The company expects a first-quarter drop in upholstery fabric sales, but less pronounced than in the fourth quarter, thanks to growth in Culp's sourced product.
A modest decrease in first-quarter ticking sales is seen from last year's first period, mainly due to ongoing pricing pressures.
| Culp Inc. | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 5/1 | 2005 | 2004 | Change |
| (a) Includes pretax restructuring charges of $8.1 million in the 2005 quarter and $10.4 million in the 2005 year and income tax benefits of $5 million in the 2005 quarter and $10.9 million in the 2005 year. The 2005 year also includes a $5.1 million pretax charge for goodwill impairment. (b) Includes pretax restructuring credits of $1 million in both periods. The 2004 year also includes a $1.7 million pretax charge for the early extinguishment of debt. (c) Based on average shares outstanding of 11.6 million in the 2005 quarter, 11.5 million in the 2005 year and 11.8 million in the 2004 periods. (d) The 2005 year is 52 weeks; the 2004 year is 53 weeks. |
|||
| Sales | $74,183,000 | $85,148,000 | (12.9%) |
| Operating income | (3,700,000) | 5,713,000 | — |
| Net income | (a)(7,730,000) | (b)3,733,000 | — |
| Earnings per share (c) | (0.67) | 0.32 | — |
| Year ended 5/1(d) | 2005 | 2004 | Change |
| Sales | $286,498,000 | $318,116,000 | (9.9%) |
| Operating income | (9,200,000) | 17,303,000 | — |
| Net income | (a)(17,852,000) | (b)7,220,000 | — |
| Earnings per share (c) | (1.55) | 0.61 | — |
-
Culp 4Q net sales down
Jun 20, 2005 -
Culp details 2Q loss
Nov 24, 2004 -
Culp 1Q sales down 8.1%
Sep 18, 2005 -
Culp narrows loss; uph. posts 4Q operating profit
Jul 16, 2006 -
Culp 3Q sales drop 11.6%
Mar 19, 2006
Featured Company
-
Wright Labels
Bill and Tom Wright founded Wright of Thomasville in 1961 on the idea that printing was a creative medium and the belief that "a promise made is a promise kept." The Wright brothers focused their attention on providing exceptional printing for the... more
VIEW ALL GALLERIES
