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Culp 3Q sales drop 11.6%

By Furniture Today Staff -- Furniture Today, March 5, 2006

High Point — Upholstery fabric and ticking supplier Culp Inc. reported an 11.6% drop in sales in its third quarter and a net loss of $2.2 million, an improvement from the $4.9 million it lost in last year's comparable quarter.

Sales in the quarter ended Jan. 29, 2006, came to $61 million, versus $69.1 million last year.

In the nine months, sales of $190.4 million were off 10.3% from $212.3 million in last year's comparable period.

Chairman and CEO Rob Culp said the company remains focused on returning to profitability by getting leaner and more agile.

As previously reported, Culp will complete the closing of a plant in Burlington, N.C., in the current quarter, ending U.S. production of print upholstery fabric, which represented 3.7% of the company's business in the first nine months. The plant closing will cut 30 jobs.

Sales in the upholstery fabrics segment in the third quarter were $38.4 million, off 11.8% from $43.5 million in the comparable quarter last year. Still, Culp cut the segment's operating loss from $2 million in last year's third period to $1.6 million this year.

Sales of U.S.-produced fabrics were $23.6 million, down 34% from last year's comparable quarter, while sales of product made in China and elsewhere surged 89% to $14.7 million.

"We believe our non-U.S.-produced upholstery fabrics business, with approximately 200 associates in our China operation, represents a significant growth opportunity," Culp said. "We intend to expand our capabilities and continue to build on our China platform as our customers source more of their fabric requirements outside of the United States."

Mattress ticking sales accounted for 37% of Culp's business in the third quarter, and operating margins in the division showed improvement, Culp said, adding the company believes it holds a strong competitive position in the segment.

Culp Inc.
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 1/29	2006	2005	Change
(a) Includes restructuring expenses of $343,000 in the 2006 quarter, $1.1 million in the 2005 quarter, $6.6 million in the 2006 nine months and $2.3 million in the 2005 nine months. Also includes an expense of $5.1 million for goodwill impairment in the 2005 nine months, and income tax benefits of $1.25 million in the 2006 quarter, $2.8 million in the 2005 quarter, $5.9 million in the 2006 nine months and $5.9 million in the 2005 nine months.
Sales	$61,035,000	$69,060,000	(11.6%)
Operating income	(1,921,000)	(5,624,000)	—
Net income (a)	(2,169,000)	(4,877,000)	—
Earnings per share	(0.19)	(0.42)	—
9 months ended 1/29	2006	2005	Change
Sales	$190,383,000	$212,315,000	(10.3%)
Operating income	(6,195,000)	(5,500,000)	—
Net income (a)	(10,261,000)	(10,122,000)	—
Earnings per share	(0.89)	(0.88)	—

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