Culp 2Q sales fall 11.9%
By Larry Thomas -- Furniture Today, December 10, 2006
High Point — Fabric and ticking supplier Culp Inc. said sales fell 11.9% in its second quarter ended Oct. 29, but the company still managed to eke out a profit of $812,000.
The profit, which equals 7 cents per share, reversed a net loss in the comparable quarter a year ago, when Culp had a host of one-time restructuring charges and lost $4.2 million.
"While our top-line results reflect the furniture industry slowdown and related inventory correction, we continued to make progress in improving our performance in both mattress ticking and upholstery fabrics," said Chairman and CEO Rob Culp.
Upholstery fabric sales totaled $35.5 million, down 17.4% from the comparable quarter last year. The segment did, however, generate operating income of $393,000, reversing an operating loss of $69,000 in last year's second fiscal quarter.
During a conference call with securities analysts, Culp said sales from the company's factory in China accounted for 58% of the upholstery fabric total. In last year's second fiscal quarter, the China facility accounted for 29% of fabric sales.
"There still is very weak demand for U.S.-made fabrics," said Culp President Frank Saxon. "We could take additional restructuring actions in the near future."
Mattress ticking sales in the most recent quarter declined 2.1% to $23.5 million, and operating income totaled $2.5 million, or 10.5% of sales.
"Demand for knitted ticking continues to grow as our customers are now using more knits on the top of the mattress and woven jacquards on the sides," said Culp. "We expect this product line, which carries a higher average selling price, to represent a higher percentage of our mattress ticking business in fiscal 2007."
For the first six months, Culp said sales were off 6% to $121.6 million. Net income was $946,000, or 8 cents per share, compared with a net loss of $8.1 million, or 70 cents per share, in the previous year's six months.
The company is projecting that total sales for the quarter ending in late January will be down 12% to 15%. A net loss of 6 to 10 cents per share is anticipated.
| Culp Inc. | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 10/29 | 2006 | 2005 | Change |
| (a) Includes after-tax restructuring and related charges of $233,000 in the 2006 quarter, $3.8 million in the 2005 quarter, $1.2 million in the 2006 six months and $7.1 million in the 2005 six months and income tax benefits of $55,000 in the 2006 quarter, $2.4 million in the 2005 quarter, $58,000 in the 2006 six months and $4.6 million in the 2005 six months. |
|||
| Sales | $59,040,000 | $67,006,000 | (11.9%) |
| Operating income | 1,718,000 | (975,000) | — |
| Net income (a) | 812,000 | (4,152,000) | — |
| Earnings per share | 0.07 | (0.36) | — |
| 6 months ended 10/29 | 2006 | 2005 | Change |
| Sales | $121,625,000 | $129,348,000 | (6.0%) |
| Operating income | 3,205,000 | (4,274,000) | — |
| Net income (a) | 946,000 | (8,093,000) | — |
| Earnings per share | 0.08 | (0.70) | — |
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