After restructuring, Culp turns a profit
Clint Engel -- Furniture Today, December 7, 2006
High Point, N.C. -- Climbing back on track and 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 a sweeping 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, a shortfall of $7.5 million. But helped by cost cuts, layoffs and continued down-sizing, the business returned to profitability with 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. In another lift to the bottom line, average gross margin widened substantially, 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.
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