Culp earnings slide 19.2% in latest quarter

Lower sales, higher raw materials costs affect results

Larry Thomas -- Furniture Today, March 2, 2011

HIGH POINT — Hampered by increasing raw materials costs and sluggish home furnishings sales, fabric supplier Culp Inc. said its net income slid 19.2% in the fiscal third quarter ended Jan. 30.

Sales fell 4.3% to $51.7 million, a figure that included a 12.5% drop in upholstery fabric sales. Mattress ticking sales, however, rose 3.9%.

Net income totaled $2.43 million or 18 cents per share. In the same quarter the previous fiscal year, the total was $3 million or 23 cents per share.

Frank Saxon, CEO, said the mattress ticking segment "has continued to deliver consistent performance," but noted that profitability was hurt by rising raw materials prices. The company recently announced price increases that should offset at least part of those increased costs in the current quarter, he said.

"We have continued to enhance our capabilities in mattress fabrics and Culp is well positioned with a large and modern, vertically integrated manufacturing platform in the major decorative product categories," Saxon said. "We have substantially improved upon our supply logistics from pattern inception to fabric delivery."

He said the upholstery fabrics business continues to be hurt by weak consumer demand for furniture, and noted that price increases also have been implemented in this segment due to higher raw materials costs.

"However, in spite of these factors, we remained solidly profitable for the (fiscal) year-to-date period," said Saxon.

For the nine months ended Jan. 30, sales were up 4.9% to $156.4 million. During that period, mattress ticking sales were up 7.1% to $87.2 million, and upholstery fabric sales were up 2.1% to $69.2 million.

Nine-month net income totaled $10.2 million or 77 cents per share. That's an increase of 31.2% from $7.76 million or 60 cents per share in the nine months ended Jan. 31, 2010.