Culp's 3Q income jumps 56.7% as sales rise 5.4%
Cindy W. Hodnett -- Furniture Today, February 28, 2013
HIGH POINT — Fabric supplier Culp Inc. reported a 5.4% gain in sales in its fiscal third quarter, ended Jan. 27, and a 56.7% increase in net income.
Upholstery fabric sales were up 9.5% compared with the same quarter last year and mattress ticking sales were up 2.3%, the company said.
Sales for the quarter were $63.7 million. For the fiscal year to date, sales were $198.4 million, up 11% from the same period a year ago with the mattress ticking segment up 10.8% and upholstery fabrics up 11.3%.
Net earnings for the quarter amounted to $2.8 million, up from $1.8 million a year earlier. For the year to date, earnings of $14.6 million were up 48% from the same period a year ago.
"We are pleased with our results for the third quarter of fiscal 2013, with higher sales and profitability compared with the same period last year," said Frank Saxon, president and CEO. "Both of our businesses delivered a solid performance by remaining focused on what is important to our customers - creative designs, a wide range of innovative products and outstanding service. We have continued to leverage our efficient global manufacturing platform to enhance our service capabilities and to meet the changing style demands of our customers."
Saxon added that the strategy enabled Culp to increase the company's return on capital from 18% to 28%.
Mattress fabric sales for the third quarter were $35.5 million, up from $34.7 million a year ago. Iv Culp, president of Culp's mattress fabrics division, said the improved profitability is attributable to the company's flexible manufacturing platform.
"As market demand has evolved for higher-end bedding and more decorative mattress fabrics, Culp has effectively responded to this trend by providing our customers with the high quality fabric they need," Culp said.
Sales for the upholstery fabrics segment were $28.2 million for the third quarter, up from $25.7 million in the fiscal 2012 quarter.
"Sales of China-produced fabrics accounted for 90% of upholstery fabric sales in the third quarter," Saxon said. "We have significant manufacturing flexibility and the ability to offer a variety of product categories through our China platform, allowing us to meet changing demand in a global marketplace."
The Chinese New Year holiday, which falls entirely in the fourth quarter of fiscal 2013, will likely dampen fourth quarter business, but Saxon expects overall fiscal 2013 annual sales to exceed last year's annual sales by approximately 5%.
"For the full fiscal year, we expect mattress fabrics sales to be approximately 5% higher than fiscal 2012, and operating income and margins are expected to be up approximately 20% compared with last fiscal year," he said. "For the full fiscal year, we expect upholstery fabric sales to be approximately 6% higher than last fiscal year. Operating income and margins are expected to be approximately 80% higher as compared to last year's results."