Culp Steadies Results

Don Hogsett, September 4, 2006

Stabilizing sales after a long downward slide, hammered by imports, but at the same time building margins, slashing costs, thinning stockpiles and paring restructuring costs, the fabric producer Culp Inc. climbed back on track with a small first-quarter profit of $132,000, reversing a year-before loss of $3.9 million.

Sales at the decorative fabric supplier edged up by 0.4%, to $62.6 million from $62.3 million, after declining by almost 5% in the prior quarter, and by 9% for all of last year.

Still trimming costs, Culp saved $2.6 million, driving overhead down by 28.4%, to $6.5 million from $9.0 million. Measured as a percentage of sales, costs were cut to 10.5% from 15.8%.

Culp reduced its inventories by 27.3% from year-before levels, to $36.7 million from $50.5 million the preceding year, generating a savings of $13.8 million.

Robert G. Culp III, chairman and ceo, called the quarterly profit and substantially improved operating metrics “a defining point” for the company. The improvement, he said, reflects “the aggressive steps we have taken this year to more effectively position Culp in the dynamic global marketplace,” notably culling its U.S. manufacturing operations.

Culp's decorative fabrics business recorded its first operating profit following two years of losses, a $1.6 million profit vs. a prior-year loss of $380,000. Just as notable, sales in the core business held relatively steady after years of decline, gaining 3.3%, to $40.7 million from $39.4 million last year.

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