Culp Issues 4Q Warning, Layoffs
May 9, 2005-- Home Textiles Today,
Greensboro, N.C. — Facing weakening demand for its U.S.-produced upholstery fabrics, Culp Inc. said it's laying off about 225 workers as it consolidates production, and warned of a deeper than expected fourth quarter loss.
Culp had earlier cautioned analysts and investors to expect a loss before restructuring charges in the range of 3 to 8 cents per share. But now the producer of mattress ticking and upholstery fabrics is forecasting a wider loss of 13 to 17 cents per share before one-time restructuring costs.
Robert Culp III, chairman and CEO, said the deeper than expected loss reflects “lower than expected demand for domestically produced upholstery fabrics, and significant manufacturing variances and production constraints related to the recent restructuring activities in our decorative fabrics operation.”
Looking to cut costs and save an estimated $11 million on an annualized basis, the company said it will relocate velvet production equipment from Burlington, N.C., to its other velvet plant in Anderson, S.C. The Burlington plant will then be used as a warehouse for finished goods produced in the United States, and as an inspection and distribution facility for fabrics imported from offshore.
Culp will also combine its sales, design and customer service activities for two divisions, Culp Decorative Fabrics and Culp Velvets/Prints. As a result, two buildings in Burlington, with about 140,000 square feet, will be sold.
The new moves will result in the layoff of about 225 workers, the company said, about 17 percent of the workforce in Culp's domestic upholstery fabrics business.
“Due to the continuing competitive pressure on demand for domestically produced upholstery fabrics, we are taking aggressive steps to adjust our cost structure and align our U.S. manufacturing capacity with a current and expected demand,” Culp said.
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