US circular knitter Culp’s mattress ticking business slipped to a wider operating loss in its first quarter, impacted by lower sales volumes and manufacturing inefficiencies related to the significant restructuring initiatives to wind-down its Canadian operation and move certain knitting and finishing equipment to its plant in Stokesdale, North Carolina.
Operating losses in the mattress ticking business were $3.5 mn, compared to an operating loss of $1.4 mn in the previous year, with sales down 3.9% to $28.1 mn. Overall, net sales were $56.5 mn, down 0.2 percent compared with the prior-year period, with upholstery fabrics sales up 3.7 per cent.
Losses from operations was $6.9 mn (which included $2.7 mn in restructuring expense and related charges during the period), compared with a loss from operations of $3.1 mn for the same period last year, which included $517,000 in restructuring and related charges during the period.
Culp said that the restructuring plan, announced on May 1, 2024 and primarily focused on the company’s mattress fabrics segment, was progressing as planned. The consolidation of the company’s sewn mattress cover operation in Haiti was completed during the first quarter, and the consolidation of Culp’s North American mattress fabrics operation is well underway, including the phased wind-down and closure of its manufacturing facility in Canada and move of certain knitting and finishing equipment to its facility in North Carolina.
Culo says it expects to generate $10 – $11 mn in annualised savings and operating improvements after the restructuring initiatives are fully implemented by the end of the calendar year, with most of the restructuring benefit realised during the second half of fiscal 2025.
Iv Culp, President and chief executive officer of Culp Inc. said: “Our sales results for the first quarter reflected strong sequential improvement as compared to the fourth quarter of last fiscal year, with mattress fabrics sales up 9.0% and upholstery fabrics sales up 19.7%.
“While we continue to experience challenged macro industry conditions, our sequential sales growth was better than expected, and year-over-year consolidated sales were flat despite the overall industry weakness.
“However, as expected, operating performance for our mattress fabrics segment was pressured by manufacturing inefficiencies primarily related to our significant restructuring activity.”
Culp said that while mattress fabrics operating results were being pressured he believed the company was on schedule to deliver its targeted improvement outcomes, including a return to near break-even adjusted EBITDA in the second quarter and a return to positive consolidated adjusted operating income in the third quarter.
“The restructuring is a significant undertaking that impacts people, plant consolidations, equipment relocation, and process improvements, but with it, we are successfully lowering our cost structure despite weak demand,” he said.
