Culp will pass along price increases effective in the second quarter.
HIGH POINT – Upholstery and mattress fabric supplier Culp will be raising its prices in the second quarter to combat increasing costs, inflation and other economic pressures.
In the company’s year-end and fourth-quarter conference call company executives said price increases on its products would be effective in the second quarter. The increases are one of a number of steps the company is taking to cut costs as the mattress and home furnishings business continues to see a slowdown.
Culp reported a net loss of $6 million for the fourth quarter, compared with net income of $1.5 million in the prior-year period. The company posted fourth quarter net sales of $56.9 million for the quarter ended May 1, a 28% decline from the same quarter last year. Mattress fabric sales dropped 30.6% from the fourth quarter last year, and upholstery fabric sales down 24.8% compared to the same period last year.
On the year, Culp reported a net loss of $3.2 million compared with net income of $3.2 million in fiscal 2021. Net sales for the year were $294.8 million, a 1.6% decline from the prior year net sales of $299.7 million.
Iv Culp, president and chief executive officer, said the fourth quarter was impacted by the unexpected shutdown of its facilities in China due to COVID-related restrictions. He also said the year started strong, but was later impacted by “the rapid rise in inflation, changing consumer spending patterns, COVID-related disruption and other geopolitical events, materially affected the performance of our businesses,” he said.
“We took several pricing and cost reduction actions throughout the year to help mitigate these pressures, but with the ongoing volatility, we are now taking additional measures to align our business, to meet current demand trends and diligently manage our liquidity.”
In addition to the pending price increases, the company is moving to reduce inventory, limit capital expenditures, reducing production schedules and making workforce adjustments to align with product demand.
“In response to the ongoing headwinds, management is taking decisive action to further reduce expenses and improve operating efficiencies with the targeted annual cost savings of approximately $2 million,” Culp said. “We’re also planning to announce additional pricing action during the first quarter that will be effective for the second quarter of fiscal 2023.”
The company’s board of directors has suspended the quarterly cash dividend on its common stock to “preserve liquidity and support future growth opportunities.”