Culp Announces Revised Expectations for Fourth Quarter Fiscal 2019

Culp, Inc. (NYSE: CULP) today announced that, based on unaudited preliminary results and current estimates, the company expects pre-tax income (GAAP) to be in the range of $1.0 million to $1.7 million for the fourth quarter of fiscal 2019. Excluding a non-recurring charge of $500,000 (discussed below), adjusted pre-tax income (non-GAAP) is projected to be in the range of $1.5 million to $2.2 million. These projected results are lower than the company’s previously announced expectation of $4.2 million to $4.9 million in pre-tax income for the quarter. Sales for the fourth quarter of fiscal 2019 are lower than the company’s previously announced outlook, with overall sales now expected to be down approximately 10 percent, with mattress fabrics sales projected to be down approximately 20 percent and upholstery fabrics sales projected to be down approximately 9 percent compared with the fourth quarter last year.

Commenting on the announcement, Iv Culp, president and chief operating officer of Culp, Inc., said, “The revised expectations for the fourth quarter of fiscal 2019 resulted from the continuing headwinds associated with Chinese imported mattresses and an overall weaker retail environment. Although sales for our mattress fabrics segment have sequentially increased compared to the third quarter, consistent with our previously announced expectations, this improvement will be less than previously anticipated as a result of the significant influx of low-priced Chinese mattress imports, which has caused major disruption in the domestic mattress business that has continued to affect many of our customers, with reduced demand for our mattress fabrics. While we believe import activity has recently slowed, there is still a substantial amount of excess inventory of late 2018 and early 2019 imports in the pipeline. Additionally, the weaker mattress retail environment has slowed the sale of this inventory. We believe the domestic mattress industry will ultimately benefit from relief under U.S. trade laws and the anticipated punitive measures against Chinese importers, with a preliminary ruling from the U.S. Department of Commerce now expected in late May 2019.