Culp, Inc. (CULP) | Investment Case

1. Company Snapshot

1.a. Company Description

Culp, Inc.manufactures, sources, markets, and sells mattress fabrics, sewn covers, and cut and sewn kits for use in mattresses, foundations, and other bedding products in the United States, North America, the Far East, Asia, and internationally.It operates in two segments, Mattress Fabrics and Upholstery Fabrics.

The Mattress Fabrics segment offers woven jacquard, knitted, and converted fabrics for use in the production of bedding products, including mattresses, box springs, foundations, and top of bed components.The Upholstery Fabrics segment provides jacquard woven fabrics, velvets, micro denier suedes, woven dobbies, knitted fabrics, piece-dyed woven products, and polyurethane fabrics for use in the production of residential and commercial upholstered furniture, such as sofas, recliners, chairs, loveseats, sectionals, and sofa-beds, as well as office seating and window treatment products; and installation services for customers in the hospitality and commercial industries.Culp, Inc.

was founded in 1972 and is headquartered in High Point, North Carolina.

Show Full description

1.b. Last Insights on CULP

Culp, Inc.'s recent performance was negatively impacted by a 6.1% sequential decline in consolidated net sales to $52.3 million, with mattress fabrics sales down 4.8% and upholstery fabrics sales down 7.8%. Despite continued improvement in mattress fabric performance, the decline in sales was a major driver of the company's recent performance. Additionally, the election of a new board member, William L. Tyson, may bring new perspectives and strategies, but its impact on the company's recent performance is unclear at this time.

1.c. Company Highlights

Last Price	3.85
Change Percentage	0.52%
Open	3.83
Previous Close	3.83
Market Cap ( Millions)	48
Volume	18732
Year High	5.94
Year Low	3.42
M A 50	4.08
M A 200	4.28

FCF Yield	-42.97%
Dividend Yield	0.00%
ROE	-10.02%
Debt / Equity	8.88%
Net Debt / EBIDTA	-2.37%
Price To Book	0.38
Price Earnings Ratio	-5.18
Price To FCF	-2.33
Price To sales	0.23
EV / EBITDA	-8.49

2. Culp's Q1 Earnings: Navigating Challenges, Positioning for Recovery

Culp reported Q1 net sales of $50.7 million, down from $56.5 million in the prior year, primarily due to soft home furnishings demand and tariff-related disruptions in residential upholstery. The company achieved a gross profit of $7.2 million (14.3% of sales), up from $5.1 million (9% of sales), driven by cost efficiencies in the bedding segment post-restructuring. Earnings per share (EPS) was -$0.02, beating estimates of -$0.12. Operating income reached $1.6 million, reversing a $6.9 million loss in the prior year.

Publication Date: Sep -20

                                    📋 Highlights
                                    Q1 Sales & Margin Pressures:
                                                Q1 sales declined due to a large customer’s purchase timing, with upholstery margin dropping to 18.9% ($4.3M) from 19.4% ($5.5M).
Balance Sheet Strength:
                                                $11.1M cash, $18.1M debt (net debt $7.1M), including $3M in China debt invested in high-yield savings.
Q2 Outlook:
                                                Sequential sales growth and improved EBITDA expected, driven by margin discipline and restructuring benefits.
Cost Savings Progress:
                                                $18M in annual savings from 2026 closures/relocations realized, with Stokesdale plant valued at $40–45M vs. book $12.1M.
Strategic Liquidity:
                                                $28.7M liquidity ($11.1M cash + $17.6M borrowing availability) and $88M NOLs position for recovery amid demand uncertainty.

                                

Segment Performance

The bedding segment's sales remained flat at $28 million, with gross profit surging to 10.5% of sales ($2.9 million) from negative 1.2% in the prior year, thanks to restructuring initiatives. The upholstery segment saw sales fall 20% to $22.6 million, impacted by low industry demand and high China import tariffs. However, hospitality and commercial channels held firm, making up 40% of segment sales.

Strategic Initiatives and Outlook

Culp's "Project Blaze" aims to generate $6 million in annual savings by consolidating operations and sharing resources. The company is also optimizing its supply chain and pricing strategy to manage tariffs. With $88 million in NOL carryforwards and undervalued real estate, Culp is positioned for future upside. Management expects sequential sales growth and EBITDA improvement driven by restructuring and margin discipline.

Valuation and Financial Health

With a P/E Ratio of -5.75 and an EV/EBITDA of -9.42, the market has priced in significant challenges. However, the P/B Ratio of 0.42 suggests potential undervaluation. Culp's net debt to EBITDA is -0.02, indicating a relatively manageable debt position. As the company navigates the current downturn, its focus on liquidity management, debt reduction, and profitability should help it capitalize on eventual demand recovery.

3. NewsRoom

GE Aerospace CEO Larry Culp: Expect AI to help worker performance, not replace jobs

Oct -14

Source: youtube.com

Culp, Inc. (CULP) Q1 2026 Earnings Call Transcript

Sep -11

Source: seekingalpha.com

Culp, Inc. (CULP) Reports Q1 Loss, Misses Revenue Estimates

Sep -10

Source: zacks.com

Culp Announces First Quarter Fiscal 2026 Results

Sep -10

Source: businesswire.com

Culp, Inc. to Webcast First Quarter Fiscal 2026 Conference Call

Sep -04

Source: businesswire.com

GE Aerospace CEO Larry Culp: We've been advocating for a return to a tariff-free construct

Jul -17

Source: youtube.com

GE Aerospace CEO Larry Culp on Air India plane crash

Jul -17

Source: youtube.com

GE Aerospace CEO Larry Culp on Q2 results: There's a lot that's going right in the business

Jul -17

Source: youtube.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.97%)

6. Segments

Upholstery Fabrics

Expected Growth: 4.5%

Culp's upholstery fabrics segment growth of 4.5% is driven by increasing demand for residential furniture, driven by rising consumer spending and housing market growth. Additionally, the company's focus on innovative, sustainable, and stylish fabrics resonates with customers, leading to market share gains. Furthermore, Culp's strategic partnerships with furniture manufacturers and its global expansion efforts contribute to the segment's growth.

Mattress Fabrics

Expected Growth: 5.5%

Culp's Mattress Fabrics segment growth of 5.5% is driven by increasing demand for premium bedding, rising consumer spending on home furnishings, and strategic partnerships with leading mattress manufacturers. Additionally, the company's focus on innovative, high-quality fabrics and expanding production capacity have contributed to its growth momentum.

7. Detailed Products

Mattress Fabrics

Culp, Inc. offers a wide range of mattress fabrics, including woven and knitted fabrics, that provide comfort, durability, and style to mattresses.

Bedding Accessories

Culp, Inc. provides a variety of bedding accessories, such as mattress ticking, bed skirts, and bedding fabrics, that enhance the overall sleeping experience.

Furniture Fabrics

Culp, Inc. offers a diverse range of furniture fabrics, including upholstery fabrics, that provide style, comfort, and durability to furniture.

RV and Marine Fabrics

Culp, Inc. provides specialized fabrics for the RV and marine industries, offering durability, water resistance, and UV protection.

8. Culp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Culp, Inc. faces moderate threat from substitutes, as customers have limited alternatives for its mattress and bedding products.

Bargaining Power Of Customers

Culp, Inc. has a diverse customer base, which reduces the bargaining power of individual customers, giving the company an upper hand in negotiations.

Bargaining Power Of Suppliers

Culp, Inc. relies on a few large suppliers for its raw materials, giving them some bargaining power, but the company's scale and diversification mitigate this risk.

Threat Of New Entrants

The mattress and bedding industry has high barriers to entry, including significant capital requirements and established distribution networks, making it difficult for new entrants to compete with Culp, Inc.

Intensity Of Rivalry

The mattress and bedding industry is highly competitive, with many established players, leading to intense rivalry and pricing pressure for Culp, Inc.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	6.56%
Debt Cost	10.30%
Equity Weight	93.44%
Equity Cost	10.30%
WACC	10.30%
Leverage	7.02%

11. Quality Control: Culp, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

G-III Apparel

A-Score: 4.9/10

Value: 8.9

Growth: 5.6

Quality: 6.8

Yield: 0.0

Momentum: 3.5

Volatility: 4.7

1-Year Total Return ->

Superior Group of Companies

A-Score: 4.8/10

Value: 6.9

Growth: 5.1

Quality: 3.9

Yield: 7.0

Momentum: 1.5

Volatility: 4.3

1-Year Total Return ->

Oxford Industries

A-Score: 4.7/10

Value: 5.7

Growth: 5.3

Quality: 5.8

Yield: 8.0

Momentum: 0.5

Volatility: 2.7

1-Year Total Return ->

Culp

A-Score: 4.1/10

Value: 9.8

Growth: 1.2

Quality: 5.0

Yield: 1.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

Lakeland Industries

A-Score: 3.5/10

Value: 9.0

Growth: 2.1

Quality: 3.7

Yield: 1.0

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

Hanesbrands

A-Score: 3.0/10

Value: 3.5

Growth: 0.9

Quality: 4.5

Yield: 2.0

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

17.44%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.30%

Culp, Inc. - US2302151053

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CULP

1.c. Company Highlights

Lower Growth

Cheaper

Medium Volatility

Earnings Miss

Revenues Beats

Earnings Beats

Stable Momentum

Weak Momentum

Revenues Miss

Strong Momentum

Average Yield

2. Culp's Q1 Earnings: Navigating Challenges, Positioning for Recovery

Segment Performance

Strategic Initiatives and Outlook

Valuation and Financial Health

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.97%)

6. Segments

Upholstery Fabrics

Expected Growth: 4.5%

Mattress Fabrics

Expected Growth: 5.5%

7. Detailed Products

Mattress Fabrics

Bedding Accessories

Furniture Fabrics

RV and Marine Fabrics

8. Culp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Culp, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.85$

Current Price

3.85$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA