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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.

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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

2. Culp, Inc. Delivers Improved Operating Performance Amidst Challenging Macro Conditions

Culp, Inc.'s financial performance for the second quarter of fiscal 2026 showed a sequential improvement in consolidated net sales to $53.2 million, despite having one less week than the first quarter. The company's gross profit margin was 10.9% of sales, relatively stable compared to the prior year period. However, the loss from operations was $3.5 million, a $1.9 million improvement from the prior year period. Excluding restructuring-related expenses, the adjusted operating loss was $2 million, a $600,000 improvement from the prior year period. The company's EPS came out at -$0.3, missing estimates of -$0.18.

Publication Date: Dec -20

📋 Highlights
  • Sequential Sales Growth:: Consolidated Q2 net sales rose to $53.2M, up from $50.7M in Q1, despite one less week in the quarter.
  • Bedding Segment Profitability:: Gross profit in the bedding segment improved by 200 bps YoY to $3.1M, with sales up 10% sequentially and 2% YoY.
  • Restructuring Savings:: $11M annualized cost savings from restructuring initiatives already reflected in Q2 results, alongside $3.5M from Project Blaze integration.
  • Operating Loss Improvement:: Loss from operations narrowed to $3.5M, a $1.9M improvement YoY, with adjusted operating loss down $600K to $2M.
  • Liquidity Position:: Total liquidity stood at $28.1M as of Q2 end, including $10.7M cash and $17.4M borrowing availability under the domestic credit facility.

Segment Performance

The bedding segment saw a 10% sequential increase in sales to $30.8 million and a 2% year-over-year increase. Gross profit in the bedding segment was $3.1 million, a 200 basis point improvement from the prior year period. In contrast, the upholstery fabrics segment saw sales of $22.4 million, sequentially flat with the first quarter but down 12% from the prior year period. Gross profit in this segment was $3.6 million, down from $4.3 million in the prior year period.

Operational Highlights and Future Outlook

The company continued to make progress on its restructuring initiatives, with expected annualized cost savings of $11 million. The integration of the mattress and upholstery divisions, known as Project Blaze, is expected to generate $3.5 million in annualized cost savings. The company expects steady consolidated sales performance in the third quarter, driven by higher expectations for the bedding segment. Management anticipates near breakeven to positive adjusted EBITDA for the third quarter.

Valuation and Liquidity

Given the current stock price, the company's valuation metrics indicate a 'P/E Ratio' of -4.06, 'P/S Ratio' of 0.21, and 'EV/EBITDA' of -10.26. The company's liquidity as of the end of the second quarter was approximately $28.1 million, consisting of $10.7 million in cash and $17.4 million in borrowing availability under their domestic credit facility. Analysts estimate next year's revenue growth at -5.5%, indicating a continued challenging environment for the company.

Tariff Mitigation Efforts

The company has been working on mitigating the impact of tariffs in Turkey and Haiti. Management believes they have become proficient in managing tariff changes and have ways to mitigate their impact, expecting to adjust to the changes in tariffs over the next 60 days. As stated by the staff, "we feel strongly that tariffs can ultimately be turned into an advantage for Culp, but the pace of legislative change creates a lag before we can compensate with pricing and/or product strategy."

3. NewsRoom

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Culp to Transfer Stock Exchange Listing to Nasdaq

13:00

Source: businesswire.com

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GE Aerospace CEO Larry Culp on forecast: Revenues will be up double digits

Jan -22

Source: youtube.com

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New Strong Sell Stocks for Jan. 14

Jan -14

Source: zacks.com

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Culp, Inc. (CULP) Q2 2026 Earnings Call Transcript

Dec -11

Source: seekingalpha.com

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Culp, Inc. (CULP) Reports Q2 Loss, Tops Revenue Estimates

Dec -11

Source: zacks.com

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

Dec -05

Source: businesswire.com

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

Oct -14

Source: youtube.com

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

Sep -11

Source: seekingalpha.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

Strength

Weaknesses

Opportunities

Threats

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

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Superior Group of Companies

A-Score: 4.8/10

Value: 5.2

Growth: 5.1

Quality: 3.6

Yield: 9.0

Momentum: 1.5

Volatility: 4.3

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Value: 6.6

Growth: 5.3

Quality: 5.4

Yield: 0.0

Momentum: 4.5

Volatility: 5.3

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Oxford Industries

A-Score: 4.4/10

Value: 6.4

Growth: 5.3

Quality: 3.2

Yield: 8.0

Momentum: 0.5

Volatility: 2.7

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Culp

A-Score: 4.3/10

Value: 10.0

Growth: 1.2

Quality: 4.8

Yield: 1.0

Momentum: 3.0

Volatility: 5.7

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Lakeland Industries

A-Score: 3.6/10

Value: 9.8

Growth: 2.1

Quality: 4.0

Yield: 2.0

Momentum: 1.5

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Hanesbrands

A-Score: 3.6/10

Value: 7.0

Growth: 0.9

Quality: 4.8

Yield: 2.0

Momentum: 3.0

Volatility: 3.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.26$

Current Price

3.27$

Potential

-0.00%

Expected Cash-Flows