Company: CULP
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0000950170-25-035191
Chunk: 86

Company: CULP INC
Filing Date: 2025-03-07
Form: 10-Q
Item: Item 2
Chunk 86
---
    9,913
     
    (0.3)%

    Restructuring expense

    6,148

    —
     
    100.0%

    Loss from operations

    (5,018
    )
     
    (3,916
    )
    28.1%

    Operating margin

    (5.8
    )%
     
    (4.3
    )%
    (150)bp

Net Sales

Mattress fabrics sales decreased 4.6% in the third quarter of fiscal 2025 compared to the prior-year period.  Mattress fabrics sales decreased 4.2% in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

The sales declines in the mattress fabrics segment stem primarily from what remains a muted demand environment across the domestic mattress market driven by macroeconomic uncertainty among consumers and its impacts on residential real estate markets and discretionary spending. However, during the quarter we continued to execute on a variety of significant measures designed to align our manufacturing costs and capacity with the slower buying activity evident across the mattress industry. As planned, we completed the vast majority of the restructuring initiatives in our mattress fabrics segment announced earlier in fiscal 2025, including the closure of our Canadian manufacturing operations and related consolidation of equipment and resources.  As a result, we believe we are now better positioned to service customers in the U.S. market through our vertical, textiles-forward facility in North Carolina. See “—Restructuring Activities” below for further details. Moving forward, we expect the current general economic and consumer uncertainty to present challenges, but we believe our execution on plans to restructure our platform and refine our go-to-market strategies should position our mattress fabrics segment for sales momentum and market share gains when the macroeconomic fundamentals begin to shift and provide the necessary foundation for a recovery cycle in the mattress industry. 

The potential ongoing geopolitical disruptions related to conflicts in Ukraine and the Middle East, as well as the potential impact of future tariffs, depend on factors beyond our control and we cannot reasonably estimate the impact of these items on our mattress fabrics segment.  Moreover, we note that if these situations worsen and shipping disruptions occur or new tariffs are imposed on our products, the impact on our operations and/or on our suppliers, customers, consumers, and the global economy could adversely affect our financial performance.

Gross Profit, Selling, General & Administrative Expenses, and Loss from Operations

Loss from operations was $433,000