Company: CULP
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0000950170-25-035191
Chunk: 49

Company: CULP INC
Filing Date: 2025-03-07
Form: 10-Q
Item: Item 1
Chunk 49
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-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 for the third quarter of fiscal 2025, compared to loss from operations of $1.6 million for the third quarter of fiscal 2024.  Loss from operations was $5.0 million for the first nine months of fiscal 2025, compared to loss from operations of $3.9 million for the first nine months of fiscal 2024.

Loss from operations for both the third quarter and the first nine months of fiscal 2025, as compared to the prior-year periods, was impacted by lower sales and manufacturing inefficiencies primarily related to the above-referenced restructuring activities. However, with  nearly all of the restructuring initiatives now completed, we are beginning to see the cost savings and efficiency 

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improvements anticipated from those initiatives positively impact our results. See “—Restructuring Activities” below for further details. 

Looking ahead, we enter our fourth quarter a more streamlined business, with greater operating efficiencies, a lower fixed cost and SG&A expense structure, and an agile, global production platform with domestic, nearshore and offshore locations. Moreover, we continue to explore the viability of additional strategic actions to enhance profitability under the current soft market conditions and better leverage any tailwinds flowing from an eventual recovery. 

Restructuring Activities

On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to (1) consolidate the company's North American mattress fabrics operations, including a gradual discontin