Company: CULP
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0000950170-25-035191
Chunk: 94

Company: CULP INC
Filing Date: 2025-03-07
Form: 10-Q
Item: Item 2
Chunk 94
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    18.1
    %

    19.7
    %
     
    (160)bp

    Selling, general, and administrative expenses

    11,056

    11,969

    (7.6)%

    Restructuring expense

    169

    432

    (60.9)%

    Income from operations

    3,005

    4,811

    (37.5)%

    Operating margin

    3.9
    %

    5.6
    %
     
    (170)bp

Income from operations was $679,000 for the third quarter of fiscal 2025, compared to $2.1 million for the third quarter of fiscal 2024. Income from operations was $3.0 million for the first nine months of fiscal 2025, compared to income from operations of $4.8 million for the first nine months of fiscal 2024.

The declines in upholstery fabrics profitability for the third quarter and the first nine months of fiscal 2025, as compared to the prior-year periods, primarily reflect lower sales, which were offset somewhat by lower SG&A expense and lower fixed costs during both periods. However, the actions we completed during the first quarter of fiscal 2025 to restructure our upholstery fabrics finishing operation in China and optimize our Asian platform continue to positively impact our operating performance (see “—Restructuring Activities—Shanghai, China—Upholstery Fabrics Finishing Operation” below). Despite the difficult demand environment in our residential business and resulting lower sales bases during our third quarter and first nine months of fiscal year 2025, these cost-structure and operational enhancements were instrumental in our ability to achieve profitability in each of those sales-pressured periods while also maintaining the service levels our customers rely upon and expect. 

Looking ahead, we expect sales in our residential business to continue to be challenged by the muted conditions in the home furnishings industry and for that dynamic to impact profitability until macroeconomic conditions improve.  However, our lower fixed cost and SG&A expense structure should allow us to better navigate the difficult environment in our residential fabrics business and leverage the more robust demand we are seeing in our hospitality/commercial fabrics business. In addition, we believe that there are other meaningful opportunities to increase operational efficiency and reduce cost across our business, and we plan to continue pursuing measures to optimize our platform. 

Restructuring Activities

Shanghai, China

Uphol