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    CULP (CULP)

    CULP Q2 2025: 7.1% Mattress Sales Rise, $10M Cost Savings

    Reported on May 28, 2025 (After Market Close)
    Pre-Earnings Price$4.95Last close (Dec 5, 2024)
    Post-Earnings Price$4.90Open (Dec 6, 2024)
    Price Change
    $-0.05(-1.01%)
    • Gaining Market Share in Mattress Fabrics: Executives highlighted strong sequential order growth and increased share in the mattress fabrics segment, indicating robust demand momentum moving into Q3 and Q4.
    • Cost Savings from Restructuring: Management expects at least $10 million in annualized savings from their restructuring efforts, which will improve profitability and leverage fixed costs as the business grows.
    • Resilient Supply Chain Strategy: The company’s strategic shift to U.S. and nearshore production provides insulation from potential tariff hikes, ensuring supply chain stability and margin protection.
    • Weak Residential Upholstery Demand: Customers have been normalizing overly aggressive inventory builds from earlier periods as underlying industry demand remains pressured, suggesting prolonged weakness in the segment.
    • Restructuring-Related Operational Inefficiencies: The ongoing restructuring in the mattress fabrics segment has led to short-term operating challenges and uncertainty over reaching breakeven, posing risks to near-term profitability.
    • Tariff and Supply Chain Risks: Management acknowledged concerns about potential increased tariffs and limited plug‐and‐play options, which could disrupt even their diversified supply chain strategy.
    1. Mattress Economics
      Q: What are expected margins for mattresses?
      A: Management anticipates that completing the restructuring will deliver annual savings of around $10M–$11M, which should drive the segment to breakeven and eventually profitable margins in the fourth quarter of fiscal '25.

    2. Tariff Impact
      Q: Are increased tariffs a significant risk?
      A: They are not overly concerned about tariffs thanks to a U.S.-based facility in North Carolina and flexible nearshore operations in Haiti and Vietnam, which insulate the business from tariff shocks.

    3. Mattress Share
      Q: Is market share in mattresses improving?
      A: Management noted a 7.1% sequential sales increase and strong order growth that signals share gains in the mattress segment despite industry headwinds.

    4. Upholstery Demand
      Q: Demand drop or inventory adjustment?
      A: The decline in upholstery sales is attributed largely to customers normalizing their previously overbuilt inventories rather than a sustained demand weakness.

    5. Office vs Hospitality
      Q: How do office and hospitality segments compare?
      A: While office seating suffers from reduced demand post-COVID, the hospitality segment remains strong and benefits from robust pipelines and better margins.

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