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Culp, Inc. (NYSE: CFI), today announced that, based on unaudited preliminary results and current estimates, the company
expects pre-tax income to be in the range of $4.0 million to $4.3 million for the fourth quarter of fiscal 2014. These projected results are lower than the company’s previously announced expectation of $5.0 million to $5.9 million in pre-tax income for the quarter. Overall sales for the fourth quarter of fiscal 2014 are expected to be up approximately 5 percent, with mattress fabrics sales up approximately 7 percent and upholstery fabrics sales up approximately 3 percent. These sales results are in line with previously announced expectations.
Commenting on the announcement, Frank Saxon, president and chief executive officer of Culp, Inc., said, “While our overall sales for the fourth quarter were in line with our projected range, our operating profit and margins were affected by several factors, most of which related to the mattress fabrics division. The adverse weather conditions experienced in many parts of the country this winter affected our mattress fabrics locations with at least a week of lost production. The strain from these weather events forced some extraordinary operational measures to meet the ongoing sales demand. During the quarter, we also had higher than expected demand for our premium decorative knitted mattress fabrics, which created additional pressures on our production throughput and operating efficiencies. In order to meet the growing demand and to address efficiency challenges, we are increasing knitted fabric production at both our U.S. and Canadian facilities. In addition, we are expanding our Stokesdale, North Carolina, building in order to increase and enhance our finishing capabilities and improve our production flow. This capacity expansion is expected to be completed by the end of November 2014. We also experienced continued growth in demand for new mattress covers, with major placements from key customers. While our margins in this business showed significant improvement compared with the fiscal third quarter, we experienced short-term production challenges due to absorbing new product placements. Overall, we are pleased with the demand trends in our mattress fabrics business as we continue to outpace the industry, and believe we are taking the necessary steps to address our recent production-related issues.