3Q Results: Update on Culp Progress Out Wednesday After Close
Culp reports 3QFY24 results after the close on Wednesday, March 6. An investor conference call is scheduled for 11:00 am ET on Thursday, March 7. Culp revised its guidance for the second half of 2023 in January in conjunction with the WTR Furniture/Furnishings Virtual Conference. Recovery in the mattress segment had been slower than previously expected. WTR now projects an EPS loss of $0.22 on revenue of $60 million. We had previously expected an EPS loss of $0.17. The revised consensus is a loss of $0.19. The retail mattress business has been in a deep slump through the second half of calendar 2023 and into early 2024. For many years, before the pandemic, Culp’s mattress fabric business was a strong, highly profitable business due to its leading market share. It still commands a high market share, but volatility in input costs and end demand for the fabrics disrupted the business through 2022 and 2023. The outlook for mattress fabrics, which we will be looking for commentary about in its release and earnings call, is key to the Culp investment thesis. In February, the Department of Commerce imposed additional tariffs on imported mattresses. We will be interested in how effective those tariffs will be in supporting domestic mattress manufacturing, a potential positive for Culp.Culp operates three segments: mattress fabrics, which markets primarily knitted and woven fabrics, as well as sewn covers made from those fabrics, which are used in the production of bedding products; upholstery fabrics, which markets a variety of fabric products that are used principally in the production of residential and commercial upholstered furniture, as well as window treatment products and installation services for customers in the hospitality and commercial industries; and home accessories, which markets a variety of bedding accessories and home goods directly to consumers and businesses through global e-commerce and business-to-business sales channels.
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