Updating 3Q Estimate Following WTR Conference Comment
Following Culp’s presentation at the WTR Furniture/Furnishings Virtual Conference, we are updating our 3Q estimates. CEO Robert Culp IV warned that 3Q operating income will fall short of previous expectations. The 3Q operating loss will approach $2.2 million, in line with the 2Q operating loss. Prior guidance was a consolidated operating loss of $1.2 million. Culp reaffirmed that the company is still working toward operating profit by the end of 4Q. That implies that the full quarter may report a slight loss. Therefore, we have adjusted our 4Q EPS estimate to reflect that, lowering our estimate from a loss of $0.05 to a loss of $0.08. The shortfall is in the margin line of the Culp Home Fashion (mattress fabric) segment. Our revised 3Q EPS estimate is now a loss of $0.22 versus a loss of $0.17 previously, For FY24, we are now modeling a loss of $0.77 versus a loss of $0.68 previously. Our other estimates remain unchanged.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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