Culp(CULP)2024-07-12 15:00Financial Performance - In fiscal 2024, total company sales were 234.9 million in fiscal 2023[25] - The mattress fabrics segment generated 111.0 million (47%) in fiscal 2023[25] - The upholstery fabrics segment saw sales decline to 123.9 million (53%) in fiscal 2023[25] - Total net sales for fiscal 2024 were 234.9 million in fiscal 2023[111] - Net sales in the United States for fiscal 2024 were 36.3 million[111] Restructuring and Operational Changes - Culp announced a restructuring plan in May 2024, expecting to incur approximately 2.5 million anticipated in the first half of fiscal 2025[23] - The restructuring plan includes consolidating operations in Quebec, Canada, and relocating some knitting operations to Stokesdale, North Carolina[19] - The company is consolidating its North American mattress fabrics operations, including the closure of a manufacturing plant in Quebec, Canada, to improve efficiency and reduce costs[29] - The company plans to complete the Fiscal 2025 restructuring, which includes the closure of the St. Jerome plant and reducing Haiti production operations to a single facility[61] - The restructuring includes the phased wind-down of the Quebec manufacturing plant and consolidation of operations in North Carolina and Haiti[19] Supply Chain and Sourcing - The company emphasizes the importance of diversifying its supply chain to mitigate risks associated with global operations[12] - The company is diversifying its sourcing strategies to mitigate risks associated with global trade tensions and tariffs, particularly concerning imports from China[51] - The company has established strategic supplier relationships in Vietnam and Turkey to diversify its supply chain and enhance sourcing capabilities[65] - The company aims to enhance its supply chain by diversifying partnerships and optimizing operations to improve efficiency and reduce costs[30] Employee and Workforce Management - The company employed 1,000 people at the end of fiscal 2024, a decrease of 333 employees compared to the previous year, with significant reductions in both mattress and upholstery segments[93] - The company plans to reduce the number of employees in its mattress fabrics segment by approximately 240, representing close to 35% of the segment's total workforce at the end of fiscal 2024[97] - The company-wide annual employee turnover rate was approximately 43.5% during the past fiscal year, compared to approximately 42% in the prior year[96] - The company has adopted a mission statement focused on providing outstanding employee support in a safe and collaborative environment[98] - The company maintains comprehensive safety monitoring and training programs to ensure employee health and safety[107] Market Trends and Competition - The bedding industry experienced significant unit contraction during fiscal 2023 and fiscal 2024, primarily due to inflationary pressures and a shift in consumer spending[41] - The upholstery fabrics segment is impacted by economic trends affecting consumer spending and housing market fluctuations[45] - The company faces high competition in both mattress and upholstery fabrics markets, primarily based on price, design, and quality[84] - The upholstery fabrics segment has become more vulnerable to price increases and production interruptions due to increased reliance on outside suppliers[80] Product and Innovation - Culp's mattress fabrics segment includes woven jacquard and knitted fabrics, with a focus on product innovation and customer service[16][17] - The company has invested in knitting software and a chemical dosing system to enhance finishing capabilities and monitor machine efficiency, leading to immediate cost-saving benefits[31] - The company launched a new innovation campus in High Point, North Carolina, to enhance design and innovation collaboration across its mattress and upholstery segments[68] - The company is focusing on creative design and product innovation as key strategies for long-term success in the mattress fabrics business[32] Pricing and Cost Structure - Raw materials account for approximately 60%-70% of production costs in both mattress and upholstery fabrics segments, with costs sensitive to oil prices[77][79] - The upholstery fabrics segment's manufacturing costs are also approximately 60%-70% dependent on raw materials, similar to the mattress fabrics segment[79] - The company emphasizes fabrics with broad appeal, priced between 10.00 per yard for mattress fabrics and 16.00 per yard for upholstery fabrics[53][54] Sales Dynamics - The mattress fabrics business experiences slight seasonality, with sales peaking in early spring and late summer[82] - Increased demand for roll-packed/compressed mattresses is driving growth, with knitted fabrics gaining popularity across various price points[43] - The largest customer in the mattress fabrics segment, Serta Simmons Holdings, accounted for approximately 13% of the company's consolidated sales in fiscal 2024[108] - The largest customer in the upholstery fabrics segment, La-Z-Boy Incorporated, accounted for approximately 12% of the company's consolidated sales in fiscal 2024[109] - The backlog for the upholstery fabric segment with confirmed shipping dates prior to June 3, 2024, was 10.6 million as of the end of fiscal 2023[114]