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Culp Inc. Reports Operating Results (10-K)

July 15, 2010 | About:

Culp Inc. (CFI) filed Annual Report for the period ended 2010-05-02.

Culp Inc. has a market cap of $156.7 million; its shares were traded at around $12.01 with a P/E ratio of 12.3 and P/S ratio of 0.7. CFI is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Total net sales in fiscal 2010 were $206 million. The mattress fabrics segment had net sales of $115 million (56% of total net sales), while the upholstery fabrics segment had net sales of $91 million (44% of total net sales).

After many years of steady growth, both in unit volume and average selling prices, the bedding industry experienced a decrease in overall sales in calendar 2009 and 2008, due to the weak economy and an especially weak housing market. According to the International Sleep Products Association (ISPA), a trade association, the U.S. wholesale bedding industry accounted for an estimated $5.7 billion in sales in 2009, an 8.4% decrease from 2008. According to industry statistics, specialty bedding producers, which produce mattresses that do not use inner spring construction, saw sales decrease by 11.7% in 2009. The industry is comprised of several hundred manufacturers, but the largest five manufacturers accounted for more than 63% of the total wholesale shipments in 2009, while the top fifteen accounted for approximately 81%. Until recently, the bedding industry has been mature and stable. However, during the past two fiscal years it has weakened due to economic pressures. On a long-term basis, the stability of this market has been due in part to replacement purchases, which account for the majority of bedding industry sales. The overall weakness in the bedding market during 2008 and 2009 reflected a slight decline in average selling prices for mattresses sold in the U.S. According to ISPA, wholesale sales of bedding decreased 8.4% in 2009 and the number of units sold decreased by 11.0%. However, more recent interim industry reports show year-over-year growth, with units and dollars increasing by 12.8% and 10.7%, respectively, on a year-to-date basis as of May 2010.

The residential furniture industry has been severely affected by the global economic downturn. Declines in consumer spending and a very weak housing market led to significantly lower sales of residential furniture in 2008, a trend that continued into 2009. According to data published by the American Home Furnishings Alliance (AHFA), a trade association, prior to 2008 the residential furniture industry was mature and stable, with growth rates at or below the overall growth rate of the U.S. economy. However, shipments declined by 14.8% in 2008 compared to the prior year, and in 2009 retail furniture shipments dropped 18.1% compared to 2008. The overall weak demand for residential furniture has continued to affect the residential furniture industry, creating significant challenges for suppliers to the industry.

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