Culp (NYSE:CULP) reported higher first-quarter fiscal 2027 sales and profitability, supported by double-digit growth in its bedding segment, restructuring-related cost savings and approximately $7 million of tariff expense recoveries.
Net sales increased to $54 million from $50.7 million a year earlier, despite one fewer selling week in the fiscal 2027 quarter. Gross profit rose to $15.4 million, or 28.5% of sales, from $7.2 million, or 14.3% of sales, in the prior-year period.
“We have developed valuable resiliency, and we have positioned Culp for success across a broad range of demand scenarios,” Culp said.
Tariff Recoveries Lift Reported Results
The quarter’s reported gross profit included roughly $7 million in recoveries of tariff expenses under the International Emergency Economic Powers Act, or IEEPA. Excluding those recoveries, gross profit was $8.4 million, or 15.6% of sales, representing an approximately 17% improvement from the prior-year period.
SG&A expense declined to $8.7 million, or 16.1% of sales, from $9.1 million, or 18% of sales, a year earlier. Operating income was $6.7 million, compared with $1.6 million in the prior-year quarter. Excluding tariff recoveries, the company reported a non-GAAP operating loss of $271,000, narrowing from a $1.9 million loss a year earlier.
Net income was $6 million, or $0.47 per diluted share, compared with a net loss of $231,000, or $0.02 per share, in the prior-year period. Adjusted EBITDA, excluding the tariff recovery benefit and other specified items, was $566,000, compared with negative $938,000 a year earlier.
Culp used the full amount of its tariff recoveries to reduce U.S. debt. It ended the quarter with $10.2 million in cash and $13.3 million in debt, for net debt of $3.1 million. That represented about a 70% reduction from net debt of $10.9 million at the end of fiscal 2026.
Chief Financial Officer Ken Bowling said the remaining debt balance was entirely in China, where the company maintains borrowings due to low interest rates and operational flexibility. The company is targeting a net cash position during fiscal 2027 while retaining some strategic China borrowings.
Cash flow from operations improved to $8.1 million from cash used in operations of $695,000 in the prior-year quarter. Free cash flow was $7.8 million, compared with negative $874,000 a year earlier.
Bedding Growth Outpaces Industry Conditions
Bedding segment sales rose 13.2% to $31.8 million from $28 million, even with the shorter selling period. Segment gross profit increased to $4.3 million, or 13.6% of sales, from $2.9 million, or 10.5% of sales. Bowling said the bedding gross-profit comparison did not include any allocated benefit from tariff recoveries.
Culp said the company believes its bedding sales growth materially exceeded broader industry shipment trends. The company cited its diversified manufacturing footprint across five geographies, product innovation and growth in sewn mattress covers as contributors to the performance.
The company also said it completed testing on new cooling technologies for bedding products and expects to introduce them later in calendar 2026, with an anticipated early launch for new mattress lines in the following year.
While management expects a more normalized mattress replacement cycle could eventually support demand, Culp said a more meaningful acceleration in mattress unit sales will likely require improving consumer confidence and discretionary spending.
Upholstery Sales Remain Steady Despite Residential Softness
Upholstery segment sales were $22.2 million, compared with $22.6 million a year earlier. Management said sales were generally comparable year over year after accounting for the shorter selling period. Segment gross profit was $4.1 million, or 18.6% of sales, versus $4.3 million, or 18.9% of sales, in the prior-year quarter.
Culp said the residential upholstery market remains affected by weak home furnishings demand, housing activity and mortgage-rate trends. However, the company reported year-over-year growth in its hospitality and commercial upholstery fabric markets.
The company is also expanding customer relationships in Asia and other international markets, supported by manufacturing capabilities in China and Vietnam as well as its global sourcing network. Culp said it is developing a broader family of branded performance products across both upholstery and bedding, though it did not provide product details or timing.
Second-Quarter Outlook and CFO Transition
For the second quarter, Culp expects sequentially consistent sales volumes, with some growth from the prior-year period. The company also expects to continue outpacing bedding-industry revenue trends in a still-challenged home furnishings environment.
Management forecast break-even operating income for the second quarter, an improvement from the comparable prior-year period, along with accelerating adjusted EBITDA results. Culp plans to continue prioritizing free-cash-flow generation, working-capital discipline and net-debt reduction.
The company also announced that Chief Operating Officer Mary Beth Hunsberger will succeed Bowling as CFO effective Sept. 14, 2026, while retaining her operational oversight responsibilities. Bowling, who has been with Culp for nearly 30 years and described the call as his 78th earnings call as CFO, will remain in the role through the transition and serve as a consultant through the end of calendar 2026.
About Culp (NYSE:CULP)
Culp, Inc, headquartered in High Point, North Carolina, is a leading producer of specialty fabrics for the home furnishings industry. Founded in 1972 by Bill Culp, the company has grown into a publicly traded enterprise that supplies upholstery and mattress fabrics to manufacturers and retailers across North America and abroad. Culp’s fabric offerings are designed to meet the aesthetic and performance requirements of residential furniture, contract seating, and hospitality applications.
The company operates through two primary segments.
