Culp, Inc. (NASDAQ: CULP), a prominent name in the fabric industry catering to bedding and upholstery, announced its financial results for the fourth quarter and full year ending May 3, 2026. The numbers reflect a mixture of growth in certain areas alongside challenges that the company continues to face in the broader market.

1. Financial Highlights: Fourth Quarter of Fiscal 2026

Net Sales Growth: Culp reported consolidated net sales of $51.6 million, representing a 7.6% increase from the previous quarter's sales of $48.0 million and a 6% rise from $48.8 million in the same quarter last year. The bedding segment saw strong performance, with sales up approximately 12% sequentially and 12.5% year-over-year, while the upholstery segment's sales increased by 2.1% sequentially but were down 2.5% compared to the prior year.

Gross Profit and Margins: The company achieved a consolidated gross profit of $6.8 million, constituting 13.2% of sales, which is a notable increase of 210 basis points from the previous quarter. However, this figure reflects a decline from $7.7 million, or 15.7% of sales, in the same quarter the previous year. The sequential improvement in gross profit was attributed to higher sales combined with enhanced efficiencies from restructuring initiatives.

Operating Loss: Culp reported a GAAP consolidated loss from operations of $(1.6) million, a marked improvement from $(3.7) million in the third quarter and $(2.2) million in the prior-year period. The non-GAAP operating loss was $(1.5) million, compared to $(3.1) million in the third quarter.

Net Loss: The company posted a net loss of $(2.2) million, or $(0.18) per diluted share, which is a 35% improvement from a net loss of $(3.4) million, or $(0.27) per diluted share, in the prior quarter. However, this was a slight increase from the net loss of $(2.1) million, or $(0.17) per diluted share, in the same quarter last year.

Adjusted EBITDA: For the quarter, Culp recorded an adjusted EBITDA of $(560) thousand, which shows a significant 74% improvement from $(2.2) million in the third quarter, though it has decreased from $511 thousand in the prior-year period.

2. Fiscal Year 2026 Performance Overview

Annual Net Sales: Culp's consolidated net sales for the full fiscal year totaled $203.5 million, representing a 4.6% decline from $213.2 million in the previous year. Sales in the bedding segment increased by 2.4%, while upholstery sales fell by 12.5%.

Annual Gross Profit: The consolidated gross profit for the year was $25.2 million, or 12.4% of sales, slightly up from $25.1 million, or 11.8% of sales, in the previous year.

Net Loss: The company's net loss for the year was $(10.2) million, or $(0.81) per diluted share, reflecting a 47% improvement over the $(19.1) million loss, or $(1.53) per diluted share, in the previous fiscal year.

3. Management's Perspective

Iv Culp, President and CEO, expressed optimism regarding the company’s trajectory, highlighting the significant sales growth and improvements in operational metrics. He noted, "We enter the new fiscal year with some exciting momentum and over $20 million in annualized savings, efficiencies, and pricing actions that should substantially improve our operating leverage going forward."

Culp acknowledged the challenges faced in the upholstery segment, citing the dependence on home buying activity and leisure spending, which have been under pressure. Nevertheless, he commended the team for their execution throughout fiscal 2026 and expressed confidence in the company's ability to capitalize on market opportunities.

4. Financial Outlook

Looking ahead, Culp Inc. provided limited guidance due to ongoing macroeconomic uncertainties, including global trade dynamics and tariff implications. However, the company expects a significant reduction in outstanding debt with the recovery of approximately $7 million in IEEPA tariff refunds, which is anticipated to bolster liquidity and balance sheet flexibility.

First Quarter 2027 Expectations: The company forecasts moderate sequential improvement in sales for the first quarter of fiscal year 2027. Furthermore, cost and efficiency benefits from restructuring initiatives are expected to drive improved gross profit and lower SG&A expenses, resulting in a breakeven to positive adjusted EBITDA for the upcoming quarter.

5. Segment Performance Insights

Bedding Segment

Fourth Quarter: Sales reached $30.5 million, up 12% sequentially and 12.5% year-over-year. Gross profit was $2.7 million, or 8.9% of sales, reflecting an increase from the previous quarter, but a decline from the prior-year period.

Full Year: Sales totaled $116.6 million, with a gross profit margin of 9.2%, up from 7.0% the previous year.

Upholstery Segment

Fourth Quarter: Upholstery sales were $21.1 million, a slight increase from the third quarter, but down from the prior-year period. The gross profit margin improved to 19.5% from 16.3% in the previous quarter.

Full Year: Total sales were $86.9 million, down from $99.3 million in the prior fiscal year, with gross profit margins declining to 17.7%.

6. Conclusion

Culp, Inc. has demonstrated resilience in the face of market challenges, particularly within its bedding segment. As the company aligns itself for the future, with strategic operational efficiencies and a focus on debt reduction, it remains poised to leverage growth opportunities in the evolving landscape of the fabric industry. Investors will be keenly watching how these initiatives translate into performance in fiscal year 2027 and beyond.

Original press release