Culp expects a lot wider Q2 working loss on stock write-downs, weak demand

Culp (NYSE:CULP) mentioned Tuesday it expects to report a a lot wider Q2 working loss than beforehand anticipated, damage by stock write-down expenses, weak demand and elevated markdowns.

The corporate projected Q2 consolidated working lack of $11.7M-$12.2M and internet gross sales of ~$58M.

Working loss contains ~$5M in stock impairment expenses, and loss on sale of uncooked materials and completed items stock within the mattress materials section.

It additionally contains ~$1M in higher-than-normal markdowns related to Culp’s (CULP) residential upholstery materials unit, and ~$700K in restructuring expenses associated to its upholstery material section’s reduce and stitch platform in China.

Culp (CULP) expects the next money place on the finish of Q2 than Q1, with ~$19M in money and investments and no excellent borrowings.

“The revised expectations replicate continued demand weak spot, significantly for our mattress materials section. Ongoing business softness as a consequence of macroeconomic pressures and adjustments in shopper spending, mixed with inflationary pressures and prospects’ elevated want for brand new merchandise to roll out on the shopper degree, led us to take stock markdowns and impairment expenses on unproductive and overvalued stock,” mentioned CEO Iv Culp.

“In our upholstery materials section, we took motion to restructure our China reduce and stitch platform, ensuing within the closure of one in every of our leased services,” he added.

Culp (CULP) expects these strikes will assist enchancment throughout H2 FY23.

The corporate expects to report Q2 ends in early Dec.