Culp Inc (NYSE:CULP) Reports Q2 Loss, Misses Estimates Amid Restructuring Efforts

Culp Inc (NYSE:CULP), a supplier of fabrics for the bedding and furniture industries, reported financial results for its second fiscal quarter ended November 2, 2025. The figures reveal a company navigating persistent market headwinds while executing a significant internal restructuring, resulting in a mixed financial picture that disappointed investors in after-hours trading.

Earnings and Revenue Versus Estimates

The company's top and bottom-line results for the quarter fell short of analyst expectations, which appears to be the primary driver behind a sharp negative reaction in the stock price following the report's release.

• Revenue: Culp reported consolidated net sales of $53.2 million. This missed the analyst consensus estimate of $54.16 million and represents a decline of approximately 4.4% from the $55.7 million reported in the prior-year period.
• Earnings Per Share: The company posted a net loss of $4.3 million, or a loss of $0.34 per diluted share. This was significantly wider than the estimated loss of $0.18 per share.

The market's reaction was decisively negative, with the stock falling sharply in after-hours trading. This immediate price action suggests investors were focused on the earnings miss and the continued net loss, despite some underlying operational improvements highlighted by management.

Segment Performance and Restructuring Impact

A deeper look into the press release shows a tale of two divisions, with the benefits of a major restructuring beginning to materialize in one segment while the other contends with broader economic pressures.

The Bedding segment was a clear bright spot. Sales increased both sequentially and year-over-year to $30.8 million. More importantly, gross profit in this segment improved by 27% compared to the prior-year period, a direct result of what CEO Iv Culp called an "extremely impactful" restructured cost platform. Management noted the bedding division is gaining market share despite a soft overall market.

Conversely, the Upholstery segment continued to struggle. Sales of $22.4 million were down approximately 12% year-over-year, attributed to consumer uncertainty, a weak housing market, and tariff volatility. Gross margin in this segment contracted slightly due to the lower sales volume.

Management Commentary and Financial Outlook

Executive commentary centered on the "challenging macro demand environment" affecting furniture and mattress purchases. Culp emphasized that the company is in the "homestretch" of a multi-phase transformation designed to cut costs and optimize its global platform. The company expects to realize over $20 million in annualized cost savings by the time it enters fiscal 2027.

Regarding the future, management provided limited forward guidance due to macroeconomic and trade uncertainty. However, they outlined the following expectations for the remainder of fiscal 2026:

• Steady consolidated sales performance, with higher expectations for the bedding segment.
• Continuing benefits from restructuring initiatives and recent pricing actions to drive improved gross profit and lower SG&A expenses.
• A path to "continued significant improvement in operating loss and near break-even to positive adjusted EBITDA for the third quarter."

This internal forecast for the next quarter can be contrasted with current analyst estimates, which project a net loss of $0.07 per share on sales of $55.08 million for Q3 2026.

Balance Sheet and Liquidity

The company maintained a liquidity position of approximately $28.1 million as of November 2, consisting of $10.7 million in cash and $17.4 million in available borrowing capacity. While the company utilized debt to fund working capital and restructuring activities, it emphasized an aggressive focus on managing liquidity and prioritizing free cash flow. Capital expenditures were markedly reduced to $218 thousand for the quarter as the company focuses on maintenance and strategic projects with quick payback.

For a detailed view of historical earnings and future analyst estimates, visit the Culp earnings and estimates page.

Conclusion

Culp's second-quarter results underscore the difficult operating environment for home furnishings, with external pressures on demand clearly impacting sales, particularly in the upholstery business. While the company's aggressive restructuring is yielding measurable profitability gains in its bedding segment, this progress was insufficient to offset the broader revenue weakness and deliver results that met Wall Street's expectations for the quarter. The market's negative reaction reflects disappointment in the earnings miss. Investors will now watch closely to see if the company's cost-saving initiatives can indeed propel it toward its goal of break-even or positive adjusted EBITDA in the coming quarter, as management anticipates, especially in light of the current analyst projections for the next period.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.