Culp (CULP) reported first-quarter fiscal 2027 results Wednesday at a Water Tower Research virtual conference, showing consolidated sales growth of 6.5% year-over-year despite having one fewer week than the prior-year period. The company said its turnaround is being driven by operational improvements rather than broader market tailwinds.
The bedding segment was the standout performer, with sales rising more than 13% year-over-year and gross margin reaching 13.6%, up 300 basis points from 10.6% in the same quarter a year earlier. CEO Iv Culp noted that two years ago the bedding business was at a loss on a gross margin basis. Upholstery gross margin remained in the high teens.
"Our growth is not driven by market recovery, it's being driven by our own execution," Culp told attendees moderated by Linda Bolton Weiser, managing director of consumer research at Water Tower Research.
The company's multi-year restructuring program, completed over two-and-a-half years, delivered more than $22 million in annualized savings while preserving 100% of growth capacity, Culp said.
Tariff refunds of approximately $7 million were received during the quarter. The last twelve months gross profit margin came in at 13.2%.
Culp has been aggressively reducing its balance sheet. Net debt fell by more than 70% from fiscal year-end to the end of the first quarter, leaving just over $3 million outstanding. The current ratio stood at 1.81 and the debt-to-equity ratio at 0.28. Inventory has been cut 16% year-over-year, with roughly $10 million removed over two sequential quarters — a decline of about 20% from the prior quarter.
Capital spending in fiscal 2026 came in under $1 million, with management expecting fiscal 2027 outlays to remain modest. Culp shares have returned 27.66% over the past six months.
The company operates a mega knit manufacturing facility in North Carolina, consolidated North American distribution centers in Stokesdale, and production facilities in Shanghai, Vietnam, and Haiti.
On the demand front, Culp described the market environment as more stable than 12 to 18 months ago but noted shipment levels remain below historical norms due to several years of inflation pressure, lower housing activity and cautious consumer spending.
"Customers today are really valuing flexibility almost as much as they value price," Culp said.
Looking ahead, Culp expects to launch a significant mattress innovation product in early calendar 2027, part of its Sonno mattress cover business and LiveSmart performance fabric platform. Culp, now in its 55th year, also cited Project Blaze as an internal initiative supporting its product pipeline. The company stressed that any new innovation must solve a real customer problem, create consumer value and be commercially scalable.
