Culp Inc. swung from an operating loss to earnings in the first quarter of fiscal 2027, driven by cost cuts and pricing actions that have generated nearly $22.5 million in annualized savings since restructuring began in fiscal 2025.
Shares rose 4.87% to $3.66 in after-hours trading following the company's September 10 presentation to analysts covering the period ending August 2, 2026.
Consolidated revenue climbed 6.5% to $54 million from $50.7 million in the year-ago quarter, the company said. The growth came despite having one fewer selling week than the prior-year period, which Culp noted was a headwind.
Adjusted gross profit increased to $8.4 million, or 15.6% of sales, from $7.2 million, or 14.3%, a 130-basis-point improvement. Adjusted operating loss narrowed sharply to $271,000 from $1.9 million, and adjusted EBITDA flipped to positive $566,000 from a $938,000 loss in the prior-year quarter. GAAP operating income came in at $6.7 million.
GAAP gross profit included $6.9 million in cash proceeds from tariff refund claims recorded in cost of sales, the company said. Culp has paid roughly $17.7 million in tariffs and duties combined since calendar year 2025 through fiscal year-end 2026. About $7 million in refunds were received during the quarter, stemming from a February 2026 Supreme Court decision that invalidated IEEPA tariffs.
Restructuring charges incurred totaled $9.4 million, partially offset by approximately $5.8 million in proceeds from asset sales and related items, the company said. Fiscal 2025 actions — including closing a Quebec facility, consolidating cut-and-sew operations in Haiti and the Dominican Republic, reducing the bedding workforce by roughly 35%, and restructuring upholstery finishing in China — produced about $11 million in annualized savings plus a $1 million reduction in administrative SG&A. Fiscal 2026 added integration of stand-alone divisions, U.S. upholstery warehousing consolidation, streamlined Read Window operations and pricing initiatives that contributed an additional $3.5 million in annualized savings. Total pricing-related margin improvement across fiscal 2026 and 2027 is expected to reach $5 million annually.
The bedding segment, Culp's larger unit, grew 13.6% to $31.8 million from $28.0 million, with gross margin expanding to 13.6% from 10.5%. Upholstery sales dipped slightly to $22.2 million from $22.6 million, with gross margin at 18.6% versus 18.9% a year earlier.
Liquidity stood at $29.4 million as of August 2, including $10.2 million in cash, $17.7 million available under a U.S. asset-based lending facility extended through June 2028, and $1.5 million in China credit line availability. Culp owns roughly $40 million in U.S. real estate and carried $95.9 million in federal NOL carryforwards as of May 3, 2026. Capital expenditures for fiscal 2027 are expected to total about $2.5 million.
The mattress industry continues to contend with a softened demand environment. Dollar-value mattress shipments fell from a 2022 peak of roughly $13 billion to about $9 billion in 2025-2026, while unit volume dropped from approximately 55 million units to around 35 million over the same period. Total U.S. mattress and stationary foundation demand declined 7.2% in dollar value and 9.7% in units in the second calendar quarter of 2026 compared with a year earlier, according to the International Sleep Products Association.
Culp estimates it holds a 20-25% share of the domestic bedding market, valued at $500-600 million, and 8-10% of the upholstery sector, estimated at $1.5-2.5 billion, positioning it as a top-two player in bedding and top-five in upholstery. New cooling technologies under the LiveSmart and Nanobionic brands are scheduled to launch from fall and winter 2026 into early 2027.
