Introducing Research Coverage on Culp, Inc.: Covering the Recovering Furniture & Mattress Market



KEY POINTS
  • With this report, we introduce coverage of Culp, Inc., a market leader in two textile platforms: mattress fabrics and upholstery fabrics. Culp manufactures, sources, and supplies fabrics and cut-and-sewn covers primarily for upholstery and mattress manufacturers. We began studying Culp soon after its 1983 IPO.
  • For investors, three relevant tenets of Culp’s strategy are: 1) innovation; 2) service; and 3) a balanced and disciplined approach for capital use and deployment.
  • Culp’s demonstrated ability to respond to changes in the economy and its market—shown again most recently with the successful divestiture of eLuxury during the early onset of COVID-19—is evidence that Culp will likely maintain its strong market position for the foreseeable future.
  • In the recap of its most recently reported quarter, F3Q21, management delivered mid-teens revenue growth, mid-single-digit operating margin, and maintained its strong balance sheet with ~$51 million in cash and investments with no outstanding funded debt.
  • During COVID-19, Culp continued to declare and pay its quarterly dividend and upped it by $0.005 per share to $0.11 in early December 2020. Culp had re-initiated its dividend in mid-2012 and has increased it every year since. In addition, the Board recently re-authorized a share repurchase program, which Culp plans to execute opportunistically.
  • With COVID-19, home furnishings companies witnessed increasing consumer demand for comfort, wellness, and a focus on their homes that has spurred spending on home furniture and mattresses.
  • Culp will likely benefit from the antidumping investigation of mattress imports, which recently resulted in meaningful duties being imposed on imported mattresses from China and seven other targeted countries.

Note: In this report, we cite statistics from governmental, industry, and company sources. We refer readers to a discussion of those sources at the end of this report.

COMPANY OVERVIEW

Founded in 1972 and headquartered in High Point, North Carolina, Culp, Inc. manufactures, markets, and supplies a wide range of mattress and upholstery fabrics in the US and across the globe. Today Culp has manufacturing and sourcing capabilities in the US, Canada, China, Haiti, Vietnam, and Turkey.

Culp reports operations in segments: 1) mattress fabrics, known as Culp Home Fashions, and 2) upholstery fabrics, known as Culp Upholstery Fabrics. Each is a leader in its respective markets.

Today, Culp’s CEO is Robert. G. Culp IV (Iv), who joined the company in 1998 and became CEO in January 2020. For 15 years before becoming CEO, Iv led Culp’s mattress fabric segment. Culp enjoys a strong market leadership role in each of its two segments, which is reinforced by its innovation.

With this report, we introduce coverage of Culp, Inc., a market leader in two textile platforms: mattress fabrics and upholstery fabrics. Culp manufactures, sources, and supplies fabrics and cut-and-sewn covers primarily for upholstery and mattress manufacturers. We began studying Culp soon after its 1983 IPO.

DISCLOSURES

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