Culp (NYSE:CULP) mentioned Tuesday it expects to report a a lot wider Q2 working loss than beforehand anticipated, damage by stock write-down costs, 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 costs, and loss on sale of uncooked materials and completed items stock within the mattress materials phase.
It additionally contains ~$1M in higher-than-normal markdowns related to Culp’s (CULP) residential upholstery materials unit, and ~$700K in restructuring costs associated to its upholstery cloth phase’s reduce and stitch platform in China.
Culp (CULP) expects a better 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 point, significantly for our mattress materials phase. Ongoing trade softness resulting from macroeconomic pressures and adjustments in client spending, mixed with inflationary pressures and clients’ elevated need for brand new merchandise to roll out on the client stage, led us to take stock markdowns and impairment costs on unproductive and overvalued stock,” mentioned CEO Iv Culp.
“In our upholstery materials phase, we took motion to restructure our China reduce and stitch platform, ensuing within the closure of certainly one of our leased services,” he added.
Culp (CULP) expects these strikes will help enchancment throughout H2 FY23.
The corporate expects to report Q2 leads to early Dec.