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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>Culp reported 1QFY26 GAAP EPS of ($0.02) versus ($0.58) in 1QFY25.</li><li>Adjusting for one-time items, including a $4.0MM gain on the sale of property in Canada in 1QFY26, we estimate that ongoing EPS was ($0.30) versus ($0.36) in 1QFY25; management does not provide an adjusted EPS number.</li><li>Please note with this report, we are assuming coverage of Culp, Inc.</li></ul>

Culp reported 1QFY26 GAAP EPS of ($0.02) versus ($0.58) in 1QFY25.Adjusting for one-time items, including a $4.0MM gain on the sale of property in Canada in 1QFY26, we estimate that ongoing EPS was ($0.30) versus ($0.36) in 1QFY25; management does not provide an adjusted EPS number.Please note with this report, we are assuming coverage of Culp, Inc.

Culp, Inc.: Demand Continues to Be Soft; Cost-Saving Initiatives Benefiting Margins

Culp, Inc: Demand Continues to Be Soft; Cost-Saving Initiatives Benefiting Margins

<ul><li>CULP posted 4QFY25 adjusted EPS of ($0.07), beating our estimate by $0.03, on strong gross margin gains in mattress fabrics on the back of management’s restructuring gains despite softer-than-expected revenue.</li><li>Upholstery fabrics revenue was down 8.9%, even as management noted strength (and potentially market share gains) in the contract/hospitality side of the upholstery business.</li><li>On the residential side of upholstery, it was continued weak industry-wide demand (slow housing, mortgage rates, consumers pulling back from discretionary durable spend) and the continued hangover from one large customer’s order timing that pulled sales forward in early FY25. </li></ul>

CULP posted 4QFY25 adjusted EPS of ($0.07), beating our estimate by $0.03, on strong gross margin gains in mattress fabrics on the back of management’s restructuring gains despite softer-than-expected revenue.Upholstery fabrics revenue was down 8.9%, even as management noted strength (and potentially market share gains) in the contract/hospitality side of the upholstery business.On the residential side of upholstery, it was continued weak industry-wide demand (slow housing, mortgage rates, consumers pulling back from discretionary durable spend) and the continued hangover from one large customer’s order timing that pulled sales forward in early FY25. 

Culp, Inc: 4Q25 Adj EPS ($0.07); FY26 to Benefit from Restructuring & Price Cost

<ul><li>CULP posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, in what is perhaps best characterized as a persistent industry-wide demand-constrained environment.</li><li>Revenue was down in both segments (CHF down 4.6% Y/Y and CUF down 22.3%, which included some out of the ordinary inventory adjustments by one major customer) as consumer discretionary spending remains constrained given economic uncertainty, high interest rates, a slow housing market, and, increasingly, consumer wariness over the impact of the new administration’s tariffs and economic policies on the economy.</li><li>However, the macro headwinds somewhat obscure the significant sequential improvement in CHF gross margin over the past several quarters (from -1.2% in 1Q25 to +9.6% in 3Q25). </li></ul>

CULP posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, in what is perhaps best characterized as a persistent industry-wide demand-constrained environment.Revenue was down in both segments (CHF down 4.6% Y/Y and CUF down 22.3%, which included some out of the ordinary inventory adjustments by one major customer) as consumer discretionary spending remains constrained given economic uncertainty, high interest rates, a slow housing market, and, increasingly, consumer wariness over the impact of the new administration’s tariffs and economic policies on the economy.However, the macro headwinds somewhat obscure the significant sequential improvement in CHF gross margin over the past several quarters (from -1.2% in 1Q25 to +9.6% in 3Q25). 

Culp, Inc. - New Estimates Reflect Cost Savings...

<ul><li>Culp posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, as industry-wide demand remains challenged in both segments, with revenue declining in both CHF and CUF.</li><li>CHF revenue was down 4.6% Y/Y, missing our revenue estimate by $2.4 million. CUF revenue was down 22.3%, $1.4 million lower than our estimate.</li><li>Given the persistent macro headwinds in both segments, these numbers aren’t surprising. </li></ul>

Culp posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, as industry-wide demand remains challenged in both segments, with revenue declining in both CHF and CUF.CHF revenue was down 4.6% Y/Y, missing our revenue estimate by $2.4 million. CUF revenue was down 22.3%, $1.4 million lower than our estimate.Given the persistent macro headwinds in both segments, these numbers aren’t surprising. 

Culp, Inc. - 3Q Adj. EPS ($0.19); Demand Headwinds Persist

United States

Culp, Inc. manufactures and markets upholstery fabrics and mattress tickings for use in furniture and bedding industries. The Company's fabrics are used in the production of residential and commercial furniture and bedding products, including sofas, recliners, chairs, loveseats, sectionals, sofa-beds, office seating, panel systems, and mattress sets.

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Culp Inc (CULP US)

Culp, Inc.: Demand Continues to Be Soft; Cost-Saving Initiatives Benefiting Margins

Adjusting for one-time items, including a $4.0MM gain on the sale of property in Canada in 1QFY26, we estimate that ongoing EPS was ($0.30) versus...

Water Tower Research

Culp, Inc: Demand Continues to Be Soft; Cost-Saving Initiatives Benefiting Margins

Adjusting for one-time items, including a $4.0MM gain on the sale of property in Canada in 1QFY26, we estimate that ongoing EPS was ($0.30) versus...

Water Tower Research

Culp, Inc: 4Q25 Adj EPS ($0.07); FY26 to Benefit from Restructuring & Price Cost

CULP posted 4QFY25 adjusted EPS of ($0.07), beating our estimate by $0.03, on strong gross margin gains in mattress fabrics on the back of...

Water Tower Research

Culp, Inc. - New Estimates Reflect Cost Savings...

CULP posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, in what is perhaps best characterized as a persistent industry-wide demand...

Water Tower Research

Culp, Inc. - 3Q Adj. EPS ($0.19); Demand Headwinds Persist

Culp posted 3QFY25 adjusted EPS of ($0.19), $0.06 below our estimate, as industry-wide demand remains challenged in both segments, with revenue...

Water Tower Research

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