Culp Profile
Culp, Inc. (Culp) manufacturers, sources, and markets mattress fabrics and sewn covers used for covering mattresses and foundations, and other bedding products; and upholstery fabrics, including cut and sewn kits, primarily used in production of upholstered furniture.
The company markets a variety of fabrics and other products in different categories to a global customer base, including fabrics produced at its manufacturing facilities and fabrics produced by other suppliers. As of May 1, 2022, the company had active production facilities located in North Carolina; Tennessee; Quebec, Canada; Shanghai, China; and Ouanaminthe, Haiti. It also sources fabrics and cut and sewn kits from other manufacturers, located primarily in China, Vietnam, and Turkey, with substantially all of these products made specifically for Culp and created by Culp designers. In addition, the company operates distribution centers in North Carolina, Canada, China, and Haiti to facilitate distribution of its fabric products, with additional distribution capabilities through strategic relationships in China and Vietnam.
Segments
The company operates through two segments, Mattress Fabrics and Upholstery Fabrics.
Mattress Fabrics segment
This segment, also known as Culp Home Fashions (Culp Home Fashions – Haiti, Ltd.), manufactures and markets mattress fabrics and sewn mattress covers to bedding manufacturers. These products include woven jacquard fabrics, knitted fabrics, and some converted fabrics. Culp Home Fashions has manufacturing facilities located in Stokesdale and High Point, North Carolina, and St. Jerome, Quebec, Canada. The division also sources products internally from Culp China, which is operated by the company’s upholstery fabrics division, as well as from a supplier in Turkey, based on its own designs and production schedule. Additionally, Culp Home Fashions has a mattress cover facility in Haiti (which is a wholly-owned operation following the fiscal 2021 fourth-quarter acquisition of the remaining fifty percent ownership interest from its former joint venture partner), and also utilizes the company’s Culp China platform for the production of sewn mattress covers. Knitted fabrics are produced at both the Stokesdale and St. Jerome facilities, while jacquard (damask) fabric is produced solely at the St. Jerome facility. The majority of its finishing and inspection processes for mattress fabrics are conducted at the Stokesdale plant, while the St. Jerome plant provides additional capacity and a second location for these processes. Both of these facilities offer finished goods distribution capabilities, and the Stokesdale plant houses the division offices.
Woven Jacquards: Various patterns and intricate designs. Woven on complex looms using a variety of synthetic and natural yarns.
Converted: Suedes, pile and embroidered fabrics, and other specialty type products are sourced to offer diversity for higher end mattresses.
Knitted Fabric: Various patterns and intricate designs produced on special-width circular knit machines utilizing a variety of synthetic and natural yarns. Knitted mattress fabrics have inherent stretching properties and spongy softness, which conforms well with layered foam packages.
Sewn Mattress Covers: Covers for bedding (primarily specialty beds), sewn from mattress fabrics produced by the company’s facilities or sourced from others.
Upholstery Fabrics
This segment markets fabrics for residential and commercial furniture, including jacquard woven fabrics, velvets, micro denier suedes, woven dobbies, knitted fabrics, piece-dyed woven products, and polyurethane ‘leather look’ fabrics. With the acquisition of Read Window Products, LLC (Read) Products in 2018, this segment also markets window treatment products and installation services, including roller shades, drapery, hardware, and top-of-mattress soft goods, for customers in the hospitality and commercial industries.
This segment operates two manufacturing facilities in Shanghai, China. It markets cut and sewn fabric kits produced in these locations, as well as a variety of upholstery fabrics and cut and sewn kits sourced from third party producers, mostly in China and Vietnam. Its China facilities in Shanghai include the production of cut and sewn kits made to the specifications of furniture manufacturing customers using sourced fabrics, as well as design, finishing, warehousing, quality control, and inspection operations.
During 2022, the company also commenced the operation of a new facility in Haiti dedicated to the production of cut and sewn fabric kits, and it continued to ramp up production at this facility during the fourth quarter. This facility primarily supports demand for an existing upholstery fabrics customer. The company continues to expand its marketing efforts to sell its upholstery fabrics products in countries other than the U.S., including the Chinese local market. Additionally, the company fabricates a variety of window treatments, using mostly customer-supplied fabrics and materials, at its facility in Knoxville, Tennessee.
Woven Jacquards: Elaborate, complex designs, such as florals and tapestries in traditional, transitional, and contemporary styles. Woven on intricate looms using a variety of synthetic and natural yarns.
Woven Dobbies: Fabrics that use straight lines to produce geometric designs, such as plaids, stripes, and solids in traditional and country styles. Woven on less complicated looms using a variety of weaving constructions and primarily synthetic yarns.
Velvets: Soft fabrics with a plush feel. Woven or knitted in basic designs, using synthetic yarns that are yarn dyed or piece dyed.
Suedes: Fabrics woven or knitted using microdenier polyester yarns, which are piece dyed and finished, usually by sanding. The fabrics are typically plain or small jacquard designs, with some being printed. These are sometimes referred to as microdenier suedes.
Faux Leathers: Sueded or knitted base cloths, which are overprinted with polyurethane, and composite products, including a base fabric that is coated with a top layer of polyurethane, which simulates the look and feel of leather.
Cut and Sewn Kits: Covers made from various types of upholstery fabrics and cut and sewn to the specifications of furniture manufacturing customers for use on specific furniture frames.
With the acquisition of Read Window Products in 2018, the upholstery fabrics business also markets a variety of window treatment products and installation services for customers in the hospitality and commercial industries. These products include roller & solar shades, drapery, roman shades and top treatments, hardware products, and soft goods, such as duvet covers, bed skirts, bolsters and pillows.
Products
The company’s products include mattress fabrics and upholstery fabrics, which are its two identified operating segments. These fabrics are sold in roll form and as sewn mattress covers by the Mattress Fabrics segment, and in roll form and as cut and sewn kits by the Upholstery Fabrics segment. The company’s upholstery segment products also include window treatments and related products.
Culp Product Categories by segment
The company markets products in most categories of fabric that manufacturers use for bedding and furniture. It also markets window treatment products to customers in the hospitality and commercial industries.
Distribution
Mattress Fabrics segment: Most of the company’s Mattress Fabrics shipments originate from its facilities in Stokesdale, North Carolina, and it has additional distribution capabilities in Canada, China, and Haiti. Through arrangements with major customers and in accordance with industry practice, the company maintains a significant inventory of mattress fabrics at its distribution facility in Stokesdale (‘make to stock’), so that products may be shipped to customers with short lead times and on a ‘just in time’ basis.
Upholstery Fabrics segment: A majority of the company’s upholstery fabrics are marketed on a ‘make to order’ basis and are shipped directly from the company’s distribution facilities in Burlington, North Carolina, and Shanghai, China. It also has distribution capabilities in Vietnam. In addition to ‘make to order’ distribution, an inventory of select fabric patterns is held at its distribution facilities in Burlington and Shanghai from which its customers can obtain quick delivery of sourced fabrics through a program known as ‘Culp Express’. The company also has distribution capabilities for its ‘Culp Express’ program to local customers in Canada through its mattress fabrics distribution facility in Quebec, Canada. Window treatment products sold through its Read Window Products business are done on a ‘job order’ basis, with manufactured products shipped directly from its manufacturing facility in Knoxville, Tennessee to the job installation site.
Customers and Sales
Mattress Fabrics segment: Major customers for the company’s mattress fabrics include bedding manufacturers, such as Serta-Simmons Bedding (SSB), Tempur + Sealy International (TSI), Casper, Corsicana, Nectar, and Ashley Furniture. Its largest customer in the mattress fabrics segment is Serta Simmons Holdings, LLC, accounting for approximately 11% of the company’s overall sales in the year ended May 1, 2022. These sales include sales to customers who are also subcontractors for Serta Simmons Holdings, LLC. The company’s mattress fabrics customers also include many small and medium-size bedding manufacturers.
Upholstery Fabrics segment: The company’s major customers for upholstery fabrics are leading manufacturers of upholstered furniture, including Ashley, Flexsteel, Kuka, La-Z-Boy (La-Z-Boy Residential and England), Southern Furniture Industries (Fusion and Southern Motion), Sudair, and Violino. Major customers for the company’s fabrics for commercial furniture include HNI Corporation and Travel + Lesiure Co. Its largest customer in the upholstery fabrics segment is La-Z-Boy Incorporated, which accounted for approximately 13% of the company’s consolidated sales in the year ended May 1, 2022.
Seasonality
Overall, demand for the company’s products generally depends upon consumer demand for furniture and bedding products, which reflects sensitivity to overall economic conditions, including consumer confidence, unemployment rates, and housing market conditions. During the fourth quarter of fiscal 2020 and continuing into the first quarter of fiscal 2021, the bedding and furniture industries, including manufacturers and retail stores, were adversely affected by closures/restricted operations, supply chain disruption, and economic uncertainty due to the COVID-19 global pandemic. For the remainder of fiscal 2021, disruption relating to the COVID-19 pandemic positively affected sales trends, with the increased consumer focus on the home and travel restrictions shifting discretionary spending away from travel and leisure activities towards home furnishings and enhancing overall comfort within the home environment. However, this sales trend began to reverse during the year ended May 1, 2022, particularly during the second half of the year, as COVID-related travel and mask restrictions were lifted and consumers began to resume travel and leisure activities. Inflationary pressures also affected consumer spending during the second half of the year ended May 1, 2022.
Upholstery Fabrics segment: The upholstery fabrics business today is less seasonal than it once was. In the past, seasonality resulted from one-week closings of the company’s manufacturing facilities and the facilities of most of its customers in the U.S. during its first and third fiscal quarters for the holiday weeks of July 4th and Christmas. This effect has become much less pronounced as the majority of its fabrics are produced or sold in locations outside of the U.S. The timing of the Chinese National Holiday in October and, to a larger extent, the Chinese New Year (which occurs in January or February each year), have a more significant impact on upholstery sales than the U.S. holiday periods, often causing sales to be higher in advance of these Chinese holiday periods and sometimes lower during or immediately following the same periods.
Intellectual Property
The company holds, or has registration applications pending for, numerous trademarks and copyrights for various product and trade names, logos, and fabric designs in the United States and certain foreign countries.
Regulations
The company is subject to various federal and state laws and regulations, including the Occupational Safety and Health Act (OSHA) and federal and state environmental laws, as well as similar laws governing its manufacturing facilities in China, Canada, and Haiti.
History
Culp, Inc. was founded in 1972 as a North Carolina corporation.
