Culp, Inc. (NYSE:CULP), a leading provider of fabrics for bedding and upholstery fabrics for residential and commercial furniture, today announced the strategic transformation of its operating model to further position the Company for flexibility and growth. The Company will combine its two stand-alone operating divisions, Culp Upholstery Fabrics and Culp Home Fashions, into a single, integrated business designed to optimize operational agility and collaboration, further streamline costs and processes across its business, and, most importantly, increase responsiveness to customer needs and market trends.
As an initial step in this integration, the Company will close the leased facility operated by its upholstery fabrics division in Burlington, North Carolina, and transition the production and distribution activities there to a shared management model within the Company-owned facility in Stokesdale, North Carolina, currently operated by its mattress fabric division. The Company expects to generate annualized efficiency improvements and cost reduction benefits of approximately $3 million after completion of the Burlington facility closure and other integration initiatives, with the potential for additional savings going forward. This is incremental to the approximately $10 to $11 million in annualized savings and operating improvements expected from the recent completion of the Company's cost restructuring plan announced in May of 2024, which was focused primarily on the mattress fabrics division. That restructuring project included the consolidation of sewn cover operations, outsourcing of certain knitting and damask weaving production, and closure of the Company's manufacturing facility in Canada and transfer of those operations and the associated equipment to its Stokesdale, North Carolina, facility, among other actions. The final step in that project, the sale of the Company's Canadian facility, is currently expected to close within the next week, and the Company intends to use the cash proceeds to retire outstanding borrowings as part of its broader plan to improve financial flexibility and position the business for long-term success.