Culp Inc. Reports $6M Annualized Cost Enhancements Amid Tariff Volatility

Culp Inc. reported a $6M annualized cost enhancement in Q1 2026, driven by the progress of Project Blaze. Despite tariff volatility, the company improved its operating results, building on momentum from the previous fiscal year. CEO Robert Culp highlighted the achievement, emphasizing the company's ability to adapt to changing market conditions.

Culp Inc. (CULP) has reported a significant $6 million annualized cost enhancement in the first quarter of fiscal 2026, driven by the progress of Project Blaze. Despite the ongoing challenges posed by tariff volatility and depressed demand in the home furnishings industry, the company has demonstrated resilience and adaptability in its financial performance.

CEO Robert Culp highlighted the company's ability to build on the momentum from the previous fiscal year, achieving improvement in operating results. The bedding segment, which underwent integration and restructuring, showed sequential sales growth and a shift to double-digit gross margins compared to the negative gross profit of the previous year. Culp emphasized the company's competitive, stylish, and innovative offerings in knits, wovens, cut and sewn covers, and bedding accessories.

The company's financial results for the first quarter reflect these improvements. Net sales were $50.7 million, compared to $56.5 million in the prior year period, while gross profit improved to $7.2 million or 14.3% of sales. The company reported a net loss of $231,000 or $0.02 per diluted share, compared to a net loss of $7.3 million or $0.58 per diluted share in the prior year period. Operating income for the quarter was $1.6 million, compared to a loss from operations of $6.9 million a year prior.

Project Blaze, an internal initiative integrating former divisions into a unified Culp-branded business, aims to deliver $6 million in annualized cost and efficiency enhancements, in addition to $10–$11 million from previous restructuring. The company expects sequential overall sales growth in the second quarter and throughout fiscal 2026, with cost and efficiency benefits from restructuring and integration initiatives driving adjusted EBITDA results in a range from near breakeven to slightly positive for Q2 2026.

Culp Inc. has shown a cautious optimism in its prepared remarks, emphasizing improvement and adaptability. The company is focused on leveraging existing capacity for future demand recovery while maintaining a focus on profitability and liquidity regardless of market conditions. The strategic focus has intensified on the bedding segment's margin recovery and integration synergies, with less emphasis on waiting for market recovery and more on proactive profitability.

While the company faces challenges from depressed demand and ongoing tariff volatility, it is addressing these risks through supply chain flexibility, price increases, and cost reductions. The execution of Project Blaze and related integration efforts is a key factor in the company's ability to navigate these headwinds and drive future growth.

The stock has lost about 22.5% since the beginning of the year, underperforming the S&P 500's gain of 10.7%. The company's earnings outlook remains a key factor for investors, with the Zacks Rank currently indicating a #3 (Hold) rating for the stock. The shares are expected to perform in line with the market in the near future, with the magnitude and direction of estimate revisions likely to change following the company's earnings report.

In conclusion, Culp Inc.'s Q1 2026 results demonstrate a clear pivot toward operational efficiency and cost discipline. The company's progress on Project Blaze and related integration efforts, targeting $6 million in new annualized savings atop prior restructuring benefits, positions it well to navigate the challenges of the home furnishings industry and drive future growth.