Culp, Inc. (CULP, Financial) is a leading manufacturer of mattress and upholstery fabrics. Culp reduced guidancein early November as the company continues to be negatively impacted by COVID lockdowns driving labor ine ciencies and higher costs for both freight and raw materials. The biggest impact in the quarter was the COVID-induced lockdown in Vietnam which impacted both sourcing and shipping for most of the quarter. The lockdown was lifted toward the end of the quarter with production and shipment rates normalizing, but the recent emergence of Omicron has the potential to reverse that. Higher costs for freight, labor, and raw materials is not new and is expected to impact next quarter as well. The overall tone on the call was positive with the expectation for a return to growth in the fiscal fourth quarter (Feb-Apr). Culp is well-positioned to capitalize on improved housing activity, which could lead to increased demand for mattresses and furniture. The cash-rich balance sheet provides flexibility and support for this anticipated growth.
From Keeley-Teton Advisors, LLC (Trades, Portfolio)'s Small Cap Dividend Value Fund fourth-quarter 2021 letter.
