Business
Culp Announces Cash Strategy and Business Update in Response to Covid-19, Including Sale of eLuxury and Withdrawal of Guidance
HIGH POINT, N.C.--(BUSINESS WIRE)-- Culp, Inc. (NYSE: CULP) announced today a series of proactive measures the company has taken to preserve balance sheet
About this update from Culp, Inc.
[{"type":"text","content":" HIGH POINT, N.C.--(BUSINESS WIRE)--\nCulp, Inc. (NYSE: CULP) announced today a series of proactive measures the company has taken to preserve balance sheet strength and reduce costs in response to increasingly challenging market conditions and the impact of the COVID-19 global pandemic. These steps include:\n\n\n\nCompleting a strategic sale of Culp’s majority interest in eLuxury, LLC to the minority owner of eLuxury in order to increase liquidity and focus on its core businesses during this unprecedented environment. The company will maintain a strong working relationship with eLuxury going forward through supply and royalty arrangements designed to support eLuxury’s ongoing growth strategy and preserve an important sales channel for Culp’s core products;\n\n\n\n\nEntering an amendment to the company’s existing domestic revolving credit facility with Wells Fargo to increase the borrowing limit, decrease the minimum liquidity level, and extend the expiration date to August 15, 2022;\n\n\n\n\nAdding to the company’s cash balance by drawing down $20 million under this domestic revolving credit facility as a precautionary measure to proactively increase balance sheet flexibility during the coronavirus crisis;\n\n\n\n\nImplementing a temporary salary reduction of 50% for the company’s executive chairman and chief executive officer, as well as other salary reductions for all other executive officers. Additionally, the board of directors will forego the cash portion of its compensation until further notice;\n\n\n\n\nFurloughing associates as necessary to align with demand and making other workforce adjustments and temporary salary reductions at each of the company’s divisions. While the company will not pay wages to furloughed associates, it will continue to provide certain healthcare-related benefits for those eligible;\n\n\n\n\nSuspending merit pay increases until further notice;\n\n\n\n\nSuspending the company’s share repurchase program indefinitely; and\n\n\n\n\nAggressively reducing expenses, capital expenditures, and discretionary spending, and working with the company’s vendors and landlords to negotiate temporary terms. \n\n\n\nCulp, Inc. issued guidance for the fourth quarter of fiscal 2020 on March 4, 2020, which excluded any impact from the spread of COVID-19. Due to the extraordinary uncertainty and rapidly changing envir...