CULP (CULP) risk factors, FY2025 10-K

Macroeconomic, Market, and Strategic Risks

1. 01Continued economic and industry uncertainty could negatively affect our sales and earnings
2. 02Loss of market share due to competition may result in declines in sales and could result in losses or decreases in earnings
3. 03or labor in the form of price increases, which can put downward pressure on our profit margins. Also, the wide range of product offerings in our industry can make it more difficult to differentiate our products through design, styling, finish, and other techniques
4. 04Our future success depends in part on our ability to successfully implement our strategic initiatives and achieve our business plans

Operational Risks

1. 05Our business may be adversely affected by increased tariffs or other changes in U.S. trade policy related to imported products, as well as violations of existing trade policies
2. 06Greater reliance on offshore operations and foreign sources of products or raw materials increases the likelihood of disruptions to our supply chain or our ability to timely deliver products to our customers
3. 07Our business faces several risks associated with doing business in China
4. 08Because a significant portion of our operations are located outside the U.S., we may be adversely affected by changes in the value of the U.S. dollar
5. 09We may have challenges managing the outsourcing arrangements used for products and services
6. 10Impairment of assets would result in a decrease in our earnings and shareholders’ equity
7. 11Changes in the price, availability, and quality of raw materials could increase our costs or cause production delays and sales interruptions, which would result in decreased earnings
8. 12Increases in energy costs increase our operating costs and could adversely affect earnings
9. 13Business difficulties or failures of large customers could result in a decrease in our sales and earnings
10. 14If we fail to anticipate and respond to changes in consumer tastes and fashion trends, our sales and earnings may decline
11. 15Increasing dependence on information technology systems comes with specific risks, including cybersecurity breaches and data leaks, which could have an adverse effect on our business
12. 16Actions of activist shareholders could be disruptive and potentially costly, and the possibility that activist shareholders may seek changes that conflict with our strategies could cause uncertainty about the direction of our business
13. 17We may not be able to recruit and retain key employees and skilled workers in a competitive labor market
14. 18Our intellectual property rights may not prevent others from using our copyrights or trademarks in connection with the sale of competitive products. We may be subject to claims that our products or trademarks infringe intellectual property rights of others
15. 19We have made and expect to continue to make acquisitions, which could involve certain risks and uncertainties

Risks Related to Financing Our Operations

1. 20We have required, and may continue to require, funding from external sources, which may not be available at the levels we require or may cost more than we expect. As a result, our expenses and operating results could be negatively affected

Legal and Regulatory Risks

1. 21We are subject to litigation and environmental regulations that could adversely affect our sales and earnings
2. 22We must comply with many governmental regulations applicable to our business, and changes in those regulations could adversely affect our business

Risks Related to Trading in Our Stock

1. 23The market price of our stock is affected by the illiquidity of our stock, which could lead to our stock trading at prices that are significantly lower than expected
2. 24The market price of our stock may be highly volatile, and the stock market in general can be highly volatile