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Segment Information
 12 Months Ended
Apr. 28, 2024
Segment Reporting [Abstract]  
Segment Information
17.
SEGMENT INFORMATION

Overall

Our operations are classified into two business segments: mattress fabrics and upholstery fabrics.

Mattress Fabrics

The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers.

Upholstery Fabrics

The upholstery fabrics segment develops, manufactures, sources, and sells fabrics to customers in the residential, commercial, and hospitality industries. In addition, this segment includes Read, which provides window treatments and sourcing of upholstery fabrics and other products, as well as measuring and installation services for Read’s products, to customers in the hospitality and commercial industries. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows.

Net Sales Geographic Concentration

Net sales denominated in U.S. dollars accounted for 92%, 91%, and 90% of total consolidated net sales in fiscal 2024, 2023, and 2022, respectively. International sales accounted for 32%, 29%, and 31% of net sales during fiscal 2024, 2023, and 2022, respectively, and are summarized by geographic area as follows:

 

(dollars in thousands)

 

2024

 

 

2023

 

 

2022

 

north america (excluding USA) (1)

 

$

29,357

 

 

$

29,756

 

 

$

39,256

 

far east and asia (2)

 

 

36,334

 

 

 

31,339

 

 

 

43,015

 

all other areas

 

 

6,011

 

 

 

8,032

 

 

 

8,114

 

 

 

$

71,702

 

 

$

69,127

 

 

$

90,385

 

 

 

(1)
Of this amount, $25.1 million, $24.9 million, and $33.5 million are attributable to shipments to Mexico in fiscal 2024, 2023, and 2022, respectively.
(2)
Of this amount $18.3 million, $20.0 million, and $26.9 million are attributable to shipments to China in fiscal 2024, 2023, and 2022, respectively.

Sales attributed to individual countries are based upon the location that the company ships its products to for delivery to customers.

Customer Concentration

One customer within the upholstery fabrics segment represented 12%, 15%, and 13% of consolidated net sales during fiscal 2024, 2023, and 2022, respectively. No customers within the upholstery fabrics segment accounted for greater than 10% of the consolidated accounts receivable, net balance as of April 28, 2024, or April 30, 2023.

No customers within the mattress fabrics segment represented greater than 10% of consolidated net sales during fiscal 2024, 2023, or fiscal 2022. No customers within the mattress fabrics segment accounted for greater than 10% of the consolidated accounts receivable, net balance as of April 28, 2024, or April 30, 2023.

Employee Workforce Concentration

Hourly employees associated with our manufacturing facility located in Quebec, Canada (approximately 14% of our workforce) are represented by a local unaffiliated union with a collective bargaining agreement that expires on February 1, 2026. On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to gradually discontinue the operations and sale of the company's manufacturing facility located in Quebec, Canada. During this gradual discontinuation of operations, hourly employees will be entitled to compensation and benefits in accordance with the collective bargaining agreement noted above.

Financial Information

We evaluate the operating performance of our business segments based upon (loss) income from operations before certain unallocated corporate expenses and other items that are not expected to occur on a regular basis. Cost of sales for each segment includes costs to develop, manufacture, or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead and incoming freight charges. Unallocated corporate expenses primarily represent compensation and benefits for certain executives and their support staff, all costs associated with being a public company, amortization of intangible assets, and other miscellaneous expenses. Segment assets include assets used in the operations of each segment and consist of accounts receivable, inventories, property, plant, and equipment, and right of use assets.

Statements of operations for our business segments are as follows:

 

(dollars in thousands)

 

2024

 

 

2023

 

 

2022

 

net sales by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

116,370

 

 

$

110,995

 

 

$

152,159

 

upholstery fabrics

 

 

108,963

 

 

 

123,939

 

 

 

142,680

 

net sales

 

$

225,333

 

 

$

234,934

 

 

$

294,839

 

gross profit (loss):

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

6,289

 

 

$

(6,739

)

 

$

16,458

 

upholstery fabrics

 

 

21,690

 

 

 

17,733

 

 

 

19,635

 

total segment gross profit

 

 

27,979

 

 

 

10,994

 

 

 

36,093

 

restructuring related charge (1) (3)

 

 

(40

)

 

 

(98

)

 

 

—

 

gross profit

 

$

27,939

 

 

$

10,896

 

 

$

36,093

 

selling, general, and administrative expenses by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

13,134

 

 

$

11,942

 

 

$

12,246

 

upholstery fabrics

 

 

15,903

 

 

 

15,739

 

 

 

14,009

 

unallocated corporate

 

 

9,574

 

 

 

10,297

 

 

 

9,160

 

selling, general, and administrative expenses

 

$

38,611

 

 

$

37,978

 

 

$

35,415

 

(loss) income from operations by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

(6,845

)

 

$

(18,681

)

 

$

4,212

 

upholstery fabrics

 

 

5,787

 

 

 

1,994

 

 

 

5,626

 

unallocated corporate expenses

 

 

(9,574

)

 

 

(10,297

)

 

 

(9,160

)

total segment (loss) income from operations

 

 

(10,632

)

 

 

(26,984

)

 

 

678

 

     restructuring related charge (1) (3)

 

 

(40

)

 

 

(98

)

 

 

—

 

     restructuring expense (2) (4)

 

 

(636

)

 

 

(1,396

)

 

 

—

 

loss from operations

 

$

(11,308

)

 

$

(28,478

)

 

$

678

 

interest expense

 

 

(11

)

 

 

—

 

 

 

(17

)

interest income

 

 

1,174

 

 

 

531

 

 

 

373

 

other expense

 

 

(625

)

 

 

(443

)

 

 

(1,359

)

loss before income taxes

 

$

(10,770

)

 

$

(28,390

)

 

$

(325

)
(1)
Cost of sales for fiscal 2024 includes a restructuring related charge totaling $40,000, which pertained to markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.
(2)
Restructuring expense of $636,000 for fiscal 2024 represents impairment charges related to equipment of $329,000 and employee termination benefits of $103,000 related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti. In addition, during the fourth quarter of fiscal 2024, restructuring expense of $204,000 was incurred for employee termination benefits related to the closure of the upholstery fabrics finishing operation located in Shanghai, China.
(3)
Cost of sales for fiscal 2023 includes a restructuring related charge totaling $98,000, which pertained to a loss on disposal and markdowns of inventory related to the exit of our cut and sew upholstery fabrics operations located in Shanghai, China.
(4)
Restructuring expense of $1.4 million for fiscal 2023 relates to both our restructuring activities for our cut and sew upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and located in Ouanaminthe, Haiti, which occurred during the third and fourth quarters of fiscal 2023. Restructuring expense represents employee termination benefits of $507,000, lease termination costs of $481,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $51,000 for other associated costs.

Balance sheet information for our business segments follow:

 

(dollars in thousands)

 

April 28,
2024

 

 

 

April 30,
2023

 

 

segment assets

 

 

 

 

 

 

 

 

mattress fabrics

 

 

 

 

 

 

 

 

accounts receivable

 

$

10,003

 

 

 

$

12,396

 

 

inventory

 

 

27,671

 

 

 

 

25,674

 

 

property, plant, and equipment

 

 

31,472

 

(1)

 

 

33,749

 

(2)

right of use assets

 

 

1,627

 

(3)

 

 

2,308

 

(4)

total mattress fabrics assets

 

 

70,773

 

 

 

 

74,127

 

 

 

 

 

 

 

 

 

 

upholstery fabrics

 

 

 

 

 

 

 

 

accounts receivable

 

 

11,135

 

 

 

 

12,382

 

 

inventory

 

 

17,172

 

 

 

 

19,406

 

 

property, plant, and equipment

 

 

1,125

 

(5)

 

 

1,671

 

(6)

right of use assets

 

 

1,952

 

(7)

 

 

2,618

 

(8)

total upholstery fabrics assets

 

 

31,384

 

 

 

 

36,077

 

 

total segment assets

 

 

102,157

 

 

 

 

110,204

 

 

 

 

 

 

 

 

 

 

non-segment assets

 

 

 

 

 

 

 

 

cash and cash equivalents

 

 

10,012

 

 

 

 

20,964

 

 

short-term investments – rabbi trust

 

 

903

 

 

 

 

1,404

 

 

short-term note receivable

 

 

264

 

 

 

 

219

 

 

current income taxes receivable

 

 

350

 

 

 

 

—

 

 

other current assets

 

 

3,371

 

 

 

 

3,071

 

 

long-term note receivable

 

 

1,462

 

 

 

 

1,726

 

 

deferred income taxes

 

 

518

 

 

 

 

480

 

 

property, plant, and equipment (9)

 

 

585

 

 

 

 

691

 

 

right of use assets (10)

 

 

2,624

 

 

 

 

3,265

 

 

intangible assets

 

 

1,876

 

 

 

 

2,252

 

 

long-term investments - rabbi trust

 

 

7,102

 

 

 

 

7,067

 

 

other assets

 

 

830

 

 

 

 

840

 

 

total assets

 

$

132,054

 

 

 

$

152,183

 

 

 

(1)
The $31.5 million as of April 28, 2024, represents property, plant, and equipment of $21.5 million, $9.4 million, and $555,000 located in the U.S., Canada, and Haiti, respectively.
(2)
The $33.7 million as of April 30, 2023, represents property, plant, and equipment of $22.7 million, $10.4 million, and $608,000 located in the U.S., Canada, and Haiti, respectively.
(3)
The $1.6 million as of April 28, 2024, represents right of use assets of $1.1 million and $545,000 located in Haiti and Canada, respectively.
(4)
The $2.3 million as of April 30, 2023, represents right of use assets of $1.5 million and $776,000 located in Haiti and Canada, respectively.
(5)
The $1.1 million as of April 28, 2024, represents property, plant, and equipment of $1.0 million and $120,000 located in the U.S. and China, respectively.
(6)
The $1.7 million as of April 30, 2023, represents property, plant, and equipment of $974,000, $592,000, and $105,000 located in the U.S., Haiti, and China, respectively.
(7)
The $2.0 million as of April 28, 2024, represents right of use assets of $1.3 million and $709,000 located in the U.S. and China, respectively.
(8)
The $2.6 million as of April 30, 2023, represents right of use assets of $1.5 million and $1.1 million located in China and the U.S., respectively.
(9)
The $585,000 as of April 28, 2024, and $691,000 as of April 30, 2023, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress fabrics and upholstery fabrics segments located in the U.S.
(10)
The $2.6 million as of April 28, 2024, and $3.3 million as of April 30, 2023, represent right of use assets associated with unallocated corporate departments and corporate departments shared by both the mattress fabrics and upholstery fabrics segments located in the U.S.

Capital expenditures and depreciation expense information for our business segments follow:

 

(dollars in thousands)

 

2024

 

 

2023

 

 

2022

 

capital expenditures (1):

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

3,474

 

 

$

1,125

 

 

$

3,383

 

upholstery fabrics

 

 

271

 

 

 

467

 

 

 

1,032

 

unallocated corporate

 

 

255

 

 

 

97

 

 

 

1,406

 

total capital expenditures

 

$

4,000

 

 

$

1,689

 

 

$

5,821

 

 

 

 

 

 

 

 

 

 

depreciation expense

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

5,883

 

 

$

6,050

 

 

$

6,200

 

upholstery fabrics

 

 

638

 

 

 

795

 

 

 

794

 

total depreciation expense

 

$

6,521

 

 

$

6,845

 

 

$

6,994

 

 

(1)
Capital expenditure amounts are stated on an accrual basis. See the Consolidated Statement of Cash Flows for capital expenditure amounts on a cash basis.