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Upholstery Fabrics Segment Restructuring

9 Months Ended

Jan. 28, 2024

Restructuring and Related Activities [Abstract]

Upholstery Fabrics Segment Restructuring

9. Upholstery Fabrics Segment Restructuring

Ouanaminthe, Haiti

During the third quarter of fiscal 2023, CUF Haiti entered into an agreement to terminate a lease associated with a facility located in Ouanaminthe, Haiti and, in turn, moved the production of upholstery cut and sewn kits to an existing facility leased by Culp Home Fashions Haiti, Ltd. (“CHF Haiti”) during the fourth quarter of fiscal 2023. Both CUF Haiti and CHF Haiti are indirect wholly-owned subsidiaries of the company. During the first quarter of fiscal 2024, demand for upholstery cut and sewn kits

declined more than previously anticipated, resulting in the strategic action to discontinue the production of upholstery cut and sew kits in Haiti.

Shanghai, China

During the second quarter of fiscal 2023, we closed our cut and sew upholstery fabrics operation located in Shanghai, China, which included the termination of an agreement to lease a building. This strategic action, along with the further use of our Asian supply chain, was taken in order to adjust our operating costs to better align with the declining customer demand for cut and sewn products.

The following summarizes our restructuring expense and restructuring related charges from both our restructuring activities noted above for the nine months ending January 28, 2024, and January 29, 2023:

	Nine Months Ended				Nine Months Ended
	January 28, 2024				January 29, 2023
Lease termination costs	$	—			$	481
Employee termination benefits		103				468
Impairment loss - leasehold improvements and equipment		329				357
Loss on disposal and markdowns of inventory		40				98
Other associated costs		—				20
Restructuring expense and restructuring related charges (1) (2)	$	472			$	1,424

(1) Of the total $472,000, $432,000 and $40,000 were recorded within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the nine-month period ending January 28, 2024.

(2) Of the total $1.4 million, $1.3 million and $98,000 were recorded within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the nine-month period ending January 29, 2023.

The restructuring activity related to the discontinuation of production of upholstery cut and sewn kits located in Haiti was mostly completed as of January 28, 2024. As a result of our strategic decision to discontinue this production, we incurred a cumulative charge of $1.3 million in restructuring expense and restructuring related charges from this start of the restructuring activity during the third quarter of fiscal 2023 through January 28, 2024.

The restructuring activity related to the closure of our cut and sew upholstery fabrics operation located in China was completed during the third quarter of fiscal 2023, and this restructuring activity incurred a cumulative charge of $713,000 in restructuring expense and restructuring related charges.

The following summarizes the activity in accrued restructuring costs for both our restructuring activities for the nine-month period ending January 28, 2024:

			Employee
			Termination
(dollars in thousands)			Benefits			Total
Beginning balance			$	—		$	—
Expenses incurred				103			103
Payments				(103	)		(103	)
Ending balance			$	—		$	—

The following summarizes the activity in accrued restructuring costs for both our restructuring activities for the nine-month period ending January 29, 2023:

			Employee			Lease			Other
			Termination			Termination			Associated
(dollars in thousands)			Benefits			Costs			Costs			Total
Beginning balance			$	—		$	—		$	—		$	—
Accrual established in fiscal 2023				468			47			—			515
Expenses incurred				—			—			20			20
Payments				(468	)		(47	)		(20	)		(535	)
Ending balance			$	—		$	—		$	—		$	—

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- References

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- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 420
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482017/420-10-50-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 420
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482017/420-10-50-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 420
-Name Accounting Standards Codification
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-URI https://asc.fasb.org//420/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 420
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (e)
-Publisher FASB
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 420
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 5.P.4(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479823/420-10-S99-2

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