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Segment Information | 3 Months Ended
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Aug. 03, 2025
Segment Reporting [Abstract] |
Segment Information | 14. Segment Information During the first quarter of fiscal 2026, we renamed our two reportable business segments to better reflect our product offerings. Our former mattress fabrics segment is now known as the bedding segment and our former upholstery fabrics segment is now known as the upholstery segment. The bedding segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. The upholstery segment develops, sources, manufactures, and sells fabrics primarily to residential, commercial, and hospitality furniture manufacturers. In addition, the upholstery segment includes Read, a wholly owned subsidiary that operates a leased facility in Knoxville, Tennessee which provides window treatments and sourcing of upholstery fabrics and other products, as well as related measuring and installation services to customers in the hospitality and commercial markets. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows. On April 24, 2025 (the fourth quarter of fiscal 2025), the company announced a strategic transformation of its operating model that will combine certain activities within the bedding and upholstery business segments and create one integrated Culp-branded business. As part of this strategic transformation, we will close our leased facilities operated by our upholstery segment located in Burlington, North Carolina and Knoxville, Tennessee, and will transition their production and distribution activities to a shared management model within our owned facility located in Stokesdale, North Carolina. See note 10 of the consolidated financial statements for further details regarding this strategic transformation initiative. Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer ("CEO"), who regularly reviews the financial results of the company on a consolidated and business segment basis for the purpose of evaluating financial and operating performance and allocation of resources to the individual segments noted above. Beginning in the first quarter of fiscal 2026, the CODM decided to use net sales and gross profit, excluding items that are not expected to occur on a regular basis (i.e. restructuring activities), as the primary measure of segment profit or loss. Previously, segment performance was primarily evaluated based on net sales and income (loss) from operations before unallocated corporate expenses and other items that are not expected to occur on a regular basis (i.e., restructuring activities). This change was made to align with internal management reporting and the decision-making processes affected by the strategic transformation of the company's operating model announced on April 24, 2025, which combined certain activities within the bedding and upholstery business segments and created one integrated Culp-branded business. The CODM evaluates segment performance based on (i) net sales, (ii) cost of sales, (iii) gross profit excluding items that are not expected to occur on a regular basis (i.e. restructuring related charges and credits), (iv) assets used in operations, which generally include accounts receivable, inventory, property, plant, and equipment, right of use assets, and assets held for sale; and (v) capital spending. 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. Intangible assets are not included in segment assets, as these assets are not used by the CODM to evaluate the respective segment’s operating performance and allocate resources to the individual segments. Statements of operations for our operating segments are as follows:
|  | Three months ended |
|  | August 3, 2025 |  |  | July 28, 2024 |
Net sales by segment: |  |  |  |  |  |
Bedding |  | $ | 28,046 |  |  | $ | 28,076 |
Upholstery |  |  | 22,645 |  |  |  | 28,461 |
Net sales |  | $ | 50,691 |  |  | $ | 56,537 |
Cost of Sales by segment: |  |  |  |  |  |
Bedding |  | $ | 25,104 |  |  | $ | 28,402 |
Upholstery |  |  | 18,359 |  |  |  | 22,943 |
Total segment cost of sales |  | $ | 43,463 |  |  | $ | 51,345 |
Restructuring related charge (1) |  |  | — |  |  |  | 116 |
Cost of Sales |  | $ | 43,463 |  |  | $ | 51,461 |
Gross profit (loss) by segment: |  |  |  |  |  |
Bedding |  | $ | 2,942 |  |  | $ | (326 | )
Upholstery |  |  | 4,286 |  |  |  | 5,518 |
Total segment gross profit |  | $ | 7,228 |  |  | $ | 5,192 |
Restructuring related charge (1) |  |  | — |  |  |  | (116 | )
Gross profit |  | $ | 7,228 |  |  | $ | 5,076 |
Selling, general, and administrative expenses |  |  | (9,119 | ) |  |  | (9,296 | )
Restructuring credit (expense) (2)(3) |  |  | 3,508 |  |  |  | (2,631 | )
Income (loss) from operations |  | $ | 1,617 |  |  | $ | (6,851 | )
Interest expense |  |  | (183 | ) |  |  | (28 | )
Interest income |  |  | 235 |  |  |  | 262 |
Other expense |  |  | (531 | ) |  |  | (404 | )
Income (loss) before income taxes |  | $ | 1,138 |  |  | $ | (7,021 | )
(1) For the three-month period ended July 28, 2024, cost of sales and gross profit included restructuring related charges totaling $116,000 for losses on the disposal and valuation of inventory related to the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada, which such facility was sold during the first quarter of fiscal 2026. See Note 10 to the consolidated financial statements for further details and a description of our restructuring activities. (2) For the three-month period ended August 3, 2025, the $3.5 million restructuring credit mostly represented a gain from the sale of the Property located in Quebec, Canada, totaling $4.0 million, partially offset by charges related to activities to transform our operating model and reduce fixed costs. See Note 10 to the consolidated financial statements for further details and a description of our restructuring activities. (3) For the three-month period ended July 28, 2024, the $2.6 million restructuring expense represented costs that were mostly associated with consolidating the company's North American mattress fabrics manufacturing and distribution facilities and the consolidation of two leased facilities related to cut and sewn mattress cover operations located in Ouanaminthe, Haiti. Balance sheet information for our operating segments follows:
(dollars in thousands) |  | August 3, 2025 |  |  | July 28, 2024 |  |  | April 27, 2025 |
Segment assets: |  |  |  |  |  |  |  |  |
Bedding: |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 10,216 |  |  | $ | 10,094 |  |  | $ | 10,576 |
Inventory |  |  | 35,102 |  |  |  | 25,278 |  |  |  | 33,293 |
Property, plant and equipment (1) |  |  | 22,061 |  |  |  | 28,844 |  |  |  | 23,259 |
Right of use assets (2) |  |  | 50 |  |  |  | 568 |  |  |  | 125 |
Assets held for sale (3) |  |  | 40 |  |  |  | 607 |  |  |  | 2,177 |
Total bedding assets |  |  | 67,469 |  |  |  | 65,391 |  |  |  | 69,430 |
Upholstery: |  |  |  |  |  |  |  |  |
Accounts receivable |  |  | 8,166 |  |  |  | 11,493 |  |  |  | 11,268 |
Inventory |  |  | 15,007 |  |  |  | 16,390 |  |  |  | 16,016 |
Property, plant and equipment (4) |  |  | 956 |  |  |  | 1,098 |  |  |  | 1,010 |
Right of use assets (5) |  |  | 2,159 |  |  |  | 1,478 |  |  |  | 2,678 |
Total upholstery assets |  |  | 26,288 |  |  |  | 30,459 |  |  |  | 30,972 |
Total segment assets |  |  | 93,757 |  |  |  | 95,850 |  |  |  | 100,402 |
Non-segment assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 11,094 |  |  |  | 13,472 |  |  |  | 5,629 |
Short-term investments - rabbi trust |  |  | 1,395 |  |  |  | 954 |  |  |  | 1,325 |
Short-term notes receivable |  |  | 5,104 |  |  |  | 268 |  |  |  | 280 |
Current income taxes receivable |  |  | — |  |  |  | 532 |  |  |  | — |
Other current assets |  |  | 2,767 |  |  |  | 3,590 |  |  |  | 2,970 |
Long-term notes receivable |  |  | 1,078 |  |  |  | 1,394 |  |  |  | 1,182 |
Deferred income taxes |  |  | 475 |  |  |  | 528 |  |  |  | 637 |
Property, plant and equipment (6) |  |  | 535 |  |  |  | 534 |  |  |  | 567 |
Right of use assets (7) |  |  | 2,953 |  |  |  | 2,437 |  |  |  | 3,105 |
Intangible assets |  |  | 865 |  |  |  | 1,782 |  |  |  | 960 |
Long-term investments - rabbi trust |  |  | 5,715 |  |  |  | 7,089 |  |  |  | 5,722 |
Other assets |  |  | 676 |  |  |  | 709 |  |  |  | 591 |
Total assets |  | $ | 126,414 |  |  | $ | 129,139 |  |  | $ | 123,370 |
(1) The $22.1 million as of August 3, 2025, represents property, plant, and equipment of $21.2 million and $888,000 located in the U.S. and Haiti, respectively. The $28.8 million as of July 28, 2024, represents property, plant, and equipment of $20.9 million, $7.4 million, and $511,000 located in the U.S., Canada, and Haiti, respectively. The $23.3 million as of April 27, 2025, represents property, plant, and equipment of $22.3 million and $955,000 located in the U.S. and Haiti, respectively. (2) The $50,000 as of August 3, 2025, represents a right of use asset in Haiti. The $568,000 as of July 28, 2024, represents right of use assets of $350,000 and $218,000 located in Haiti and Canada, respectively. The $125,000 as of April 27, 2025, represents a right of use asset in Haiti. (3) The $40,000 as of August 3, 2025, represents assets held for sale located in the U.S. The $607,000 as of July 28, 2024, represents assets held for sale of $357,000 and $250,000 located in the U.S. and Haiti, respectively. The $2.2 million as of April 27, 2025, represents assets held for sale located in Canada. (4) The $956,000 as of August 3, 2025, represents property, plant, and equipment of $897,000 and $59,000 located in the U.S. and China, respectively. The $1.1 million as of July 28, 2024, represents property, plant, and equipment of $990,000 and $108,000 located in the U.S. and China, respectively. The $1.0 million as of April 27, 2025, represents property, plant, and equipment of $940,000 and $70,000 located in the U.S. and China, respectively. (5) The $2.2 million as of August 3, 2025, represents right of use assets of $1.4 million and $771,000 located in China and the U.S., respectively. The $1.5 million as of July 28, 2024, represents right of use assets of $1.1 million and $393,00 located in U.S. and China, respectively. The $2.7 million as of April 27, 2025, represents right of use assets of $1.7 million and $1.0 million located in China and the U.S., respectively. (6) The $535,000, $534,000, and $567,000 as of August 3, 2025, July 28, 2024, and April 27, 2025, respectively, represents property, plant, and equipment located in the U.S. (7) The $3.0 million, $2.4 million, and $3.1 million as of August 3, 2025, July 28, 2024, and April 27, 2025, respectively, represent right of use assets located in the U.S. Information about capital expenditures and depreciation expense for our operating segments follows:
|  | Three months ended |
(dollars in thousands) |  | August 3, 2025 |  |  | July 28, 2024 |
Capital expenditures (1): |  |  |  |  |  |
Bedding |  | $ | 100 |  |  | $ | 134 |
Upholstery |  |  | 50 |  |  |  | 68 |
Non-Segment |  |  | 14 |  |  |  | 12 |
Total capital expenditures |  | $ | 164 |  |  | $ | 214 |
Depreciation expense: |  |  |  |  |  |
Bedding |  | $ | 889 |  |  | $ | 1,284 |
Upholstery |  |  | 40 |  |  |  | 39 |
Selling, general and administrative |  |  | 182 |  |  |  | 258 |
Total depreciation expense |  | $ | 1,111 |  |  | $ | 1,581 |
Accelerated depreciation expense (2) (3) |  |  | 22 |  |  |  | 875 |
Total |  | $ | 1,133 |  |  | $ | 2,456 |
(1) Capital expenditure amounts are stated on an accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis. (2) During the three-month period ended August 3, 2025, accelerated depreciation expense totaling $22,000 related to the upholstery segment and was classified within restructuring credit in the Consolidated Statements of Net Loss. The accelerated depreciation expense pertained to the shortening of useful lives of equipment related to the consolidation of distribution activities from our Burlington, North Carolina facility to the manufacturing and distribution center located in Stokesdale, North Carolina. (3) During the three-month period ended July 28, 2024, accelerated depreciation expense totaling $875,000 related to the bedding segment and was classified within restructuring expense in the Consolidated Statements of Net Loss. The accelerated depreciation expense related to the shortening of useful lives of equipment associated with the closure of our operations located in Quebec, Canada.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482810/280-10-50-21 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name 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