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Restructuring Activities | 3 Months Ended
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Aug. 03, 2025
Restructuring and Related Activities [Abstract] |
Restructuring Activities | 10. Restructuring Activities Restructuring Activities Announced May 1, 2024 On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to: (i) consolidate the company's North American mattress fabrics operations, including the closure and sale of the Property located in Quebec, Canada; (ii) move a portion of the knitting and finishing capacity from the company's manufacturing facility located in Quebec, Canada, to the company's manufacturing facility located in Stokesdale, North Carolina; (iii) transition the bedding segment's weaving operation to a strategic sourcing model through the company's long-standing supply partners; (iv) consolidate the company's sewn mattress cover operation located in Ouanaminthe, Haiti, from two leased facilities into one building and reduce other operating expenses at this location; as well as (v) reduce unallocated corporate and shared service expenses. As of the end of the first quarter of fiscal 2026, all of the above restructuring activities related to this announcement have been completed, including the sale of the Property and certain equipment located in Quebec, Canada. Accordingly, we recorded a gain from the sale of this Property and equipment totaling $4.0 million that was classified within restructuring credit in the Consolidated Statement of Net Loss for the period ended August 3, 2025. See notes 7 and 8 of the consolidated financial statements for further details regarding the Sales Agreement associated with the sale of the Property and determination of fair value regarding the Property and equipment. During three months ended August 3, 2025, we recorded a restructuring credit of $3.9 million that was mostly related to the gain on sale of the Property noted above and was solely related to the bedding segment. Since inception of this restructuring initiative, we incurred cumulative restructuring and restructuring related charges totaling $4.8 million, most of which related to the bedding segment. Restructuring Activities Announced April 24, 2025 On April 24, 2025 (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 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, which has historically been solely operated by our bedding segment. During the three months ended August 3, 2025, we incurred restructuring expense of $349,000 related to this strategic transformation, of which $256,000 and $93,000 relate to the bedding and upholstery segments, respectively. The estimated cumulative restructuring and restructuring related charges for this initiative are expected to be $2.2 million, of which $674,000 is expected to be cash expenditures. The $2.2 million of estimated cumulative restructuring and restructuring related charges associated with this initiative represents: (i) a non-cash charge for impairment of Read's tradename totaling $540,000 (see Note 6 located in the notes to the consolidated financial statements for further details); (ii) a non-cash charge of $450,000 associated with the disposal and markdowns of inventory; (iii) non-cash lease termination costs of $125,000; (iv) non-cash accelerated depreciation expense, along with impairments and losses on disposal of fixed assets totaling $424,000; (v) cash charges for employee termination benefits of $207,000; (vi) cash charges for facility consolidation and relocation expenses of $432,000; (vii) and cash charges for other associated costs of $35,000. We expect the initiatives associated with this strategic transformation to be substantially completed by December 31, 2025. The following summarizes restructuring and restructuring related charges associated with the above announcements for the three month periods ended August 3, 2025 and July 28, 2024:
|  | Three Months Ended |  |  | Three Months Ended |
(dollars in thousands) |  | August 3, 2025 |  |  | July 28, 2024 |
Additional depreciation expense for shortened useful lives |  | $ | 22 |  |  | $ | 875 |
Employee termination benefits |  |  | (4 | ) |  |  | 689 |
Lease Termination Costs |  |  | 62 |  |  |  | 670 |
Facility consolidation and relocation expenses |  |  | 52 |  |  |  | 251 |
Net (gain) loss on sale and impairment of property, plant, and equipment |  |  | (3,747 | ) |  |  | 95 |
Other Associated Costs |  |  | 107 |  |  |  | 51 |
Loss on disposal and markdowns of inventory |  |  | — |  |  |  | 116 |
Restructuring (credit) expense and restructuring related charge (1) (2) |  | $ | (3,508 | ) |  | $ | 2,747 |
(1) The total $3.5 million credit was classified within restructuring credit in the Consolidated Statement of Net Loss for the three-month period ended August 3, 2025. The $3.5 million restructuring credit mostly related to the bedding segment. (2) Of the total $2.7 million restructuring and restructuring related charges, $2.6 million and $116,000 were classified within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the three month period ended July 28, 2024. The $2.7 million expense mostly related to the bedding fabrics segment. The following summarizes accrued restructuring costs for the three-month period ended August 3, 2025:
|  | Employee |  |  | Other |  |  | Facility Consolidation |  |  |  |
|  | Termination |  |  | Associated |  |  | and Relocation |  |  |  |
(dollars in thousands) |  | Benefits |  |  | Costs |  |  | Costs |  |  | Total |
Beginning balance |  | $ | 522 |  |  | $ | 88 |  |  | $ | — |  |  | $ | 610 |
Expenses incurred |  |  | — |  |  |  | 84 |  |  |  | 52 |  |  |  | 136 |
Change in estimate adjustments |  |  | (4 | ) |  |  | 23 |  |  |  | — |  |  |  | 19 |
Payments |  |  | (446 | ) |  |  | (163 | ) |  |  | (52 | ) |  |  | (661 | )
Foreign currency exchange remeasurement |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Ending Balance |  | $ | 72 |  |  | $ | 33 |  |  | $ | — |  |  | $ | 105 |
The following summarizes accrued restructuring costs for the three-month period ended July 28, 2024:
|  | Employee |  |  | Other |  |  | Facility Consolidation |  |  |  |
|  | Termination |  |  | Associated |  |  | and Relocation |  |  |  |
(dollars in thousands) |  | Benefits |  |  | Costs |  |  | Costs |  |  | Total |
Beginning balance (1) |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | 3 |
Expenses incurred |  |  | 689 |  |  |  | 302 |  |  |  | — |  |  |  | 991 |
Payments |  |  | (72 | ) |  |  | (282 | ) |  |  | — |  |  |  | (354 | )
Foreign currency exchange remeasurement |  |  | (7 | ) |  |  | — |  |  |  | — |  |  |  | (7 | )
Ending Balance |  | $ | 610 |  |  | $ | 23 |  |  | $ | — |  |  | $ | 633 |
(1) Accrued restructuring expense of $3,000 was reported within accrued expenses in the Consolidated Balance Sheet for the period ended April 28, 2024.

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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 S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4.e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479823/420-10-S99-2 Reference 2: 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 3: 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 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/420/tableOfContent Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 + Details
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