v3.26.1
Discontinued Operations
 3 Months Ended
May 03, 2026
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3. Discontinued Operations

 

During the third quarter of fiscal 2026, we determined that the Home Meridian segment no longer aligned with our long-term strategy to streamline our portfolio and enhance profitability by focusing on brands that generate consistent earnings. As a result, we initiated a process to sell two brands in the segment. On December 1, 2025, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with a buyer to sell the Company’s Pulaski Furniture (“PFC”) and Samuel Lawrence (“SLF”) casegoods brands, including specified assets and liabilities associated with those brands. We retain the Samuel Lawrence brand in connection with the operation of its hospitality business.

On December 12, 2025, the Company completed the sale and received cash proceeds of approximately $5.5 million, representing the estimated net book value of the assets at closing, less a holdback amount of approximately $0.6 million, in accordance with the terms of the purchase agreement. Final transaction pricing, including working capital adjustments, resulted in a difference of approximately $0.3 million between the estimated fair value less costs to sell determined at the measurement date and the final net proceeds received.

 

Following the sale, the Home Meridian segment was eliminated, with its remaining Samuel Lawrence Hospitality brand reclassified into the “All Other” category.

 

We believe this transaction represented a single disposal plan that constituted a strategic shift that materially affects our operations and financial results. Accordingly, the financial results of the PFC and SLF businesses are reflected in our consolidated financial statements as discontinued operations for all periods presented.

 

The following table represents summarized statements of operations information of carrying amounts of major classes of line items constituting pretax loss of discontinued operations included as part of discontinued operations for the first quarter of fiscal 2026:

 

   For the 
   Thirteen Weeks Ended 
   May 3,   May 4, 
   2026   2025 
         
Net sales  $     -   $14,133 
           
Cost of sales   -    12,850 
           
Gross profit   -    1,283 
           
Selling and administrative expenses   -    4,102 
Trade name impairment charges   -    - 
Intangible asset amortization   -    246 
Other income items that are not major   -    (28)
           
Loss from discontinued operations before income taxes   -    (3,037)
           
Income tax benefit   -    (599)
           
Net loss from discontinued operations   -    (2,438)

The significant components included in our condensed consolidated statements of cash flows for the discontinued operations are as follows:

 

   For the 
   Thirteen Weeks Ended 
   May 3,   May 4, 
   2026   2025 
Operating Activities:        
Loss from discontinued operations, net of tax  $          -   $(2,438)
Depreciation and amortization   -    436 
Changes in assets and liabilities:          
Trade accounts receivable, net   -    6,004 
Inventories   -    1,128 
Trade accounts payable   -    (9,873)
Other assets and liabilities   -    190 
Cash used in operating activities from discontinued operations  $-   $(4,553)
           
Investing Activities:          
Purchase of properties and equipment   -    (124)
Cash used in investing activities from discontinued operations  $-   $(124)