On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to: (1) consolidate the company's North American bedding operations, including the closure and sale of the Property located in Quebec, Canada; (2) 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; (3) transition the bedding segment's weaving operation to a strategic sourcing model through the company's long-standing supply partners; (4) 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; and (5) reduce unallocated corporate and shared service expenses.

These restructuring activities were completed by the end of the second quarter of fiscal 2026, including the sale of Property located in Quebec, Canada. Accordingly, we recorded a gain from the sale of this Property totaling $4.0 million that was classified within restructuring credit in the fiscal 2026 Consolidated Statement of Net Loss. See Notes 7 and 8 to the consolidated financial statements for further details regarding the Sales Agreement associated with the sale of Property and determination of fair value.

Since the inception of this restructuring initiative, we have incurred cumulative restructuring and restructuring related charges totaling $5.3 million, most of which is related to the bedding segment. Of this total $5.3 million, $7.2 million represents a cash restructuring and restructuring related charge partially offset by $(1.9) million represents a non-cash restructuring credit.

On April 24, 2025 (fourth quarter of fiscal 2025), the company announced a strategic transformation of its operating model that combined certain activities within the bedding and upholstery segments and created one integrated Culp-branded business. As part of this strategic transformation, we closed a leased facility located in Burlington, North Carolina and a leased facility in Knoxville, Tennessee, each operated by our upholstery segment, and transitioned their production and distribution activities to a shared management model within our owned facility located in Stokesdale, North Carolina, which had historically been operated solely by our bedding segment.

These restructuring activities were completed by the end of the fourth quarter of fiscal 2026. Since the inception of this restructuring initiative, we have incurred restructuring and restructuring related charges totaling $2.7 million, of which $1.4 million represents a cash restructuring and related charge and $1.3 million represents a non-cash restructuring charge.

During the third quarter of fiscal 2023, CUF Haiti entered into an agreement to terminate a lease associated with one of its facilities and moved the production of upholstery cut and sewn kits to an existing facility leased by 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 production of upholstery cut and sewn kits in Haiti.

This restructuring activity commenced during the third quarter of fiscal 2023 and was completed during the third quarter of fiscal 2024. It resulted in a cumulative restructuring and restructuring related charge of $1.3 million.

See Note 7 to the consolidated financial statements for further details regarding the agreement to terminate the above mentioned lease and the establishment of a note receivable.

During the fourth quarter of fiscal 2024, we closed our upholstery finishing operation in China to align with current demand trends. This restructuring activity was completed during the first quarter of fiscal 2025 and resulted in a cumulative restructuring and restructuring related charge totaling $218,000.

The following summarizes restructuring (credit) expense and restructuring related charges associated with all the restructuring activities described above:


(dollars in thousands)		2026			2025			2024
Net (gain) loss from the sale and impairment of property, plant, and equipment	$	(3,754	)	$	(16	)	$	329
Loss on disposal, valuation, and markdowns of inventory		931			1,621			40
Facility consolidation and relocation expenses		543			2,437			—
Impairment of intangible asset		291			540			—
Other associated costs		284			1,038			—
Employee termination benefits		164			1,552			307
Additional depreciation expense for shortened useful lives of equipment		112			1,339			—
Lease termination costs		37			849			—
Restructuring (credit) expense and restructuring related charges (1) (2) (3)	$	(1,392	)	$	9,360		$	676

(1) Of the total $(1.4) million net restructuring credit, a $(2.3) million credit and a $931,000 charge were classified within restructuring credit and cost of sales, respectively, in the fiscal 2026 Consolidated Statement of Net Loss. Of the total $(1.4) million net restructuring credit and restructuring related charge, a credit of $(3.1) million and a charge of $1.7 million related to bedding and upholstery segments, respectively. Of the total $(1.4) million net restructuring credit and restructuring related charge, a credit of $(3.4) million and a charge of $2.0 million related to the restructuring activities announced on May 1, 2024, and April 24, 2025, respectively.

(2) Of the total $9.4 million restructuring and restructuring related charge, $7.7 million and $1.6 million were classified within restructuring expense and cost of sales, respectively, in the fiscal 2025 Consolidated Statement of Net Loss. Of the $9.4 million restructuring and restructuring related charge, $8.5 million, $540,000, and $290,000 related to the bedding segment, unallocated corporate, and the upholstery segment, respectively. Of the total $9.4 million restructuring and restructuring related charge, $8.7 million and $676,000 related to restructuring activities announced on May 1, 2024, and April 24, 2025, respectively.

(3) Of the total $676,000 restructuring and restructuring related charge, $636,000 and $40,000 were classified within restructuring expense and cost of sales, respectively in the fiscal 2024 Consolidated Statement of Net Loss. The entire $676,000 related to the upholstery segment and the other restructuring activities prior to fiscal 2025.


	Employee			Other			Facility Consolidation
	Termination			Associated			and Relocation
(dollars in thousands)	Benefits			Costs			Costs			Total
Balance, April 30, 2023	$	—		$	—		$	—		$	—
Expenses incurred		307			—			—			307
Change in estimate adjustments		—			—			—			—
Payments		(304	)		—			—			(304	)
Effects of foreign currency		—			—			—			—
Balance, April 28, 2024 (1)		3			—			—			3
Expenses incurred		1,667			1,046			2,437			5,150
Change in estimate adjustments		(115	)		(8	)		—			(123	)
Payments		(1,022	)		(940	)		(2,435	)		(4,397	)
Effects of foreign currency		(11	)		(10	)		(2	)		(23	)
Balance, April 27, 2025		522			88			—			610
Expenses incurred		265			300			549			1,114
Change in estimate adjustments		(101	)		(16	)		(6	)		(123	)
Payments		(649	)		(372	)		(533	)		(1,554	)
Effects of foreign currency		—			—			—			—
Balance, May 3, 2026	$	37		$	—		$	10		$	47

(1) Accrued restructuring was reported within accrued expenses within the Consolidated Balance Sheet as of April 28, 2024.