v3.26.1
Segment Information
 3 Months Ended
Aug. 02, 2026
Segment Reporting [Abstract]  
Segment Information

14. Segment Information

During the first quarter of fiscal 2026, we renamed our two reportable 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 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 combined certain activities within the bedding and upholstery business segments and created one integrated Culp-branded business. As part of this strategic transformation, we closed a leased facility 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. See Note 10 to 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 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 (e.g., restructuring activities and tariff refunds), 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 (e.g., restructuring activities and tariff refunds). 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 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 (e.g., restructuring related charges and credits and tariff refunds), (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 segments are as follows:

 

 

 

Three Months Ended

 

 

 

August 2, 2026

 

 

August 3, 2025

 

Net sales by segment:

 

 

 

 

 

 

Bedding

 

$

31,750

 

 

$

28,046

 

Upholstery

 

 

22,223

 

 

 

22,645

 

Net sales

 

$

53,973

 

 

$

50,691

 

Cost of sales by segment:

 

 

 

 

 

 

Bedding

 

$

27,442

 

 

$

25,104

 

Upholstery

 

 

18,093

 

 

 

18,359

 

Total segment cost of sales

 

$

45,535

 

 

$

43,463

 

     Tariff refunds (1)

 

 

(6,940

)

 

 

—

 

Cost of sales

 

$

38,595

 

 

$

43,463

 

Gross profit by segment:

 

 

 

 

 

 

Bedding

 

$

4,308

 

 

$

2,942

 

Upholstery

 

 

4,130

 

 

 

4,286

 

Total segment gross profit

 

$

8,438

 

 

$

7,228

 

      Tariff refunds (1)

 

 

6,940

 

 

 

—

 

Gross profit

 

$

15,378

 

 

$

7,228

 

Selling, general, and administrative expenses

 

 

(8,709

)

 

 

(9,119

)

Restructuring credit (2)

 

 

—

 

 

 

3,508

 

Income from operations

 

$

6,669

 

 

$

1,617

 

Interest expense

 

 

(155

)

 

 

(183

)

Interest income

 

 

134

 

 

 

235

 

Other income (expense)

 

 

201

 

 

 

(531

)

Income before income taxes

 

$

6,849

 

 

$

1,138

 

 

 

(1) During the three-month period ended August 2, 2026, the $6.9 million represents the amount received from the U.S. Customs and Border Protection Agency as a recovery of previously incurred tariff expenses under the International Emergency Economic Powers Act ("IEEPA"). The $6.9 million excludes interest and was recorded within cost of sales in the Consolidated Statement of Net Income for the three months ended August 2, 2026. See Note 18 to the consolidated financial statements for further details.

 

 

 

 

(2) For the three-month period ended August 3, 2025, the $3.5 million restructuring credit mostly represented a gain from the sale of Property, 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.

 

Balance sheet information for our segments follows:

 

(dollars in thousands)

 

August 2, 2026

 

 

August 3, 2025

 

 

May 3, 2026

 

Segment assets:

 

 

 

 

 

 

 

 

 

Bedding:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

10,035

 

 

$

10,216

 

 

$

10,657

 

Inventory

 

 

26,727

 

 

 

35,102

 

 

 

31,757

 

Property, plant and equipment (1)

 

 

19,039

 

 

 

22,061

 

 

 

19,755

 

Right of use assets (2)

 

 

—

 

 

 

50

 

 

 

—

 

Assets held for sale (3)

 

 

—

 

 

 

40

 

 

 

—

 

Total bedding assets

 

 

55,801

 

 

 

67,469

 

 

 

62,169

 

Upholstery:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

10,240

 

 

 

8,166

 

 

 

9,712

 

Inventory

 

 

15,526

 

 

 

15,007

 

 

 

15,737

 

Property, plant and equipment (4)

 

 

641

 

 

 

956

 

 

 

708

 

Right of use assets (5)

 

 

312

 

 

 

2,159

 

 

 

496

 

Total upholstery assets

 

 

26,719

 

 

 

26,288

 

 

 

26,653

 

Total segment assets

 

 

82,520

 

 

 

93,757

 

 

 

88,822

 

Non-segment assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

10,235

 

 

 

11,094

 

 

 

8,273

 

Short-term investments - rabbi trust

 

 

1,524

 

 

 

1,395

 

 

 

1,477

 

Short-term notes receivable

 

 

328

 

 

 

5,104

 

 

 

297

 

Current income taxes receivable

 

 

—

 

 

 

—

 

 

 

142

 

Other current assets

 

 

4,138

 

 

 

2,767

 

 

 

2,645

 

Long-term notes receivable

 

 

788

 

 

 

1,078

 

 

 

885

 

Deferred income taxes

 

 

507

 

 

 

475

 

 

 

503

 

Property, plant and equipment (6)

 

 

508

 

 

 

535

 

 

 

550

 

Right of use assets (7)

 

 

2,330

 

 

 

2,953

 

 

 

2,488

 

Intangible assets

 

 

323

 

 

 

865

 

 

 

355

 

Long-term investments - rabbi trust

 

 

4,757

 

 

 

5,715

 

 

 

4,991

 

Other assets

 

 

528

 

 

 

676

 

 

 

562

 

Total assets

 

$

108,486

 

 

$

126,414

 

 

$

111,990

 

 

 

(1)
The $19.0 million as of August 2, 2026, represents property, plant, and equipment of $18.1 million and $855,000 located in the U.S. and Haiti, respectively. 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 $19.8 million as of May 3, 2026, represents property, plant, and equipment of $18.9 million, and $825,000 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.
(3)
The $40,000 as of August 3, 2025, represents assets held for sale located in the U.S.
(4)
The $641,000 as of August 2, 2026, represents property, plant, and equipment of $590,000, $30,000 and $21,000 located in the U.S., Vietnam, and China, respectively. 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 $708,000 as of May 3, 2026, represents property, plant, and equipment of $642,000, $37,000, and $29,000 located in the U.S., Vietnam, and China, respectively.
(5)
The $312,000 as of August 2, 2026, represents right of use assets of $265,000 and $47,000 located in China and the U.S., respectively. 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 $496,000 as of May 3, 2026, represents right of use assets of $421,000 and $75,000 located in China and the U.S., respectively.
(6)
The $508,000, $535,000, and $550,000 as of August 2, 2026, August 3, 2025, and May 3, 2026, respectively, represent property, plant, and equipment located in the U.S.
(7)
The $2.3 million, $3.0 million, and $2.5 million as of August 2, 2026, August 3, 2025, and May 3, 2026, respectively, represent right of use assets located in the U.S.

 

Capital expenditures and depreciation expense information for our segments follows:

 

 

 

 

Three Months Ended

 

(dollars in thousands)

 

August 2, 2026

 

 

August 3, 2025

 

Capital expenditures (1):

 

 

 

 

 

 

Bedding

 

$

86

 

 

$

100

 

Upholstery

 

 

—

 

 

 

50

 

Non-Segment

 

 

—

 

 

 

14

 

Total capital expenditures

 

$

86

 

 

$

164

 

Depreciation expense:

 

 

 

 

 

 

Bedding

 

$

688

 

 

$

889

 

Upholstery

 

 

40

 

 

 

40

 

Selling, general and administrative

 

 

183

 

 

 

182

 

Total depreciation expense

 

$

911

 

 

$

1,111

 

Accelerated depreciation expense (2)

 

 

—

 

 

 

22

 

Total

 

$

911

 

 

$

1,133

 
(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 our manufacturing and distribution center located in Stokesdale, North Carolina.