CULP INC
For the period ended Aug 2, 2026. Filed Sep 11, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 2, 2026 · Filed Sep 11, 2026
CULP$3.60-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-02-01; filed 2026-03-13.
0001193125-26-105579
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-08-02; filed 2026-09-11.
0001193125-26-388759
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 183 previous paragraphs and 160 current paragraphs.
64 unchanged; 50 reworded; 45 added; 68 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 18 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (45)
Current report
During fiscal 2026, as part of the strategic transformation noted above, we closed a leased upholstery facility located in Burlington, North Carolina, and transitioned its distribution activities to a shared management model within our owned facility located in Stokesdale, North Carolina. Our Stokesdale, North Carolina facility had historically been operated solely by our bedding segment. See Note 10 of the consolidated financial statements for further details regarding this restructuring activity.
Current report
Net sales increased despite the first quarter comprising a 13-week selling period versus 14 weeks in the comparable quarter. This sales growth was achieved notwithstanding continued challenges in the home furnishings industry, including softness in consumer spending and housing-related activity affecting demand, as well as ongoing uncertainty associated with global trade and tariff conditions.
Current report
The increase in sales was primarily attributable to the bedding segment, which reported sales growth of more than 13% compared to the prior-year period despite the continued low-demand market environment and having one fewer shipping week during the quarter. In the upholstery segment, sales were within range of the comparable quarter when considering the shorter selling period. In addition, we saw some indications during the quarter that demand in residential upholstery, which represents our largest upholstery end market, may be stabilizing.
Current report
We continue to believe that demand in our core bedding and furniture markets should improve over the longer term and that our commercial strategies will support additional revenue growth, particularly if bedding industry replacement-cycle trends develop as anticipated. However, the timing and extent of any recovery remain dependent on a sustained improvement in housing activity and discretionary consumer spending.
Current report
Despite the current macroeconomic environment, we have continued to expand our presence in select channels and believe customers increasingly recognize the benefits of our global manufacturing and sourcing platform, including substantial U.S. production capabilities. We believe these capabilities are particularly relevant as customers evaluate supply chain cost structures and reliability in light of ongoing trade and tariff developments. We also believe that our actions to restructure our bedding platform, integrate U.S. distribution operations, and consolidate our production footprint in China strengthen our operating foundation and, coupled with our expertise in product development and customer service, position the company to pursue additional market opportunities and grow as macroeconomic conditions and other factors affecting demand improve.
Current report
Our consolidated gross profit for the first quarter of fiscal 2027 was $15.4 million, an increase of $8.2 million, or 112.8%, compared with consolidated gross profit of $7.2 million for the first quarter of fiscal 2026, with bedding gross profit increasing by 190.4%, and upholstery gross profit increasing 59.4%. Consolidated profit margin increased by 1,420 basis points from 14.3% during the first quarter of fiscal 2026 to 28.5% during the first quarter of fiscal 2027.
Current report
The increase in overall gross profitability for the quarter primarily reflects the recognition of recoveries of previously incurred tariff expenses under the International Emergency Economic Powers Act ("IEEPA"), which were recorded as a reduction to cost of sales, as well as higher sales volumes and operational efficiencies resulting from the company's restructured and integrated operating platform.
Current report
Overall, our consolidated income before income taxes for the first quarter of fiscal 2027 was $6.8 million, an increase of $5.7 million or 501.8%, compared with income before income taxes of $1.1 million for the same period a year ago.
Current report
Operating performance for the quarter benefited from a one-time recovery of expenses previously incurred in connection with IEEPA tariffs and continued to benefit from lower costs and operational efficiencies resulting from the Company's restructured bedding manufacturing platform. Operating performance also continued to benefit from additional initiatives to reduce selling, general and administrative expenses, implement price increases to offset the impact of tariffs and higher petrochemical costs, and further integrate the upholstery business.
Current report
During the first quarter of fiscal 2027, we experienced pre-tax income from our U.S. operations that mostly related to tariff refunds totaling $6.9 million (see note 18 to the consolidated financial statements for further details). As a result, we partially reversed our full U.S. valuation allowance, which decreased the effective income tax rate by 12.9%. In comparison, during the first quarter of fiscal 2026, we experienced a pre-tax loss from our U.S. operations that mostly related to our recent restructuring activities (see note 10 to the consolidated financial statements for further details). Accordingly, a full U.S. allowance was applied against the fiscal 2026 loss carryforward, which led to an increase in the effective income tax rate of 60.4%.
Current report
During the first quarter of fiscal 2026, we recognized a gain from the closure and sale of our manufacturing facility located in Quebec, Canada, which increased the effective income tax rate by 15.9%. No such transactions occurred during the first quarter of fiscal 2027.
Current report
As of the end of the first quarter of fiscal 2027, we determined that our foreign operations were expected to meet the high tax exception test related to Net CFC Tested Income (NCTI) for the full year fiscal 2027, and therefore the company currently expects not to have a NCTI inclusion and incur income tax. Accordingly, there was no impact on the effective income tax rate for the first quarter of fiscal 2027. In comparison, as of the end of the first quarter of fiscal 2026, we determined that certain foreign jurisdictions were not expected to meet the high tax exception test related to NCTI for the full year fiscal 2026, and therefore, the company had a NCTI inclusion and incurred income taxes, which led to an increase in the effective income tax rate of 12.6%.
Current report
Our net cash provided by operating activities of $8.1 million improved during the first quarter of fiscal 2027, compared with net cash used in operating activities of $(695,000) during the first quarter of fiscal 2026. This trend mostly reflects: (i) cash proceeds totaling $6.9 million related to tariff refund claims, and (ii) a decrease in inventory purchases due to improved alignment with current customer demand trends, partially offset by faster cash collections with key international upholstery customers during the first quarter of fiscal 2026, which did not occur during the first quarter of fiscal 2027.
Current report
For further discussion, see “—Liquidity and Capital Resources,” below.
Current report
Bedding net sales increased 13.2% during the first quarter of fiscal 2027, compared with the same period a year ago.
Current report
Our bedding business generated double-digit sales growth during the quarter despite operating within a shorter 13-week selling cycle compared to the 14-week selling period in the prior-year quarter and against the backdrop of continued softness in overall bedding industry demand. We believe this performance reflects ongoing progress in the implementation of our commercial strategies and continued momentum in targeted product categories, including sewn mattress covers and knitted fabrics. Our customers continue to recognize the benefits of the sourcing flexibility offered by our global manufacturing network and domestic production capabilities, particularly as supply chain economics, lead times, and continuity of supply remain areas of heightened focus in the current trade and tariff environment.
Current report
Although we have observed signs that conditions across the bedding sector may be becoming more stable, the broader demand recovery anticipated by many industry participants as replacement activity normalizes has yet to emerge. Accordingly, we remain focused on strengthening relationships with key customers, expanding product placements, securing incremental business opportunities, and increasing market penetration in selected categories.
Current report
Looking ahead, we believe that a more meaningful acceleration in bedding demand will depend in part on improvements in broader economic conditions, including factors that influence consumer confidence, housing-related activity, and discretionary spending. In addition, geopolitical uncertainties, including the ongoing conflicts in Ukraine and the Middle East, continue to present risks to global economic activity and trade flows, which could adversely affect market demand, customer purchasing trends, supply chains, and future sales performance.
Current report
Gross profit in the bedding segment (which does not include the impact of the tariff-related recoveries) was $4.3 million for the first quarter of fiscal 2027, an increase of $1.4 million or 46.4%, compared with gross profit of $2.9 million for the same period a year ago.
Current report
The increase in gross profit from the comparable quarter was attributable primarily to revenue growth and lower manufacturing costs and productivity gains realized through the fiscal 2025 restructuring of the bedding segment. Gross profitability in the bedding segment also benefited from pricing initiatives and stronger margin performance.
Current report
As of August 2, 2026, inventory of $26.7 million has steadily decreased compared with inventory of $35.1 million and $31.8 million as of August 3, 2025, and May 3, 2026, respectively. This decrease in inventory is due to improved alignment of inventory purchases with current customer demand trends and a strategic focus on reducing aged inventory.
Current report
As of August 2, 2026, and May 3, 2026, there were no right of use assets as a result of the completion of our restructuring activities during fiscal 2026. The $50,000 as of August 3, 2025, represents a right of use asset located in Haiti that was subsequently terminated during the second quarter of fiscal 2026.
Current report
As of August 2, 2026, and May 3, 2026, no assets were classified as held for sale as a result of the completion of our restructuring activities during fiscal 2026. The $40,000 as of August 3, 2025, represents assets held for sale located in the U.S. that related to the restructuring initiative announced on April 24, 2025.
Current report
Net sales in our upholstery fabrics segment continued to be affected by challenging macroeconomic conditions, including subdued housing activity, weakened consumer confidence, reduced discretionary spending, and ongoing uncertainty related to trade policies and tariffs, particularly within the residential furniture market, which represents our largest upholstery end-use category. Despite these market headwinds, overall sales remained generally comparable period-over-period considering the shorter 13-week selling period in the current quarter compared to the 14-week selling period in the prior-year quarter. We also observed indications of improved demand consistency within portions of the residential upholstery market during the quarter. In addition, our hospitality and commercial upholstery businesses experienced favorable sales growth and benefited from improving market conditions in some areas.
Current report
Looking ahead, we anticipate that conditions within the home furnishings industry will remain uncertain in the near term and may continue to be influenced by current macroeconomic trends. Nevertheless, as market conditions improve and a broader recovery in the furnishing sector develops, we believe our recently completed integration and optimization initiatives within the upholstery segment, together with our product development capabilities and supply chain optionality, will enhance our ability to support future revenue growth and capitalize on improving demand trends.
Current report
Gross profit (which does not include the impact of the tariff-related recoveries) was $4.1 million for the first quarter of fiscal 2027, a decrease of (3.6)%, compared with gross profit of $4.3 million for the same period a year ago.
Current report
Our upholstery segment was able to sustain relatively consistent operating margins despite continued weakness in the home furnishings industry and challenging conditions within the residential upholstery market. Market demand remained constrained by a combination of factors, including shifts in consumer spending behavior, uncertainty surrounding global trade policies and tariff actions, persistent inflationary pressures, reduced housing market activity, and other macroeconomic conditions affecting discretionary consumer purchases. Collectively, these factors continued to limit demand and impact profitability during the period.
Current report
Looking ahead, we expect the subdued demand environment in our residential furniture markets to continue to pressure sales volumes and profitability within the upholstery segment until broader macroeconomic conditions improve. Nevertheless, we believe recent operational initiatives have strengthened the segment's long-term earnings profile. We recently completed the integration of our U.S. upholstery distribution and window treatment operations into our company-owned facility in North Carolina and further streamlined our upholstery operations in China. These actions are expected to improve operating efficiency, increase utilization of existing resources, reduce costs, and enhance the overall profitability of the upholstery segment. As industry demand recovers, we believe these initiatives position the segment to achieve greater operating leverage and improved financial performance.
Current report
Management will continue to closely monitor market conditions and evaluate additional opportunities to optimize operations and align the segment's cost structure with prevailing demand levels. While maintaining a disciplined approach to expense management, we remain focused on preserving customer service levels, supporting key customer relationships, and maintaining the operational flexibility necessary to respond to changing market conditions and future growth opportunities.
Current report
As of August 2, 2026, accounts receivable of $10.2 million was higher than accounts receivable of $8.2 million and $9.7 million as of August 3, 2025, and May 3, 2026, respectively. The increase in accounts receivable reflects a higher sales mix with key international customers who had longer payment trends during the first quarter of fiscal 2027, compared with the first quarter and fourth quarters of fiscal 2026, respectively. Accordingly, days sales outstanding was 41 days for the first quarter of fiscal 2027, compared with 32 days and 33 days for the first quarter and fourth quarters of fiscal 2026, respectively.
Current report
As of August 2, 2026, inventory of $15.5 million was consistent with inventory of $15.0 million and $15.7 million as of August 3, 2025, and May 3, 2026, respectively. This trend reflects consistent alignment of inventory purchases with current customer demand trends.
Current report
As of August 2, 2026, right of use assets of $312,000 decreased by $184,000, or 37.1%, compared with $496,000 as of May 3, 2026. This decrease mostly represents rent expense incurred over the terms of the existing respective lease agreements.
Current report
(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, and mostly related to the bedding segment.
Current report
The decrease in interest expense during the first quarter of fiscal 2027, compared with the first quarter of fiscal 2026, reflects a decrease in outstanding borrowings under our line of credit agreement associated with our U.S. operations. As of August 2, 2026, there were no outstanding borrowings under our line of credit agreement associated with our U.S. operations, compared with $7.0 million as of August 3, 2025, and May 3, 2026, respectively.
Current report
The decrease in interest income during the first quarter of fiscal 2027, compared with the first quarter of fiscal 2026, represents cash proceeds received on the entire remaining balance of our note receivable that occurred during the fourth quarter of fiscal 2026. This note receivable is associated with the sale of the Property.
Current report
During the first quarter of fiscal 2027, we experienced pre-tax income from our U.S. operations that mostly related to tariff refunds totaling $6.9 million (see note 18 to the consolidated financial statements for further details). As a result, we partially reversed our full U.S. valuation allowance, which decreased the effective income tax rate by 12.9%. In comparison, during the first quarter of fiscal 2026, we experienced a pre-tax loss from our U.S. operations that mostly related to our recent restructuring activities (see note 10 to the consolidated financial statements for further details). Accordingly, a full U.S. allowance was applied against the fiscal 2026 loss carryforward, which led to an increase in the effective income tax rate of 60.4%.
Current report
During the first quarter of fiscal 2026, we recognized a gain from the closure and sale of our manufacturing facility located in Quebec, Canada, which increased the effective income tax rate by 15.9%. No such transactions occurred during the first quarter of fiscal 2027.
Current report
As of the end of the first quarter of fiscal 2027, we determined that our foreign operations were expected to meet the high tax exception test related to Net CFC Tested Income (NCTI) for the full year fiscal 2027, and therefore the company currently expects not to have a NCTI inclusion and incur income tax. Accordingly, there was no impact on the effective income tax rate for the first quarter of fiscal 2027. In comparison, as of the end of the first quarter of fiscal 2026, we determined that certain foreign jurisdictions were not expected to meet the high tax exception test related to NCTI for the full year fiscal 2026, and therefore, the company had a NCTI inclusion and incurred income taxes, which led to an increase in the effective income tax rate of 12.6%.
Current report
Our net cash provided by operating activities of $8.1 million improved during the first quarter of fiscal 2027, compared with net cash used in operating activities of $(695,000) during the first quarter of fiscal 2026. This trend mostly reflects: (i) cash proceeds totaling $6.9 million related to tariff refund claims, and (ii) a decrease in inventory purchases due to improved alignment with current customer demand trends, partially offset by faster cash collections with key international upholstery customers during the first quarter of fiscal 2026, which did not occur during the first quarter of fiscal 2027.
Current report
Tariff Reimbursements
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Removed paragraphs (68)
Previous report
Market conditions in the home furnishings and bedding industry remain challenging, with continued softness in consumer spending and housing activity weighing on demand and sales. These pressures, compounded by severe winter weather in the United States that effectively eliminated the final week of shipping during the third quarter in our largest market, as well as ongoing complexity related to global trade and tariff dynamics, drove the decline in consolidated net sales for the quarter. While we remain confident that our core bedding and furniture markets will recover over time, we believe that meaningful improvement will depend on a sustained rebound in housing activity and discretionary consumer spending. Encouragingly, we have observed what we believe may be some early signs of demand stabilization in the bedding segment in recent periods.
Previous report
Despite the difficult macroeconomic environment, we continue to secure new programs with major customers and expand our share of available business in targeted channels. Prior to the weather-related disruptions late in the quarter, our bedding sales were tracking those in the comparable prior-year period. Moreover, we were pleased to see growth during the quarter in our sewn mattress cover product category, which remains a key growth driver within our bedding segment. We also continue to see customers recognize the strategic value of our global footprint and strong U.S. manufacturing capabilities, particularly as the current trade and tariff environment drives increased scrutiny of supply chain cost structures and reliability.
Previous report
The decline in our upholstery sales reflects the broader softness in the home furnishings market and its impact on residential upholstery demand. Notwithstanding these headwinds, we delivered double-digit growth in our upholstery kit product category, an important strategic focus for this segment. Sales in our commercial and hospitality upholstery business also declined year-over-year, as customer demand in these markets was affected by project delays driven by ongoing macroeconomic uncertainty.
Previous report
Although the markets we serve continue to face near-term challenges, we believe we are well positioned for future growth. The recent restructuring of our bedding platform, along with the completion of several additional initiatives during the quarter that should positively impact our upholstery segment—including the integration of our U.S. distribution operations and the consolidation of our production footprint in China—strengthens our operating foundation. Combined with our capabilities in product development and customer service, these actions position us to capture additional market share in the current environment and to accelerate sales growth as industry conditions improve.
Previous report
Consolidated gross profit for the third quarter of fiscal 2026 was $5.3 million, a decrease of $(1.0) million, or (16.1)%, compared with consolidated gross profit of $6.3 million for the third quarter of fiscal 2025, with bedding gross profit decreasing by $(787,000), or (28.7)%, and upholstery gross profit decreasing by $(861,000), or (20.4)%. Consolidated gross profit for the first nine months of fiscal 2026 was $18.3 million, an increase of $920,000, or 5.3%, compared with consolidated gross profit of $17.4 million, for the first nine months of fiscal 2025, with bedding gross profit increasing by $3.1 million, or 64.6%, and upholstery gross profit decreasing by $(2.8) million, or (19.9)%.
Previous report
Overall gross profitability for the quarter was adversely affected by lower sales volumes, unfavorable foreign exchange impacts related to our China upholstery operations, and inventory-related adjustments primarily associated with the completion of our restructuring and integration initiatives, which were partially offset by the benefits of improved selling margins within our bedding business.
Previous report
Overall, our loss before income taxes for the third quarter of fiscal 2026 was $(3.1) million, an improvement of $540,000, or 14.7%, compared with loss before income taxes of $(3.7) million for the same period a year ago. Our loss before income taxes for the first nine months of fiscal 2026 was $(6.1) million, an improvement of $10.3 million, or 62.8%, compared with loss before income taxes of $(16.4) million for the same period a year ago.
Previous report
Although lower comparable sales and other factors adversely affected our operating performance during the quarter, we continue to benefit from the lower costs and efficiencies emanating from our recently restructured bedding manufacturing platform. Our operating performance also continues to benefit from our additional actions to reduce selling, general and administrative expenses and implement price increases to mitigate tariff impacts. Further, the integration of our domestic upholstery distribution and Read window treatment operations into our owned North Carolina facility, along with the reduction of our facility footprint in China, all of which we completed during the quarter, should further strengthen our operating profile going forward.
Previous report
Our consolidated effective income tax rates were adversely affected by the mix of earnings between our U.S. operations and foreign subsidiaries, as our taxable income stemmed from our operations located in China and a gain from the sale of Property located in Canada during the first quarter of fiscal 2026 (see Notes 8 and 10 of the consolidated financial statements for further details), which such jurisdictions have higher income tax rates than the U.S. In addition, we applied a full valuation allowance against our U.S. net deferred income tax assets during the first nine months of fiscal 2026 and 2025. Consequently, an income tax benefit was not recognized for pre-tax losses associated with our U.S. operations totaling $(12.6) million and $(16.8) million that were incurred during the first nine months of fiscal 2026 and 2025, respectively. Lastly, our consolidated effective income tax rates were also adversely affected by pre-tax losses associated with our Haitian operations, which are not subject to income tax. Our Haitian operations are located in an economic zone that permits a 0% income tax rate for the first fifteen years of operations, for which we have seven years remaining. As a result of the 0% income tax rate, an income tax benefit was not recognized for the pre-tax losses associated with our Haitian operations totaling $(657,000) and $(992,000) that were incurred during the first nine months of fiscal 2026 and 2025, respectively.
Previous report
Our net cash used in operating activities of $(2.3) million improved for the first nine months of fiscal 2026, compared with net cash used in operating activities of $(9.4) million during the first nine months of fiscal 2025. This trend mostly reflects: (i) a decrease in cash losses from savings associated with our restructuring activities announced on May 1, 2024, and April 24, 2025 (refer to section titled "-- Segment Analysis -- Consolidated Other Income Statement Categories -- Restructuring Activities" for further details regarding our restructuring initiatives), and (ii) an increase in cash flow from accounts receivable due to faster payment trends with key bedding customers, as well as a lower sales mix with upholstery customers who had longer payments trends; partially offset by a decrease in cash flow from: (i) having more finished goods on hand to accommodate customers during the transition of our restructuring activities related to our bedding segment and to prepare for the supply chain effects of the Chinese New Year Holiday, (ii) rising costs to produce and source inventory, and (iii) tariffs imposed in accordance with U.S. trade policies related to imported products, and (iv) a decline in consumer demand negatively impacting cash flow from accounts payable.
Previous report
Bedding net sales decreased (4.7)% during the third quarter of fiscal 2026, compared with the same period a year ago. Bedding net sales for the first nine months of fiscal 2026 decreased by (0.8)%, compared with the same period a year ago.
Previous report
For both the three and nine-month periods ended February 1, 2026, net sales were negatively impacted by reduced demand, as well as ongoing complexity related to global trade and tariff dynamic and adverse weather conditions. However, despite ongoing market headwinds, the company continues to secure new programs with major bedding manufacturers and expand its share of available business within targeted channels. Prior to severe weather-related disruptions late in the quarter, bedding sales were tracking in line with the prior-year period and we were ultimately able to achieve growth in sewn mattress cover products, which remain a key growth driver in this segment. Our bedding customers continue to value the strategic supply alternatives provided by our global footprint and U.S. manufacturing bases, particularly given the increased emphasis on supply chain cost structures and reliability driven by the current tariff environment.
Previous report
Looking ahead, we see encouraging indications that the bedding market may be stabilizing to a degree, with potential demand improvement driven by product replacement cycles. We will remain focused on expanding placements with key customers and increasing market share to drive revenue growth, while continuing to navigate sales pressure stemming from the current macroeconomic environment. We believe that meaningful future sales growth will depend on a broader industry recovery, improved economic conditions, and greater global trade stability. Ongoing geopolitical risks, including conflicts in Ukraine and the Middle East, also have the potential to disrupt global markets and adversely affect sales.
Previous report
Gross profit was $2.0 million for the third quarter of fiscal 2026, a decrease of $(787,000), or (28.7)%, compared with gross profit of $2.7 million for the third quarter of fiscal 2025. Gross profit for the first nine months of fiscal 2026 was $8.0 million, an increase of $3.1 million, or 64.6%, compared with gross profit of 4.9 million for the first nine months of fiscal 2025.
Previous report
For the third quarter, the decrease in gross profit compared with the comparable quarter was due primarily to inventory-related adjustments resulting primarily from our decision to build inventory to ensure high customer service levels during the pendency of our restructuring activities, as well as lower comparable sales, partially offset by cost reductions, efficiency gains and improved selling margins. For the nine months ended February 1, 2026, the increase in gross profit was due primarily to cost reductions and efficiency gains achieved through the restructuring of our bedding segment in fiscal 2025, together with pricing actions and improved selling margin, partially offset by the same factors affecting the third quarter.
Previous report
As of February 1, 2026, inventory of $34.3 million increased by $2.9 million, or 9.3%, compared with inventory totaling $31.4 million as of January 26, 2025. This increase in inventory is due primarily to: (i) requiring more finished goods to be on hand to accommodate customers during our restructuring-related transitions, and (ii) rising costs to produce and source inventory, along with tariffs imposed in accordance with U.S. trade policies related to imported products.
Previous report
As of February 1, 2026, inventory of $34.3 increased by $1.0 million, or 3.1%, compared with inventory totaling $33.3 million as of April 27, 2025. This increase in inventory is due to the same reasons noted above for the third quarter ended February 1, 2026, compared with the third quarter ended January 26, 2025.
Previous report
Inventory turns were 3.0 for the third quarter of fiscal 2026, as compared with 3.4 for the third quarter of fiscal 2025, and 2.9 for the fourth quarter of fiscal 2025.
Previous report
Right of use assets have steadily decreased due to the restructuring initiatives announced on May 1, 2024, which commenced at the beginning of fiscal 2025 and continued through the third quarter fiscal 2026. In connection with these restructuring initiatives, right of use assets decreased due mostly to the termination of an agreement to lease a facility located in Ouanaminthe, Haiti, and the closure of two leased facilities located in Quebec, Canada.
Previous report
As of February 1, 2026, the bedding segment did not have any right of use assets due to the closure of the above mentioned facilities. The $200,000 and $125,000 as of January 26, 2025, and April 27, 2025, respectively, represents a right of use asset located in Haiti.
Previous report
As of April 27, 2025, and January 26, 2025, we classified certain assets as held for sale totaling $2.2 million, which mostly related to the manufacturing facility and related land (collectively referred to as the "Property") associated with the closure of our operations located in Quebec, Canada.
Previous report
During the first quarter of fiscal 2026, we sold the Property, and recognized a gain from this sale totaling $4.0 million that was classified within restructuring credit in the Consolidated Statement of Net Loss for the nine-month period ended February 1, 2026. As a result, the bedding segment did not have any assets classified as held for sale as of February 1, 2026.
Previous report
Conditions in the upholstery market remain unsettled, continuing to adversely affect demand in the company’s residential fabric business. In addition, broader macroeconomic pressures have dampened project activity in the commercial and hospitality fabric markets we serve. The year‑over‑year declines in upholstery sales during the quarter and first nine months of fiscal 2026 reflect these factors, as well as incremental pressure on customer demand resulting from ongoing tariff volatility. Despite these market challenges, we achieved double‑digit growth in upholstery kits during the quarter. This product category represents an important strategic channel for this segment and continues to perform favorably relative to broader market trends.
Previous report
Looking forward, we expect conditions in the home furnishings market to remain uncertain in the near term. However, as market conditions improve and a broader industry recovery emerges, we believe that recent scale and efficiency enhancements resulting from the completion of integration initiatives within our upholstery segment, coupled with our product innovation capabilities and multi‑location manufacturing and sourcing platform, position our upholstery segment to accelerate sales growth when demand stabilizes.
Previous report
Upholstery gross profit was $3.4 million for the third quarter of fiscal 2026, a decrease of $(861,000), or (20.4)%, compared with upholstery gross profit of $4.2 million for the third quarter of fiscal 2025. Upholstery gross profit for the first nine months of fiscal 2026 was $11.3 million, a decrease of $(2.8) million, or (19.9)%, compared with upholstery gross profit of $14.1 million for the first nine months of fiscal 2025.
Previous report
The declines in gross profit within our upholstery segment during the quarter and first nine months of fiscal 2026 were primarily attributable to lower comparable sales and unfavorable foreign exchange impacts associated with our China upholstery operations. These factors were partially offset by our improving cost structure, which allowed us to maintain solid gross margins despite challenging market conditions affecting the home furnishings industry, including both residential and commercial upholstery channels.
Previous report
The residential home furnishings market continues to experience reduced demand driven by shifts in consumer spending patterns, volatility related to global trade and tariffs, inflationary pressures, lower home sales activity, and other macroeconomic factors affecting discretionary purchases. As a result, we expect the current low‑demand environment for residential upholstery fabrics to continue to adversely affect gross profit until market conditions improve.
Previous report
During the quarter, we completed the integration of our U.S. upholstery distribution and window treatment operations into our owned facility in North Carolina, which is expected to enhance operating efficiency and improve this segment’s profitability profile. In addition, we implemented further cost‑reduction and efficiency initiatives during the quarter, including the rationalization of our production and distribution footprint in China. We continue to monitor demand trends closely and remain prepared to implement additional operational adjustments as necessary to align our cost structure in this segment with market conditions, while continuing to provide consistent service levels to customers.
Previous report
As of February 1, 2026, accounts receivable of 8.3 million decreased by $(3.3) million, or (28.2)%, compared with $11.6 million as of January 26, 2025. This trend was driven by a decrease in net sales of (12.4)% during the third quarter of fiscal 2026, compared with the third quarter of fiscal 2025. In addition, this decrease reflects a lower sales mix with customers who had longer payment trends during the third quarter of fiscal 2026, compared with the third quarter of fiscal 2025. Accordingly, days’ sales outstanding was 34 days for the third quarter of fiscal 2026, as compared with 42 days for the third quarter of fiscal 2025.
Previous report
As of February 1, 2026, accounts receivable of $8.3 million decreased by $(3.0) million, or (26.4)%, compared with $11.3 million as of April 27, 2025. This trend stems from a decrease in net sales during the third quarter of fiscal 2026, compared with the fourth quarter of fiscal 2025. Net sales totaled $20.7 million during the third quarter of fiscal 2026, a decrease of (4.5)%, compared with $21.7 million during the fourth quarter of fiscal 2025. In addition, this decrease reflects a lower sales mix with customers who had longer payment trends during the third quarter of fiscal 2026, compared with the third quarter of fiscal 2025. Accordingly, days’ sales outstanding was 34 days for the third quarter of fiscal 2026, as compared with 46 days for the third quarter of fiscal 2025.
Previous report
As of February 1, 2026, inventory of $17.9 million increased by $677,000, or 3.9%, compared with $17.2 million as of January 26, 2025. This increase in inventory is due primarily to: (i) requiring more finished goods to prepare for the supply chain effects of the Chinese New Year Holiday, and (ii) rising costs to produce and source inventory, along with tariffs imposed in accordance with U.S. trade policies related to imported products, which were partially offset by a decrease in net sales of (12.4%) due to lower consumer demand during the third quarter of fiscal 2026, compared with the third quarter of fiscal 2025.
Previous report
As of February 1, 2026, inventory of $17.9 million increased by $1.9 million, or 11.8%, compared with $16.0 million as of April 27, 2025. This increase in inventory is due primarily to: (i) requiring more finished goods to be on hand to prepare for the supply chain effects of the Chinese New Year Holiday, and (ii) rising costs to produce and source inventory, along with tariffs imposed in accordance with U.S. trade policies related to imported products.
Previous report
Restructuring Activities Announced May 1, 2024
Previous report
Restructuring Activities Announced April 24, 2025
Previous report
(1) The $584,000 was classified within restructuring expense in the Consolidated Statement of Net Loss for the three-month period ended February 1, 2026. Of the total $584,000 restructuring expense, $565,000 and $19,000 related to the upholstery and bedding segments, respectively.
Previous report
(2) Of the total $(1.5) million net restructuring credit and restructuring related charge, a $(2.4) million credit and $931,000 charge were classified within restructuring credit and cost of sales, respectively, in the Consolidated Statement of Net Loss for the nine-month period ended February 1, 2026. Of the total ($1.5) million net restructuring credit and restructuring related charge, a credit of ($3.1) million and a charge of $1.6 million related to the bedding and upholstery segments, respectively.
Previous report
(3) Of the total $584,000 restructuring expense for the three months ended February 1, 2026, $577,000 and $7,000 related to the restructuring activities announced on April 24, 2025, and May 1, 2024, respectively. Of the total $(1.5) million net restructuring credit and restructuring related charge for the nine months ended February 1, 2026, a credit of $(3.4) million and a charge of $1.9 million related to the restructuring activities announced on May 1, 2024, and April 24, 2025, respectively.
Previous report
The following summarizes restructuring expense and restructuring related charges associated with the May 1, 2024 announcement described above for the three-month and nine-month periods ended January 26, 2025:
Previous report
(1) Of the total $2.3 million restructuring expense and restructuring related charge, $1.7 million and $624,000 were classified within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the three-month period ended January 26, 2025. The $2.3 million mostly relates to the bedding segment.
Previous report
(2) Of the total $7.8 million restructuring expense and restructuring related charge, $6.3 million and $1.5 million were classified within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the nine-month period ended January 26, 2025. The $7.8 million mostly relates to the building segment.
Showing the first 40 of 68 passages. Open the source sections for the rest.
Reworded paragraphs (50)
Previous wording
Our fiscal year is the 52 or 53-week period ending on the Sunday closest to April 30. The company's nine months ended February 1, 2026, and January 26, 2025, represent 40-week and 39-week periods, respectively. We refer to the three months ended February 1, 2026, as the "third quarter" and the three months ended January 26, 2025, as the "comparable quarter".
Current wording
Our fiscal year is the 52 or 53-week period ending on the Sunday closest to April 30. The company's three months ended August 2, 2026, and August 3, 2025, represent 13-week and 14-week periods, respectively. We refer to the three months ended August 2, 2026, as the "first quarter" and the three months ended August 3, 2025, as the "comparable quarter".
Previous wording
Our operations are classified into two business segments: bedding (formerly known as mattress fabrics) and upholstery (formerly known as upholstery fabrics).
Current wording
Our operations are classified into two business segments: bedding and upholstery.
Previous wording
The bedding segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. Currently, we have a mattress fabrics manufacturing operation located in Stokesdale, North Carolina, and a sewn mattress cover operation located in Ouanaminthe, Haiti.
Current wording
The bedding segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. Currently, we have a bedding manufacturing operation located in Stokesdale, North Carolina, and a sewn mattress cover operation located in Ouanaminthe, Haiti.
Previous wording
The upholstery segment develops, sources, manufactures, and sells fabrics primarily to residential, commercial, and hospitality furniture manufacturers. Currently, we have upholstery fabric operations located in Shanghai, China; Burlington, North Carolina; and Vietnam.
Current wording
The upholstery segment develops, sources, manufactures, and sells fabrics primarily to residential, commercial, and hospitality furniture manufacturers. Currently, we have upholstery operations located in Stokesdale, North Carolina, and Shanghai, China, as well as a wholly-owned subsidiary, Culp Fabrics Vietnam Company Ltd., which has an administrative office and showroom located in Ho Chi Minh City, Vietnam. Our Vietnam office enhances our strategic sourcing capabilities and further diversifies our supply chain in Asia, while our recently added showroom facilitates better product exposure with our growing customer base there.
Previous wording
Also, Read Window Products, LLC (“Read”), is 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 segments and created one integrated Culp-branded business. As part of this strategic transformation, we closed our leased facilities operated by our upholstery segment located in Burlington, North Carolina, and Knoxville, Tennessee, and transitioned 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. Refer to Note 10 of the consolidated financial statements for further details regarding this restructuring activity.
Current wording
Additionally, the upholstery segment includes Read Window Products, LLC ("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. Read's operations were previously conducted at a leased facility in Knoxville, Tennessee, and also within a leased upholstery facility in Burlington, North Carolina, but these operations were moved to our Stokesdale, North Carolina facility in fiscal 2026 as part of the strategic transformation noted above.
Previous wording
Overall, our consolidated net sales for the third quarter of fiscal 2026 decreased by $(4.3) million, or (8.2)% compared with the same period a year ago, with bedding sales decreasing by $(1.4) million, or (4.7)%, and upholstery sales decreasing by $(2.9) million, or (12.4)%. Our consolidated net sales for the first nine months of fiscal 2026 decreased by $(12.6) million, or (7.7)%, compared with the same period a year ago, with bedding sales decreasing by $(699,000), or (0.8)%, and upholstery sales decreasing by $(11.9) million, or (15.3)%.
Current wording
Overall, our consolidated net sales for the first quarter of fiscal 2027 increased by 6.5% compared with the same period a year ago, with bedding sales increasing by 13.2%, and upholstery sales decreasing by (1.9)%.
Previous wording
We recorded income tax expense of $1.9 million, or (30.6)% of loss before income taxes, for the nine-month period ended February 1, 2026, compared with income tax expense of $635,000, or (3.9)% of loss before income taxes, for the nine-month period ended January 26, 2025.
Current wording
We recorded income tax expense of $868,000, or 12.7% of income before income taxes, for the three-month period ended August 2, 2026, compared with income tax expense of $1.4 million, or 120.3% of income before income taxes, for the three-month period ended August 3, 2025. The primary factors that decreased the company's effective income tax rate for the three months ended August 2, 2026, compared with August 3, 2025, follows:
Previous wording
During the first nine months of fiscal 2026, we incurred a consolidated pre-tax loss of $(6.1) million, compared with a significantly higher consolidated pre-tax loss of $(16.4) million during the first nine months of fiscal 2025. As a result, the principal differences between income tax expense at the U.S. federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced during the first nine months of fiscal 2026, as compared with the first nine months of fiscal 2025.
Current wording
During the first quarter of fiscal 2027, we reported a higher consolidated pre-tax income totaling $6.8 million, compared with $1.1 million during the first quarter of fiscal 2026. Accordingly, the principal differences between our income tax expense at the U.S. Federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced during the first quarter of fiscal 2026, compared with the first quarter of fiscal 2027.
Previous wording
As of February 1, 2026, our cash and cash equivalents (collectively, “cash”) totaled $9.7 million, which represents an increase of $4.1 million compared with cash of $5.6 million as of April 27, 2025. This increase was due mostly to: (i) net borrowings on our lines of credit of $5.3 million; and (ii) proceeds from the sale of property, plant, and equipment totaling $1.1 million, partially offset by net cash used in operating activities of $(2.3) million.
Current wording
As of August 2, 2026, our cash and cash equivalents (collectively, “cash”) totaled $10.2 million, which represents an increase of $1.9 million compared with cash of $8.3 million as of May 3, 2026. This increase was due mostly to net cash provided by operating activities of $8.1 million, partially offset by net payments on our lines of credit totaling $6.0 million.
Previous wording
We had outstanding borrowings totaling $18.5 million under our line of credit agreements, of which $11.5 million and $7.0 million were reported in lines of credit-current and line of credit-long term, respectively, on the February 1, 2026, Consolidated Balance Sheet.
Current wording
We had outstanding borrowings totaling $13.3 million under our line of credit agreements, of which the entire amount was reported in lines of credit-current within the August 2, 2026, Consolidated Balance Sheet.
Previous wording
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 (e.g., 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 (e.g., 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.
Current wording
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.
Previous wording
As of February 1, 2026, accounts receivable of $8.6 million decreased by $(3.0) million, or (25.9)%, compared with accounts receivable totaling $11.6 million as of January 26, 2025. This decrease was driven by a decrease in net sales of (4.7)% during the third quarter of fiscal 2026, compared with the same period a year ago. In addition, this decrease reflects faster payment trends with key customers during the third quarter of fiscal 2026, compared with the third quarter of fiscal 2025. Accordingly, days’ sales outstanding decreased to 29 days for the third quarter of fiscal 2026, from 37 days for the third quarter of fiscal 2025.
Current wording
As of August 2, 2026, accounts receivable of $10.0 million decreased by $(181,000), or (1.8)%, compared with accounts receivable totaling $10.2 million as of August 3, 2025. This trend stems from an increase in net sales of 13.2% during the first quarter of fiscal 2027, compared with the first quarter of fiscal 2026, that was more than offset by faster payment trends with key bedding customers that had shorter credit terms during the first quarter of fiscal 2027, as compared with the first quarter of fiscal 2026. Accordingly, days sales outstanding decreased to 29 days for the first quarter of fiscal 2027, from 36 days for the first quarter of fiscal 2026.
Previous wording
As of February 1, 2026, accounts receivable totaling $8.6 million decreased by $(2.0) million, or (18.7)%, compared with accounts receivable totaling $10.6 million as of April 27, 2025. This decrease mostly represents faster payment trends with key customers during the third quarter of fiscal 2026, compared with the fourth quarter of fiscal 2025. Accordingly, days’ sales outstanding decreased to 29 days for the third quarter of fiscal 2026, from 35 days for the fourth quarter of fiscal 2025.
Current wording
As of August 2, 2026, accounts receivable totaling $10.0 million decreased by $(622,000), or (5.8)%, compared with accounts receivable totaling $10.7 million as of May 3, 2026. This decrease mostly represents continued faster payment trends with key customers during the first quarter of fiscal 2027, compared with the fourth quarter of fiscal 2026. Accordingly, days sales outstanding decreased to 29 days for the first quarter of fiscal 2027, from 32 days for the fourth quarter of fiscal 2026.
Previous wording
Inventory turns were 3.4 for the third quarter of fiscal 2026, as compared with 3.8 for the third quarter of fiscal 2025, and 3.3 for the fourth quarter of fiscal 2025.
Current wording
Inventory turns were 3.3 for the first quarter of fiscal 2027, as compared with 2.9 for the first quarter of fiscal 2026, and 3.3 for the fourth quarter of fiscal 2026.
Previous wording
Property, plant, and equipment has steadily decreased due to reduced capital spending stemming from current unfavorable macroeconomic conditions within the home furnishings and bedding industries, as well as restructuring initiatives commencing at the beginning of fiscal 2025 and continuing through the third quarter of fiscal 2026. See note 10 of the consolidated financial statements for further details and description of our restructuring activities.
Current wording
Property, plant, and equipment has steadily decreased due to reduced capital spending stemming from current unfavorable macroeconomic conditions within the home furnishings and bedding industries, as well as the restructuring initiative announced on April 24, 2025, that related to the strategic transformation of the company's operating model that combined certain activities within the bedding and upholstery segments and created one integrated Culp-branded business. See note 10 of the consolidated financial statements for further details and description of our restructuring activities.
Previous wording
The $20.4 million as of February 1, 2026, represents property, plant, and equipment of $19.6 million and $803,000 located in the U.S. and Haiti, respectively. The $24.2 million as of January 26, 2025, represents property, plant, and equipment of $23.0 million, $973,000 and $221,000 located in the U.S., Haiti, and Canada, 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.
Current wording
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.
Previous wording
Upholstery net sales decreased (12.4)% during the third quarter of fiscal 2026, compared with the same period a year ago. Upholstery net sales for the first nine months of fiscal 2026 decreased by (15.3)%, compared with the same period a year ago.
Current wording
Upholstery net sales decreased 1.9% during the first quarter of fiscal 2027, compared with the same period a year ago.
Previous wording
The potential impact of ongoing geopolitical developments, including conflicts in Ukraine and the Middle East, remains uncertain and is dependent on factors outside of our control. At this time, we cannot reasonably estimate the effect of these events on the upholstery fabrics segment. However, an escalation of geopolitical tensions, including potential shipping disruptions related to conflicts in the Middle East, could adversely affect our operations, as well as those of our suppliers and customers, and could negatively impact the global economy and our financial performance.
Current wording
The impact of ongoing geopolitical events, including the conflicts in Ukraine and the Middle East, remains difficult to predict and is subject to factors beyond our control. Consequently, we are unable to reasonably estimate the extent to which these developments may affect the upholstery fabrics segment. However, a further escalation of geopolitical instability, including potential disruptions to global shipping routes associated with conflicts in the Middle East, could adversely affect our operations, as well as those of our suppliers and customers. Such developments could also negatively impact global economic activity, supply chain efficiency, market demand, and our financial condition and operating results.
Previous wording
Inventory turns were 4.0 for the third quarter of fiscal 2026, as compared with 4.2 for the third quarter of fiscal 2025 and 4.0 for the fourth quarter of fiscal 2025.
Current wording
Inventory turns were 4.0 for the first quarter of fiscal 2027, compared with 4.8 for the first quarter of fiscal 2026, and 4.3 for the fourth quarter of fiscal 2026.
Previous wording
The $712,000 as of February 1, 2026, represents property, plant, and equipment of $674,000 and $38,000 located in the U.S. and China, respectively. The $1.1 million as of January 26, 2025, represents property, plant, and equipment of $1.0 million and $83,000 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.
Current wording
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.
Previous wording
Right of use assets have steadily decreased due to the restructuring initiatives announced on April 24, 2025, which were mostly completed by the end of the third quarter fiscal 2026. In connection with these restructuring initiatives, right of use assets decreased due mostly to the termination of lease agreements associated with upholstery facilities located in Burlington, North Carolina, and Knoxville, Tennessee, as well as one facility located in Shanghai, China.
Current wording
As of August 2, 2026, right of use assets of $312,000 decreased by $1.8 million, or 85.5%, compared with $2.2 million as of August 3, 2025. This decrease reflects the restructuring initiatives announced on April 24, 2025, which included the termination of lease agreements associated with upholstery facilities located in Burlington, North Carolina, and Knoxville, Tennessee, as well as one facility located in Shanghai, China.
Previous wording
The $677,000 as of February 1, 2026, represents right of use assets of $574,000 and $103,000 located in China and the U.S., respectively. The $2.6 million as of January 26, 2025, represents right of use assets of $1.9 million and $764,000 located in the 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.
Current wording
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.
Previous wording
The decrease in selling, general, and administrative expenses during the third quarter and first nine months of fiscal 2026, compared with the third quarter and first nine months of fiscal 2025, was primarily due to the cost reduction initiatives in connection with our restructuring and integration activities announced on May 1, 2024, and April 24, 2025 (see Note 10 of the consolidated financial statements for further details and descriptions of our restructuring initiatives). Also, additional SG&A expenses were incurred during the first nine months of fiscal 2026, compared with the first nine months of fiscal 2025, as the first nine months of fiscal 2026 and 2025 represented 40-week and 39-week periods, respectively.
Current wording
The decrease in selling, general, and administrative expenses during the first quarter of fiscal 2027, compared with the first quarter of fiscal 2026, was primarily due to cost reduction initiatives in connection with our restructuring and integration activities announced on April 24, 2025, partially offset by incentive compensation.
Previous wording
On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to: (i) consolidate the company's North American bedding 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.
Current wording
On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to: (i) consolidate the company's North American bedding operations, including the closure and sale of the company's manufacturing facility and related land (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.
Previous wording
These restructuring activities were completed by the end of the second quarter of fiscal 2026, including the sale of the 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 Consolidated Statement of Net Loss for the nine-month period ended February 1, 2026. 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.
Current wording
These restructuring activities were completed by the end of the second quarter of fiscal 2026, including the sale of the Property. Accordingly, we recorded a gain from the sale of the Property totaling $4.0 million that was classified within restructuring credit in the Consolidated Statement of Net Loss for the three-month 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 its fair value.
Previous wording
Since inception of this restructuring initiative, we 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 and $(1.9) million, represent a cash restructuring and related charge and a non-cash restructuring credit, respectively.
Current wording
Since inception of this restructuring initiative, we 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 a $(1.9) million non-cash restructuring credit.
Previous wording
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 our leased facilities operated by our upholstery segment located in Burlington, North Carolina, and Knoxville, Tennessee, and transitioned 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.
Current wording
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 located 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.
Previous wording
These restructuring activities were mostly completed by the end of the third quarter of fiscal 2026. Since inception of this restructuring initiative, we incurred cumulative restructuring and restructuring related charges totaling $2.6 million, of which $2.3 million and $265,000 related to the upholstery and bedding segments, respectively. Of this total $2.6 million, $1.3 million and $1.3 million represent a cash restructuring and related charge and a non-cash restructuring charge, respectively.
Current wording
These restructuring activities were completed by the end of the fourth quarter of fiscal 2026. Since inception of this restructuring initiative, we have incurred cumulative restructuring and restructuring related charges totaling $2.7 million, of which $1.4 million represents a cash restructuring and restructuring related charge and $1.3 million represents a non-cash restructuring charge.
Previous wording
The following summarizes restructuring expense (credit) and restructuring related charges associated with the above announcements for the three-month and nine-month periods ended February 1, 2026:
Current wording
The following summarizes restructuring credit associated with the above announcements for the three-month period ended August 3, 2025:
Previous wording
The increase in other income for the third quarter of fiscal 2026, compared with the third quarter of fiscal 2025, and the decrease in other expense for the first nine months of fiscal 2026, compared with the first nine months of fiscal 2025, reflects $1.0 million of cash proceeds in connection with the resolution of a legal matter, offset by less favorable foreign currency exchange rates associated with our operations located in China. During the third quarter of fiscal 2026, we incurred a foreign currency exchange rate loss associated with our operations located in China totaling $(532,000), compared with a foreign currency exchange rate gain of $305,000 during the third quarter of fiscal 2025. During the first nine months of fiscal 2026, we incurred a foreign currency exchange rate loss associated with our operations located in China totaling $(994,000), compared with a foreign currency exchange gain of $74,000 during the first nine months of fiscal 2025.
Current wording
During the first quarter of fiscal 2027 we reported other income of $201,000, compared with other expense of $(531,000) during the first quarter of fiscal 2026. This trend reflects insurance proceeds of $814,000 in connection with a resolution of a legal matter, partially offset by less favorable foreign currency exchange rates experienced during the first quarter of fiscal 2027, resulting in a foreign currency exchange rate loss of $360,000, compared with a foreign currency exchange rate loss of $122,000 during the first quarter of fiscal 2026.
Previous wording
The $(994,000) foreign currency exchange rate loss for the first nine months of fiscal 2026 described above was mostly non-cash and offset by an income tax benefit of $839,000. The income tax benefit of $839,000 was associated with tax deductible foreign currency exchange rate losses based on less favorable foreign currency exchange rates applied against balance sheet accounts denominated in U.S. dollars to determine the corresponding Chinese Renminbi local currency amounts. The foreign currency exchange rate loss derived from U.S. dollar denominated balance sheet accounts is considered tax deductible, as we incur income tax expense and pay income taxes in China's local currency.
Current wording
During first quarter of fiscal 2027, we incurred a foreign currency exchange rate loss of $250,000 that was associated with our operations located in China. This $250,000 stems from less favorable foreign currency exchange rates applied against our balance sheet accounts denominated in Chinese Renminbi to determine the corresponding U.S. dollar financial reporting amounts. The foreign exchange rate loss of $250,000 described above was mostly non-cash and was partially offset by an income tax benefit of $97,000. This income tax benefit of $97,000 was associated with deductible foreign exchange rate losses based on less favorable foreign currency exchange rates applied against balance sheet accounts denominated in U.S. dollars to determine the corresponding Chinese Renminbi local currency amounts. The foreign exchange rate loss derived from our U.S. dollar denominated balance sheet accounts is considered tax deductible, as we incur income tax expense and pay income taxes in China’s local currency.
Previous wording
Our consolidated effective income tax rates for the nine-month periods ended February 1, 2026, and January 26, 2025, were based upon the estimated effective income tax rate applicable for the full year after giving effect to any significant items related specifically to interim periods. When calculating the annual estimated effective income tax rates for the nine-month periods ended February 1, 2026, and January 26, 2025, we were subject to loss limitation rules. These loss limitation rules require any pre-tax loss associated with our U.S. or foreign operations to be excluded from the annual estimated effective income tax rate calculation if it was determined that no income tax benefit could be recognized during the current fiscal year. The effective income tax rate can be impacted over the fiscal year by the mix and timing of actual earnings from our U.S. operations and foreign subsidiaries located in China, Canada, Haiti, and Vietnam versus annual projections, as well as changes in foreign currency exchange rates in relation to the U.S. dollar.
Current wording
Our consolidated effective income tax rates for the three-month periods ended August 2, 2026, and August 3, 2025, were based upon the estimated effective income tax rate applicable for the full year after giving effect to any significant items related specifically to interim periods. When calculating the annual estimated effective income tax rates for the three-month periods ended August 2, 2026, and August 3, 2025, we were subject to loss limitation rules. These loss limitation rules require any pre-tax loss associated with our U.S. or foreign operations to be excluded from the annual estimated effective income tax rate calculation if it was determined that no income tax benefit could be recognized during the current fiscal year. The effective income tax rate can be impacted over the fiscal year by the mix and timing of actual earnings from our U.S. operations and foreign subsidiaries located in China, Canada, Haiti, and Vietnam versus annual projections, as well as changes in foreign currency exchange rates in relation to the U.S. dollar.
Previous wording
We recorded income tax expense of $1.9 million, or (30.6)% of loss before income taxes, for the nine-month period ended February 1, 2026, compared with income tax expense of $635,000, or (3.9)% of loss before income taxes, for the nine-month period ended January 26, 2025.
Current wording
We recorded income tax expense of $868,000, or 12.7% of income before income taxes, for the three-month period ended August 2, 2026, compared with income tax expense of $1.4 million, or 120.3% of income before income taxes, for the three-month period ended August 3, 2025. The primary factors that decreased the company's effective income tax rate for the three months ended August 2, 2026, compared with August 3, 2025, follows:
Previous wording
During the first nine months of fiscal 2026, we incurred a consolidated pre-tax loss of $(6.1) million, compared with a significantly higher consolidated pre-tax loss of $(16.4) million during the first nine months of fiscal 2025. As a result, the principal differences between income tax expense at the U.S. federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced during the first nine months of fiscal 2026, as compared with the first nine months of fiscal 2025.
Current wording
During the first quarter of fiscal 2027, we reported a higher consolidated pre-tax income totaling $6.8 million, compared with $1.1 million during the first quarter of fiscal 2026. Accordingly, the principal differences between our income tax expense at the U.S. Federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced during the first quarter of fiscal 2026, compared with the first quarter of fiscal 2027.
Previous wording
Currently, our sources of liquidity include cash and cash equivalents (collectively, "cash"), cash flow from operations, and amounts available under our revolving credit lines. As of February 1, 2026, we believe: (i) our cash of $9.7 million; (ii) improvements in cash flow from operations stemming from expected cash savings from our recent restructuring activities, (iii) the current availability under our U.S. line of credit totaling $13.7 million (refer to Note 11 of the consolidated financial statements for further details regarding our financing arrangements), and (iv) proceeds totaling $4.8 million from the collection of a note receivable associated with the sale of Property located in Quebec, Canada (see Note 7 of the consolidated financial statements for further details) will be sufficient to fund our: (i) foreseeable business needs; (ii) restructuring activities; (iii) capital expenditures; (iv) commitments; (v) contractual obligations; and (vi) income tax payments.
Current wording
Currently, our sources of liquidity include cash, cash flow from operations, and amounts available under our lines of credit. As of August 2, 2026, we believe: (i) our cash of $10.2 million, (ii) improvement in cash flow from operations stemming from expected cash savings from our recent restructuring activities, and (iii) the current availability under our lines of credit totaling $19.2 million, including $17.7 million in available borrowings under the ABL Facility and additional availability under a credit agreement associated with our operations located in China (Refer to Note 11 of the consolidated financial statements for further details regarding our financing arrangements), will be sufficient to fund our foreseeable business needs, capital expenditures, commitments, contractual obligations, and income tax payments.
Previous wording
As of February 1, 2026, our cash and cash equivalents (collectively, “cash”) totaled $9.7 million, which represents an increase of $4.1 million compared with cash of $5.6 million as of April 27, 2025. This increase was due mostly to: (i) net borrowings on our lines of credit of $5.3 million; and (ii) proceeds from the sale of property, plant, and equipment totaling $1.1 million, partially offset by net cash used in operating activities of $(2.3) million.
Current wording
As of August 2, 2026, our cash and cash equivalents (collectively, “cash”) totaled $10.2 million, which represents an increase of $1.9 million compared with cash of $8.3 million as of May 3, 2026. This increase was due mostly to net cash provided by operating activities of $8.1 million, partially offset by net payments on our lines of credit totaling $6.0 million.
Previous wording
We had outstanding borrowings totaling $18.5 million under our line of credit agreements, of which $11.5 million and $7.0 million were reported in lines of credit-current and line of credit-long term, respectively, on the February 1, 2026, Consolidated Balance Sheet.
Current wording
We had outstanding borrowings totaling $13.3 million under our line of credit agreements, which the entire amount was reported in lines of credit-current within the August 2, 2026 Consolidated Balance Sheet.
Previous wording
In March 2020, our board of directors approved an authorization for us to acquire up to $5.0 million of our common stock. Under this common stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under the Securities Exchange Act Rule 10b5-1, or otherwise. The number of shares purchased and the timing of such purchases are based on working capital requirements, market and general business conditions, and other factors.
Current wording
In March 2020, our board of directors approved an authorization for us to acquire up to $5.0 million of our common stock. Under the common stock repurchase program, shares may be repurchased from time to time in open market transactions, block trades, through plans established under the Securities Exchange Act Rule 10b5-1, or otherwise. The number of shares purchased and the timing of such purchases are based on working capital requirements, market and general business conditions, and other factors.
Previous wording
We did not repurchase any shares of common stock during the nine-month periods ended February 1, 2026, or January 26, 2025, respectively.
Current wording
During the first quarters of fiscal 2027 and 2026, we did not repurchase any shares of our common stock.
Previous wording
As of February 1, 2026, $3.2 million is available for additional repurchases of our common stock.
Current wording
As of August 2, 2026, $3.2 million was available for additional repurchases of our common stock. Despite the current share repurchase authorization, the company does not expect to repurchase any shares through at least the first quarter of fiscal 2028.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
On April 24, 2025, the company announced a strategic transformation of its operating model to combine certain activities within the bedding and upholstery segments and create one integrated Culp-branded business. This strategic transformation was completed by the end of fiscal 2026.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On April 29, 2024 (the first quarter of fiscal 2025), our board of directors made a decision to: (i) consolidate the company's North American bedding operations, including the closure and sale of the company's manufacturing facility and related land ("collectively referred to as 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; and (v) reduce unallocated corporate expenses and shared service expenses. Refer to Note 10 of the consolidated financial statements for further details regarding this restructuring activity.