Segment Information | 14. Segment Information Overall Our operations are classified into two business segments: mattress fabrics and upholstery fabrics. Mattress Fabrics The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. Upholstery Fabrics The upholstery fabrics segment develops, sources, manufactures, and sells fabrics to customers in the residential, commercial, and hospitality industries. In addition, this segment includes Read, which provides window treatments and sourcing of upholstery fabrics and other products, as well as measuring and installation services for Read’s products, to customers in the hospitality and commercial industries. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows. Financial Information We evaluate the operating performance of our business segments based upon (loss) income from operations before certain unallocated corporate expenses and other items that are not expected to occur on a regular basis. 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. Unallocated corporate expenses primarily represent compensation and benefits for certain executives and their support staff, all costs associated with being a public company, amortization of intangible assets, and other miscellaneous expenses. Segment assets include assets used in the operations of each segment and consist of accounts receivable, inventories, property, plant, and equipment, and right of use assets. The mattress fabrics segment also includes assets held for sale associated with property, plant, and equipment related to the Fiscal 2025 Restructuring Plan announced on April 29, 2024 (see Note 10 to the consolidated financial statements for further details regarding this restructuring plan). Intangible assets are not included in segment assets, as these assets are not used by the Chief Operating Decision Maker to evaluate the respective segment’s operating performance, allocate resources to individual segments, or determine executive compensation. Statements of operations for our operating segments are as follows: Three months ended January 26, 2025 January 28, 2024 Net sales by segment: Mattress fabrics $ 28,642 $ 30,021 Upholstery fabrics 23,611 30,397 Net sales $ 52,253 $ 60,418 Gross profit: Mattress fabrics $ 2,743 $ 1,520 Upholstery fabrics 4,228 6,122 Segment gross profit 6,971 7,642 Restructuring related (charge) credit (1)(2) ( 624 ) 61 Gross profit $ 6,347 $ 7,703 Selling, general, and administrative expenses by segment: Mattress fabrics $ 3,176 $ 3,102 Upholstery fabrics 3,549 4,030 Unallocated corporate expenses 1,854 2,361 Selling, general, and administrative expenses $ 8,579 $ 9,493 (Loss) income from operations by segment: Mattress fabrics $ ( 433 ) $ ( 1,582 ) Upholstery fabrics 679 2,092 Unallocated corporate expenses ( 1,854 ) ( 2,361 ) Total segment loss from operations $ ( 1,608 ) $ ( 1,851 ) Restructuring related (charge) credit (1) (2) ( 624 ) 61 Restructuring expense (3)(4) ( 1,655 ) 50 Loss from operations $ ( 3,887 ) $ ( 1,740 ) Interest expense ( 63 ) — Interest income 255 284 Other income (expense) 15 ( 705 ) Loss before income taxes $ ( 3,680 ) $ ( 2,161 ) (1) During the three months ended January 26, 2025, gross profit includes restructuring related charges totaling $ 624,000 for losses on the disposal and valuation of inventory related to the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada. (2) During the three months ended January 28, 2024, gross profit includes a restructuring related credit of $ 61,000 for the gain on disposal of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility located in Ouanaminthe, Haiti. (3) During the three months ended January 26, 2025, restructuring expense of $ 1.7 million mostly relates to the mattress fabrics segment. The $ 1.7 million restructuring expense represents (i) $ 1.5 million for the consolidation of our mattress fabrics operations located in Quebec, Canada into our facility located in Stokesdale, North Carolina and (ii) $ 176,000 for employee termination benefits, partially offset by (iii) a net gain of $( 33,000 ) for the impairment and sale of equipment. See Note 10 to the consolidated financial statements for further details and description of our Fiscal 2025 Restructuring Plan. (4) The restructuring credit of $ 50,000 for the three months ended January 28, 2024 , represents a gain on the sale of equipment related to the discontinuation of production of cut and sewn upholstery kits in Ouanaminthe, Haiti. Nine months ended January 26, 2025 January 28, 2024 Net sales by segment: Mattress fabrics $ 86,792 $ 90,619 Upholstery fabrics 77,672 85,185 Net sales $ 164,464 $ 175,804 Gross profit: Mattress fabrics $ 4,862 $ 5,997 Upholstery fabrics 14,061 16,780 Total segment gross profit $ 18,923 $ 22,777 Restructuring related charge (1) (2) ( 1,509 ) ( 40 ) Gross profit $ 17,414 $ 22,737 Selling, general, and administrative expenses by segment: Mattress fabrics $ 9,880 $ 9,913 Upholstery fabrics 11,056 11,969 Unallocated corporate expenses 6,299 7,484 Selling, general, and administrative expenses $ 27,235 $ 29,366 (Loss) income from operations by segment: Mattress fabrics $ ( 5,018 ) $ ( 3,916 ) Upholstery fabrics 3,005 4,811 Unallocated corporate expenses ( 6,299 ) ( 7,484 ) Total segment loss from operations $ ( 8,312 ) $ ( 6,589 ) Restructuring related charge (1) (2) ( 1,509 ) ( 40 ) Restructuring expense (3) (4) ( 6,317 ) ( 432 ) Loss from operations $ ( 16,138 ) $ ( 7,061 ) Interest expense ( 121 ) — Interest income 761 911 Other expense ( 898 ) ( 560 ) Loss before income taxes $ ( 16,396 ) $ ( 6,710 ) (1 ) During the nine months ended January 26, 2025, gross profit includes restructuring related charges totaling $ 1.5 million for losses on the disposal and valuation of inventory related to the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada. (2) During the nine months ending January 28, 2024, gross profit includes a restructuring related charge of $ 40,000 , which represents markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility located in Ouanaminthe, Haiti. 3) During the nine months ending January 26, 2025, restructuring expense of $ 6.3 million mostly relates to the mattress fabrics segment. The $ 6.3 million restructuring expense represents (i) $ 2.7 million for the consolidation of our mattress fabrics operations located in Quebec, Canada into our facility located in Stokesdale, North Carolina, (ii) $ 1.5 million for impairment of and accelerated depreciation related to property, plant, and equipment, (iii) $ 1.4 million for employee termination benefits, and (iv) $ 849,000 for lease termination costs, partially offset by a gain on sale and disposal of equipment totaling $( 174,000 ). See Note 10 to the consolidated financial statements for further details and description of our Fiscal 2025 Restructuring Plan. (4) Restructuring expense of $ 432,000 for the nine months ending January 28, 2024 , represents a $ 329,000 impairment charge associated with equipment and $ 103,000 for employee termination benefits related to the discontinuation of production of cut and sewn upholstery kits in Ouanaminthe, Haiti. Balance sheet information for our operating segments follows: (dollars in thousands) January 26, 2025 January 28, 2024 April 28, 2024 Segment assets: Mattress Fabrics: Accounts receivable $ 11,607 $ 11,463 $ 10,003 Inventory 31,377 27,925 27,671 Property, plant and equipment (1) 24,210 32,263 31,472 Right of use assets (2) 200 1,798 1,627 Assets held for sale (3) 2,214 — — Total mattress fabrics assets 69,608 73,449 70,773 Upholstery Fabrics: Accounts receivable 11,552 12,223 11,135 Inventory 17,222 18,952 17,172 Property, plant and equipment (4) 1,117 1,155 1,125 Right of use assets (5) 2,647 2,345 1,952 Total upholstery fabrics assets 32,538 34,675 31,384 Total segment assets 102,146 108,124 102,157 Non-segment assets: Cash and cash equivalents 5,279 12,585 10,012 Short-term investments - rabbi trust 1,753 937 903 Short-term notes receivable 526 260 264 Current income taxes receivable 1,137 476 350 Other current assets 2,619 4,237 3,371 Long-term notes receivable 1,254 1,530 1,462 Deferred income taxes 490 531 518 Property, plant and equipment (6) 612 603 585 Right of use assets (7) 3,256 2,809 2,624 Intangible assets 1,594 1,970 1,876 Long-term investments - rabbi trust 6,250 7,083 7,102 Other assets 639 853 830 Total assets $ 127,555 $ 141,998 $ 132,054 (1) 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 $ 32.3 million as of January 28, 2024 , represents property, plant, and equipment of $ 21.9 million, $ 9.8 million, and $ 600,000 located in the U.S., Canada, and Haiti, respectively. The $ 31.5 million as of April 28, 2024, represents property, plant, and equipment of $ 21.5 million, $ 9.4 million, and $ 555,000 located in the U.S., Canada, and Haiti, respectively. (2) The $ 200,000 as of January 26, 2025, represents a right of use asset in Haiti. The $ 1.8 million as of January 28, 2024 , represents right of use assets of $ 1.2 million and $ 604,000 located in Haiti and Canada, respectively. The $ 1.6 million as of April 28, 2024, represents right of use assets of $ 1.1 million and $ 545,000 located in Haiti and Canada, respectively. (3) The $ 2.2 million as of January 26, 2025, represents assets held for sale located in Canada. (4) 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 $ 1.2 million as of January 28, 2024 , represents property, plant, and equipment of $ 1.1 million and $ 134,000 located in the U.S. and China, respectively. The $ 1.1 million as of April 28, 2024, represents property, plant, and equipment of $ 1.0 million and $ 120,000 located in the U.S. and China, respectively. (5) The $ 2.6 million as of January 26, 2025, represents right of use assets of $ 1.9 million and $ 764,000 located in China and the U.S., respectively. The $ 2.3 million as of January 28, 2024 , represents right of use assets of $ 944,000 and $ 1.4 million located in China and the U.S., respectively. The $ 2.0 million as of April 28, 2024, represents right of use assets of $ 1.3 million and $ 709,000 located in the U.S. and China, respectively. (6) The $ 612,000 , $ 603,000 , and $ 585,000 as of January 26, 2025, January 28, 2024, and April 28, 2024, respectively, represents property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by our mattress fabrics and upholstery fabrics segments. Property, plant, and equipment associated with our corporate departments are located in the U.S. (7) The $ 3.3 million, $ 2.8 million, and $ 2.6 million as of January 26, 2025, January 28, 2024, and April 28, 2024, respectively, represent right of use assets located in the U.S. Information about capital expenditures and depreciation expense for our operating segments follows: Nine months ended (dollars in thousands) January 26, 2025 January 28, 2024 Capital expenditures (1): Mattress Fabrics $ 1,469 $ 2,828 Upholstery Fabrics 280 219 Unallocated Corporate 789 167 Total capital expenditures $ 2,538 $ 3,214 Depreciation expense: Mattress Fabrics (2) $ 5,166 $ 4,422 Upholstery Fabrics 464 475 Total depreciation expense $ 5,630 $ 4,897 (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 nine-month period ended January 26, 2025, depreciation expense for the mattress fabrics segment included additional depreciation expense related to the shortening of useful lives of equipment associated with the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada. The amount of additional depreciation expense was $ 1.3 million and was classified as restructuring expense in the Consolidated Statements of Net Loss. |