Company: CULP
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0000950170-25-035191
Chunk: 57

Company: CULP INC
Filing Date: 2025-03-07
Form: 10-Q
Item: Item 1
Chunk 57
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anghai, China—Upholstery Fabrics Finishing Operation” below). Despite the difficult demand environment in our residential business and resulting lower sales bases during our third quarter and first nine months of fiscal year 2025, these cost-structure and operational enhancements were instrumental in our ability to achieve profitability in each of those sales-pressured periods while also maintaining the service levels our customers rely upon and expect. 

Looking ahead, we expect sales in our residential business to continue to be challenged by the muted conditions in the home furnishings industry and for that dynamic to impact profitability until macroeconomic conditions improve.  However, our lower fixed cost and SG&A expense structure should allow us to better navigate the difficult environment in our residential fabrics business and leverage the more robust demand we are seeing in our hospitality/commercial fabrics business. In addition, we believe that there are other meaningful opportunities to increase operational efficiency and reduce cost across our business, and we plan to continue pursuing measures to optimize our platform. 

Restructuring Activities

Shanghai, China

Upholstery Fabrics Finishing Operation

During the fourth quarter of fiscal 2024, we closed our upholstery fabrics finishing operation in Shanghai, China, to align with demand trends and further leverage our strategic supply relationships to meet customer finishing needs. This restructuring activity 

I-40

was completed during the first quarter of fiscal 2025 and resulted in cumulative restructuring and restructuring related charges totaling $218,000. 

Ouanaminthe, Haiti

Cut and Sew Upholstery Fabrics Operation

During the third quarter of fiscal 2023, Culp Upholstery Fabrics - Haiti, Ltd. ("CUF Haiti") entered into an agreement to terminate a lease agreement associated with one facility, and in turn moved the production of upholstery cut and sewn kits to another existing facility leased by Culp Home Fashions - Haiti, Ltd. ("CHF Haiti") during the fourth quarter of fiscal 2023. Both CUF Haiti and CHF Haiti are indirect wholly owned subsidiaries of the company. During the first quarter of fiscal 2024, demand for upholstery cut and sewn kits declined more than previously anticipated, resulting in the strategic action to discontinue the production of upholstery cut and sewn kits in Haiti. This restructuring activity was completed during the third quarter of fiscal 2024 and resulted in cumulative restructuring and restructuring related charges of $1.3 million.   

The following summarizes our restructuring expense (credit) and restructuring related charge (credit) for all restructuring activities for the upholstery fabrics