Q3falsefalse--04-270000723603true2025CULP INCP9Yhttp://fasb.org/us-gaap/2024#InvestmentsMemberhttp://fasb.org/us-gaap/2024#InvestmentsMemberhttp://fasb.org/us-gaap/2024#InvestmentsMemberP1Y0000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-290000723603culp:BankOfChinaMembercountry:CNculp:WorkingCapitalLoanMemberculp:CreditAgreementMember2024-11-050000723603us-gaap:CustomerRelationshipsMember2023-05-012024-01-280000723603culp:MattressAssetGroupMember2025-01-260000723603us-gaap:RetainedEarningsMember2024-07-280000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-01-260000723603us-gaap:CapitalLossCarryforwardMember2025-01-260000723603us-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembercountry:US2025-01-260000723603culp:UpholsteryFabricsMember2024-10-282025-01-260000723603us-gaap:OperatingSegmentsMembercountry:HTculp:MattressFabricsMember2025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMember2024-10-282025-01-260000723603us-gaap:OtherRestructuringMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-04-292025-01-260000723603culp:MattressAssetGroupMemberculp:MattressFabricsMember2022-08-012025-01-260000723603us-gaap:RevolvingCreditFacilityMembercountry:US2024-04-292025-01-260000723603us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2025-01-260000723603culp:LeaseTerminationCostsMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-10-282025-01-260000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2023-10-302024-01-280000723603us-gaap:RetainedEarningsMember2023-05-012023-07-300000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMemberculp:SeniorExecutivesMember2024-08-082024-08-080000723603us-gaap:NoncompeteAgreementsMember2024-01-280000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMembercountry:HTculp:LeaseholdImprovementsAndEquipmentImpairmentLossMember2023-10-302024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-08-080000723603culp:MattressFabricsSegmentMemberus-gaap:EmployeeSeveranceMembersrt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-04-270000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-292024-07-280000723603us-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembersrt:MaximumMembercountry:US2025-01-260000723603culp:SP500IndexFundMemberus-gaap:FairValueMeasurementsRecurringMember2024-01-280000723603culp:BankOfChinaMembercountry:CNus-gaap:ForeignLineOfCreditMember2024-03-202024-03-200000723603us-gaap:OperatingSegmentsMembercountry:USculp:MattressFabricsMember2024-04-280000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMemberculp:MattressFabricsMember2024-04-292025-01-260000723603culp:SecuredLineOfCreditByTradeReceivableMemberculp:BankOfChinaMembercountry:CNculp:CreditAgreementMember2024-11-050000723603us-gaap:CorporateNonSegmentMember2024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMemberculp:SeniorExecutivesMember2022-08-102022-08-100000723603us-gaap:OtherRestructuringMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-10-282025-01-260000723603us-gaap:OperatingSegmentsMemberculp:ImpairmentAndAcceleratedDepreciationRelatedToPropertyPlantAndEquipmentMemberculp:MattressFabricsMember2024-04-292025-01-260000723603culp:MattressFabricsSegmentMembersrt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMemberculp:PartiallyOffsetByNetGainsOnDisposalOfEquipmentMember2025-04-270000723603culp:BankOfChinaMembercountry:CNculp:CreditAgreementMember2025-01-260000723603culp:AmendedAndRestatedTwoThousandAndFifteenEquityIncentivePlanMember2025-01-260000723603culp:TimeBasedRestrictedStockUnitsMember2025-01-260000723603us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMembercountry:US2025-01-260000723603us-gaap:EmployeeSeveranceMember2024-10-282025-01-260000723603srt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-04-270000723603us-gaap:AdditionalPaidInCapitalMember2024-04-292024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2024-01-082024-01-080000723603culp:UpholsteryFabricsMemberus-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2023-05-012024-01-280000723603culp:AmendedAndRestatedTwoThousandAndFifteenEquityIncentivePlanMember2023-09-272023-09-270000723603us-gaap:OperatingSegmentsMember2023-10-302024-01-280000723603srt:MaximumMember2024-04-292025-01-260000723603culp:EquityIncentivePlanTwoThousandFifteenMember2015-09-160000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMembercountry:HT2024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMember2023-05-012024-01-280000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2024-10-282025-01-260000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-01-280000723603us-gaap:CorporateNonSegmentMember2023-05-012024-01-280000723603us-gaap:CustomerRelationshipsMember2024-04-292025-01-260000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-292024-10-270000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-10-282025-01-260000723603country:CNculp:CreditAgreementExpiresMarch82025Memberus-gaap:ForeignLineOfCreditMember2024-03-202024-03-200000723603us-gaap:DomesticCountryMembercountry:US2024-01-280000723603culp:CufHaitiMemberculp:DisposalAndMarkdownsOfInventoryMemberculp:ExitAndDisposalActivityMembercountry:HT2023-05-012024-01-280000723603culp:NetGainOnDisposalOfEquipmentMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-10-282025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2023-09-282023-09-280000723603culp:SellingManufacturingFacilityMemberus-gaap:CorporateNonSegmentMembercountry:CA2024-10-282025-01-260000723603us-gaap:CustomerRelationshipsMembersrt:MaximumMember2025-01-260000723603us-gaap:OperatingSegmentsMemberculp:LeaseTerminationCostsMemberculp:MattressFabricsMember2024-04-292025-01-260000723603us-gaap:RetainedEarningsMember2024-07-292024-10-270000723603us-gaap:CorporateNonSegmentMember2023-10-302024-01-280000723603country:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementExpiresMarch92025Member2024-03-200000723603us-gaap:CustomerRelationshipsMember2024-01-280000723603us-gaap:MaterialReconcilingItemsMember2024-10-282025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2023-10-302024-01-280000723603us-gaap:OperatingSegmentsMember2024-01-280000723603country:US2025-01-260000723603us-gaap:CorporateNonSegmentMembercountry:US2024-01-280000723603us-gaap:AdditionalPaidInCapitalMember2024-04-280000723603us-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembercountry:US2025-01-262025-01-260000723603us-gaap:CorporateNonSegmentMembercountry:US2024-04-280000723603culp:UpholsteryFabricsMemberus-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2023-05-012024-01-280000723603culp:UpholsteryFabricsMember2023-10-302024-01-280000723603culp:FederalAndStateMemberculp:DeferredIncomeTaxAssetsMember2025-01-260000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2023-10-302024-01-280000723603srt:MinimumMember2024-04-292025-01-260000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMember2025-01-260000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-10-270000723603us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2024-04-280000723603us-gaap:RetainedEarningsMember2024-10-282025-01-260000723603us-gaap:AllowanceForCreditLossMember2023-05-012024-01-280000723603us-gaap:RetainedEarningsMember2025-01-2600007236032023-10-302024-01-280000723603us-gaap:CorporateNonSegmentMember2024-10-282025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-08-012024-08-010000723603culp:BankOfChinaMembercountry:CNculp:WorkingCapitalLoanMemberculp:CreditAgreementMember2025-01-260000723603culp:SellingManufacturingFacilityMembercountry:HTus-gaap:CorporateNonSegmentMember2023-05-012024-01-280000723603us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-01-280000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2025-01-2600007236032023-07-312023-10-290000723603culp:TimeBasedRestrictedStockUnitsMemberculp:NonEmployeeDirectorMember2024-09-262024-09-2600007236032024-07-280000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2024-04-292025-01-260000723603culp:GainLossOnDisposalOfEquipmentMemberus-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2024-04-292025-01-260000723603us-gaap:RetainedEarningsMember2023-10-290000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2024-04-280000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-302024-01-280000723603us-gaap:NoncompeteAgreementsMember2024-04-292025-01-260000723603us-gaap:InterestIncomeMembercountry:US2024-01-280000723603culp:MattressFabricsAndUpholsteryFabricsMember2024-04-292025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2024-04-292025-01-260000723603us-gaap:CommonStockMember2024-10-270000723603us-gaap:AllowanceForCreditLossMember2024-04-280000723603us-gaap:RevolvingCreditFacilityMembercountry:CN2024-03-200000723603culp:UpholsteryFabricsMemberus-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2023-10-302024-01-280000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMember2024-01-280000723603us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembersrt:MaximumMembercountry:US2024-04-292025-01-260000723603srt:MinimumMember2025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2024-08-082024-08-080000723603country:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementExpiresMarch92025Member2024-03-202024-03-200000723603culp:MattressFabricsMember2024-04-292025-01-2600007236032024-04-292025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2022-08-100000723603culp:DisposalValuationAndMarkdownsOfInventoryMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-10-282025-01-260000723603country:CN2024-04-292024-07-280000723603culp:LeaseTerminationCostsMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-04-292025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMember2023-05-012024-01-280000723603us-gaap:AdditionalPaidInCapitalMember2024-01-280000723603us-gaap:OperatingSegmentsMember2024-10-282025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-08-082024-08-080000723603culp:CufHaitiMemberculp:DisposalAndMarkdownsOfInventoryMemberculp:ExitAndDisposalActivityMembercountry:HT2023-10-302024-01-280000723603us-gaap:RevolvingCreditFacilityMembercountry:US2024-04-280000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-300000723603us-gaap:CustomerRelationshipsMember2025-01-260000723603culp:MattressAssetGroupMemberus-gaap:PropertyPlantAndEquipmentMember2025-01-260000723603country:CNsrt:SubsidiariesMember2024-04-292025-01-260000723603culp:TimeBasedRestrictedStockUnitsMembersrt:ManagementMember2024-04-292025-01-260000723603culp:MattressFabricsAndUpholsteryFabricsMember2023-05-012024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2022-08-102022-08-100000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-05-012023-07-300000723603us-gaap:CorporateNonSegmentMember2024-04-292025-01-260000723603country:CNus-gaap:ForeignLineOfCreditMember2025-01-260000723603us-gaap:EmployeeSeveranceMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-10-282025-01-260000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMembercountry:HTus-gaap:CostOfSalesMember2023-10-302024-01-280000723603culp:UpholsteryFabricsMemberus-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2024-10-282025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2023-05-012024-01-280000723603culp:CufHaitiMember2025-01-260000723603culp:MattressFabricsSegmentMembersrt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-04-270000723603us-gaap:RetainedEarningsMember2024-04-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMemberculp:SeniorExecutivesMember2024-01-082024-01-080000723603us-gaap:CapitalLossCarryforwardMember2024-01-280000723603us-gaap:AdditionalPaidInCapitalMember2023-04-300000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:US2024-04-280000723603us-gaap:DomesticCountryMembercountry:US2025-01-260000723603us-gaap:RetainedEarningsMember2024-04-292024-07-280000723603us-gaap:CommonStockMember2023-10-290000723603us-gaap:CommonStockMember2023-07-300000723603us-gaap:AdditionalPaidInCapitalMember2024-07-280000723603us-gaap:BaseRateMembercountry:CNus-gaap:ForeignLineOfCreditMember2024-03-202024-03-200000723603country:CNculp:CreditAgreementExpiresMarch82025Memberus-gaap:ForeignLineOfCreditMember2024-03-200000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-280000723603country:CAculp:MattressFabricsMember2025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMember2025-01-260000723603culp:EquipmentImpairmentChargeMemberus-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2024-10-282025-01-260000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2024-04-292025-01-260000723603us-gaap:CorporateNonSegmentMember2025-01-260000723603us-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembercountry:US2024-04-292025-01-260000723603us-gaap:CommonStockMember2023-07-312023-10-290000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMembercountry:HT2023-05-012024-01-280000723603us-gaap:CustomerRelationshipsMember2024-04-280000723603us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2025-01-260000723603us-gaap:OperatingSegmentsMembercountry:USculp:MattressFabricsMember2024-01-280000723603culp:FederalAndStateMemberculp:DeferredIncomeTaxAssetsMember2024-01-280000723603us-gaap:AdditionalPaidInCapitalMember2024-07-292024-10-270000723603country:CN2024-04-292025-01-260000723603us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembersrt:MinimumMembercountry:US2024-04-292025-01-260000723603us-gaap:OperatingSegmentsMember2023-05-012024-01-280000723603us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2024-10-282025-01-260000723603culp:TwoThousandTwentyFiveRestructuringPlanMember2025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2024-10-282025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:CN2024-04-280000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMember2024-04-280000723603culp:NetGainOnDisposalOfEquipmentMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-04-292025-01-260000723603us-gaap:CommonStockMember2023-05-012024-01-280000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMember2023-10-302024-01-280000723603us-gaap:AdditionalPaidInCapitalMember2023-07-300000723603us-gaap:RetainedEarningsMember2024-10-270000723603us-gaap:CommonStockMemberculp:StockRepurchaseProgramMarchTwoThousandAndTwentyMember2020-03-310000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMembercountry:CA2025-01-260000723603culp:TimeBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-04-292025-01-2600007236032024-04-280000723603us-gaap:OtherRestructuringMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-01-260000723603us-gaap:RevolvingCreditFacilityMembercountry:US2024-01-280000723603culp:SP500IndexFundMemberus-gaap:FairValueMeasurementsRecurringMember2024-04-280000723603culp:PerformanceBasedRestrictedStockUnitsMember2024-04-292025-01-2600007236032023-07-300000723603us-gaap:ForeignCountryMembercountry:CA2023-05-012024-01-280000723603culp:IncomeTaxesPayableNoncurrentMember2024-01-280000723603culp:IncomeTaxesPayableNoncurrentMember2025-01-260000723603us-gaap:BaseRateMemberculp:BankOfChinaMembercountry:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementMember2024-11-052024-11-0500007236032023-04-300000723603culp:MattressAssetGroupMemberculp:RightOfUseAssetsMember2025-01-260000723603us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-04-280000723603us-gaap:AdditionalPaidInCapitalMember2024-10-270000723603us-gaap:AllowanceForCreditLossMember2025-01-260000723603us-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembersrt:MinimumMembercountry:US2025-01-260000723603srt:MinimumMemberus-gaap:CustomerRelationshipsMember2025-01-260000723603us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-01-280000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:US2024-01-280000723603us-gaap:AllowanceForCreditLossMember2023-04-300000723603culp:MattressAssetGroupMember2024-04-292025-01-260000723603culp:CufHaitiMember2023-01-290000723603culp:PerformanceBasedRestrictedStockUnitsMember2025-01-262025-01-260000723603culp:TimeBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2023-05-012024-01-280000723603us-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembersrt:MinimumMembercountry:US2024-04-292025-01-260000723603culp:TimeBasedRestrictedStockUnitsMember2024-04-292025-01-260000723603us-gaap:AccruedLiabilitiesMembercountry:CN2024-04-280000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMemberus-gaap:EmployeeSeveranceMembercountry:HT2023-10-302024-01-280000723603us-gaap:AdditionalPaidInCapitalMember2023-10-290000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMemberus-gaap:EmployeeSeveranceMembercountry:HT2023-05-012024-01-280000723603culp:UpholsteryFabricsMemberculp:GainLossOnDisposalOfEquipmentMemberus-gaap:OperatingSegmentsMembercountry:HT2023-10-302024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMembersrt:MaximumMember2022-08-102022-08-100000723603culp:BankOfChinaMembercountry:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementMember2025-01-262025-01-260000723603culp:MattressAssetGroupMemberus-gaap:CustomerRelationshipsMemberculp:MattressFabricsMember2025-01-260000723603us-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2024-04-280000723603us-gaap:OperatingSegmentsMemberculp:DepreciationRelatedToShorteningUsefulLivesOfEquipmentMembercountry:CAculp:MattressFabricsMember2024-04-292025-01-260000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMemberculp:MattressFabricsMember2024-10-282025-01-260000723603culp:CufHaitiMember2024-04-292025-01-260000723603country:US2023-05-012024-01-280000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-300000723603srt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMemberculp:UpholsteryFabricsSegmentMember2025-04-270000723603country:US2024-04-280000723603us-gaap:OperatingSegmentsMembercountry:CAculp:MattressFabricsMember2024-04-292025-01-260000723603culp:IncomeTaxesPayableNoncurrentMember2024-04-280000723603us-gaap:RevolvingCreditFacilityMembercountry:US2025-01-260000723603dei:FormerAddressMember2024-04-292025-01-260000723603culp:SellingManufacturingFacilityMembercountry:HTus-gaap:CorporateNonSegmentMember2023-10-302024-01-280000723603culp:TwoThousandTwentyFiveRestructuringPlanMemberus-gaap:CostOfSalesMember2024-10-282025-01-260000723603us-gaap:InterestIncomeMembercountry:US2025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:CN2024-01-280000723603us-gaap:CommonStockMember2023-04-300000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2023-05-012024-01-280000723603us-gaap:RetainedEarningsMember2023-04-300000723603us-gaap:CommonStockMember2024-04-292025-01-260000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMemberculp:MattressFabricsMember2023-05-012024-01-280000723603us-gaap:RetainedEarningsMember2023-07-300000723603culp:SP500IndexFundMemberus-gaap:FairValueMeasurementsRecurringMember2025-01-2600007236032025-01-260000723603us-gaap:ForeignCountryMembercountry:CA2024-04-292025-01-260000723603culp:AdditionalDepreciationExpenseForShortenedUsefulLivesOfEquipmentMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-10-282025-01-260000723603us-gaap:MaterialReconcilingItemsMember2024-04-292025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMemberculp:SeniorExecutivesMember2023-09-282023-09-280000723603country:US2024-04-292025-01-260000723603culp:ChfTerminationAgreementMember2024-08-022024-08-020000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMembersrt:MaximumMember2024-01-082024-01-080000723603country:CN2024-04-280000723603culp:SP500IndexFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-01-280000723603country:US2023-05-010000723603us-gaap:RevolvingCreditFacilityMembercountry:US2023-05-012024-01-280000723603us-gaap:AllowanceForCreditLossMember2024-01-280000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:CN2025-01-260000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-280000723603country:CNus-gaap:ForeignLineOfCreditMember2024-03-200000723603culp:TwoThousandTwentyFiveRestructuringPlanMember2024-04-292025-01-260000723603culp:MattressFabricsSegmentMemberus-gaap:OtherRestructuringMembersrt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-04-270000723603country:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementExpiresMarch72025Member2024-03-200000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2023-09-282023-09-280000723603culp:MattressFabricsSegmentMemberculp:AdditionalDepreciationExpenseForShortenedUsefulLivesOfEquipmentMembersrt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-04-270000723603us-gaap:CommonStockMember2024-04-280000723603us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-04-280000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-01-260000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMemberculp:SaleOfEquipmentGainLossMembercountry:HT2023-10-302024-01-280000723603culp:BankOfChinaMembercountry:CNus-gaap:LetterOfCreditMemberculp:CreditAgreementMember2024-11-052024-11-050000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMembercountry:HT2023-10-302024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2023-09-280000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:HT2023-05-012024-01-280000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMemberculp:MattressFabricsMember2023-10-302024-01-280000723603country:CNus-gaap:ForeignCountryMember2023-05-012024-01-280000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMembercountry:HTculp:LeaseholdImprovementsAndEquipmentImpairmentLossMember2023-05-012024-01-280000723603us-gaap:NoncompeteAgreementsMember2024-04-280000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-04-280000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:US2025-01-260000723603culp:MattressFabricsMember2023-10-302024-01-280000723603culp:BankOfChinaMembercountry:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementMember2025-01-260000723603us-gaap:AdditionalPaidInCapitalMember2023-07-312023-10-290000723603us-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2024-01-280000723603culp:SP500IndexFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-01-260000723603us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2024-01-280000723603culp:TimeBasedRestrictedStockUnitsMember2023-05-012024-01-2800007236032023-10-290000723603culp:MattressFabricsSegmentMembersrt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMemberculp:LossOnDisposalAndValuationOfInventoryMember2025-04-270000723603us-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMemberculp:SecondAmendedAndRestatedCreditAgreementMembersrt:MaximumMembercountry:US2024-04-292025-01-260000723603culp:EquipmentImpairmentChargeMemberculp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMembercountry:HT2024-04-292025-01-260000723603culp:TwoThousandTwentyFiveRestructuringPlanMemberus-gaap:CostOfSalesMember2024-04-292025-01-260000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMembercountry:CA2024-10-282025-01-260000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2023-09-282023-09-280000723603culp:DisposalValuationAndMarkdownsOfInventoryMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-04-292025-01-260000723603culp:CufHaitiMemberculp:ExitAndDisposalActivityMembercountry:HTus-gaap:CostOfSalesMember2023-05-012024-01-280000723603culp:MattressFabricsMember2023-05-012024-01-280000723603us-gaap:CorporateNonSegmentMember2024-04-280000723603us-gaap:RetainedEarningsMember2023-10-302024-01-280000723603culp:MattressFabricsMember2024-10-282025-01-260000723603us-gaap:CommonStockMember2023-05-012023-07-300000723603us-gaap:EmployeeSeveranceMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-04-292025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-01-082024-01-080000723603us-gaap:CommonStockMember2025-01-260000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2023-05-012024-01-280000723603culp:ExecutiveOfficersAndKeyEmployeesMember2024-04-292025-01-260000723603us-gaap:CommonStockMember2024-07-280000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2025-01-062025-01-060000723603culp:NonEmployeeDirectorMemberus-gaap:StockCompensationPlanMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2023-05-012024-01-280000723603us-gaap:OperatingSegmentsMember2024-04-280000723603culp:BankOfChinaMembercountry:CNculp:WorkingCapitalLoanMemberculp:CreditAgreementMember2025-11-062025-11-060000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2022-08-102022-08-100000723603us-gaap:CommonStockMember2024-01-280000723603culp:AdditionalDepreciationExpenseForShortenedUsefulLivesOfEquipmentMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2024-04-292025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-08-010000723603us-gaap:OperatingSegmentsMembercountry:HTculp:MattressFabricsMember2024-04-280000723603culp:SellingManufacturingFacilityMemberus-gaap:CorporateNonSegmentMembercountry:CA2024-04-292025-01-260000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2024-08-082024-08-080000723603culp:NonEmployeeDirectorMemberus-gaap:StockCompensationPlanMemberculp:ImmediateMember2023-07-032023-07-030000723603us-gaap:CommonStockMember2024-07-292024-10-270000723603us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2023-10-302024-01-2800007236032024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMembersrt:MaximumMember2024-08-082024-08-080000723603us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2025-01-2600007236032024-10-270000723603us-gaap:OperatingSegmentsMemberus-gaap:EmployeeSeveranceMemberculp:MattressFabricsMember2024-04-292025-01-260000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2024-01-082024-01-080000723603us-gaap:MaterialReconcilingItemsMember2023-05-012024-01-280000723603culp:UpholsteryFabricsMember2024-04-292025-01-260000723603us-gaap:OperatingSegmentsMember2024-04-292025-01-2600007236032024-07-292024-10-270000723603us-gaap:AdditionalPaidInCapitalMember2023-10-302024-01-280000723603country:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementExpiresMarch72025Member2024-03-202024-03-200000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMember2024-04-292025-01-260000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-312023-10-290000723603us-gaap:AllowanceForCreditLossMember2024-04-292025-01-2600007236032023-05-012024-01-2800007236032023-05-012023-07-300000723603us-gaap:RetainedEarningsMember2024-01-280000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2022-08-102022-08-100000723603us-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2025-01-260000723603us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2024-04-292025-01-260000723603us-gaap:OperatingSegmentsMemberculp:MattressFabricsMember2024-01-2800007236032024-04-292024-07-280000723603culp:UpholsteryFabricsMemberus-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2024-04-292025-01-260000723603us-gaap:CustomerRelationshipsMember2023-04-300000723603us-gaap:OperatingSegmentsMember2025-01-260000723603us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2023-05-012024-01-280000723603culp:MattressAssetGroupMemberus-gaap:NoncompeteAgreementsMemberculp:MattressFabricsMember2025-01-260000723603us-gaap:OperatingSegmentsMembercountry:USculp:MattressFabricsMember2025-01-260000723603country:CNsrt:SubsidiariesMember2025-01-260000723603us-gaap:NoncompeteAgreementsMember2023-05-012024-01-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-04-292025-01-260000723603culp:UpholsteryFabricsMemberus-gaap:OperatingSegmentsMemberus-gaap:EmployeeSeveranceMembercountry:HT2024-04-292025-01-260000723603us-gaap:NoncompeteAgreementsMember2025-01-260000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2022-09-062022-09-060000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueMeasurementsRecurringMember2025-01-260000723603culp:FederalAndStateMemberculp:DeferredIncomeTaxAssetsMember2024-04-280000723603us-gaap:NoncompeteAgreementsMember2023-04-300000723603culp:SP500IndexFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-04-280000723603us-gaap:OperatingSegmentsMembercountry:CAculp:MattressFabricsMember2024-01-280000723603culp:MattressFabricsSegmentMemberculp:LeaseTerminationCostsMembersrt:ScenarioForecastMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-04-270000723603us-gaap:CapitalAdditionsMemberculp:MattressFabricsMember2025-01-260000723603us-gaap:OperatingSegmentsMembercountry:HTculp:MattressFabricsMember2024-01-2800007236032025-03-0700007236032024-10-282025-01-260000723603us-gaap:OperatingSegmentsMembercountry:CAculp:MattressFabricsMember2024-04-280000723603srt:MaximumMember2025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-01-080000723603culp:UpholsteryFabricsMember2023-05-012024-01-280000723603us-gaap:AdditionalPaidInCapitalMember2023-05-012023-07-300000723603us-gaap:AdditionalPaidInCapitalMember2025-01-260000723603country:CNus-gaap:ForeignCountryMember2024-04-292025-01-260000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2024-10-282025-01-260000723603us-gaap:RevolvingCreditFacilityMemberus-gaap:SubsequentEventMembercountry:US2025-03-070000723603us-gaap:EmployeeSeveranceMemberculp:TwoThousandTwentyFiveRestructuringPlanMember2025-01-260000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-04-280000723603culp:SecuredLineOfCreditByTradeReceivableMemberculp:BankOfChinaMembercountry:CNculp:CreditAgreementMember2025-01-260000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-01-280000723603us-gaap:CapitalLossCarryforwardMember2024-04-280000723603culp:TwoThousandTwentyFiveRestructuringPlanMember2024-10-282025-01-260000723603us-gaap:CorporateNonSegmentMembercountry:US2025-01-260000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMembersrt:MaximumMember2023-09-282023-09-280000723603us-gaap:AdditionalPaidInCapitalMember2024-10-282025-01-260000723603us-gaap:RetainedEarningsMember2023-07-312023-10-290000723603country:US2024-01-28xbrli:purexbrli:sharesiso4217:CNYiso4217:CADculp:Segmentiso4217:USDiso4217:USDxbrli:shares

0000723603falseQ1falsetrue--04-272026CULP INCP9Yhttp://fasb.org/us-gaap/2025#InvestmentsMemberhttp://fasb.org/us-gaap/2025#InvestmentsMemberhttp://fasb.org/us-gaap/2025#InvestmentsMemberhttp://fasb.org/srt/2025#ChiefExecutiveOfficerMemberP1Y0000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2025-01-062025-01-060000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMember2025-08-030000723603us-gaap:OtherRestructuringMember2024-04-280000723603us-gaap:NoncompeteAgreementsMember2025-04-282025-08-030000723603us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2025-08-030000723603us-gaap:RetainedEarningsMember2024-07-280000723603us-gaap:AllowanceForCreditLossMember2024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-01-082024-01-080000723603culp:ValuationCapitalLossCarryforwardsAndCreditsMember2024-07-280000723603culp:BeddingMember2025-08-030000723603culp:BeddingFabricsMemberus-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2024-04-292024-07-280000723603culp:CufHaitiMemberculp:CUFTerminationAgreementMember2023-01-242023-01-240000723603us-gaap:RetainedEarningsMember2025-04-282025-08-030000723603culp:BeddingAssetGroupMember2025-08-030000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMemberculp:DepreciationRelatedToShorteningUsefulLivesOfEquipmentMember2025-04-282025-08-030000723603culp:UpholsteryMember2025-08-030000723603culp:BeddingAssetGroupMemberculp:RightOfUseAssetsMember2025-08-030000723603culp:BeddingMember2024-04-292024-07-280000723603culp:FederalAndStateMemberculp:DeferredIncomeTaxAssetsMember2025-04-270000723603us-gaap:OperatingSegmentsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-04-292024-07-280000723603culp:SP500IndexFundMemberus-gaap:FairValueMeasurementsRecurringMember2025-08-030000723603us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-07-280000723603us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2025-04-270000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-08-030000723603culp:OneBigBeautifulBillActMember2025-04-282025-08-030000723603us-gaap:EmployeeSeveranceMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-08-030000723603us-gaap:CustomerRelationshipsMember2024-04-280000723603culp:AprilTwentyNineTwoThousandTwentyFourRestructuringPlanMembercountry:CA2025-04-282025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:HT2025-04-270000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2024-08-082024-08-080000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-08-082024-08-080000723603culp:FacilityConsolidationAndRelocationExpensesMember2024-04-292024-07-280000723603us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2025-04-282025-08-030000723603us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberculp:CreditAgreementMembercountry:US2025-08-030000723603us-gaap:OtherRestructuringMember2025-08-030000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMember2024-07-280000723603us-gaap:CorporateNonSegmentMembercountry:US2025-04-270000723603culp:BeddingFabricsSegmentMember2024-04-292024-07-280000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2024-04-292024-07-280000723603us-gaap:OtherRestructuringMember2025-04-282025-08-030000723603culp:CufHaitiMembercountry:US2025-08-030000723603culp:SP500IndexFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-04-270000723603culp:FacilityConsolidationAndRelocationExpensesMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMember2025-04-282025-08-030000723603culp:ValuationCapitalLossCarryforwardsAndCreditsMember2025-04-270000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2023-09-282023-09-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2025-04-282025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2023-09-282023-09-280000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2022-09-060000723603country:US2025-04-270000723603us-gaap:CustomerRelationshipsMember2024-04-292024-07-280000723603culp:TimeBasedRestrictedStockUnitsMember2025-04-282025-08-030000723603culp:BankOfChinaMembercountry:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementMember2025-04-270000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMembercountry:US2025-04-270000723603culp:BeddingFabricsMember2024-04-292024-07-280000723603culp:SalesAgreementMembersrt:MaximumMembercountry:CA2025-04-302025-04-300000723603culp:BeddingMembercountry:CA2025-04-270000723603culp:BankOfChinaMemberus-gaap:BaseRateMembercountry:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementMember2024-11-052024-11-050000723603us-gaap:OperatingSegmentsMember2024-07-280000723603culp:BeddingFabricsSegmentMemberculp:StrategicTransformationMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-04-282025-08-030000723603us-gaap:TransferredOverTimeMemberus-gaap:ServiceMember2024-04-292024-07-280000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:HT2024-07-2800007236032025-08-032025-08-030000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMember2025-04-282025-08-030000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2024-01-082024-01-080000723603country:US2024-07-280000723603culp:SupplierFinancingArrangementsMembercountry:CNculp:AgriculturalBankOfChinaMember2024-04-280000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMember2024-04-292024-07-280000723603culp:WellsFargoBankMemberus-gaap:RevolvingCreditFacilityMembercountry:US2024-07-280000723603culp:SalesAgreementMembercountry:CA2025-04-022025-04-300000723603culp:SupplierFinancingArrangementsMembercountry:CNculp:AgriculturalBankOfChinaMember2024-04-292024-07-280000723603us-gaap:RevolvingCreditFacilityMembercountry:CN2024-07-280000723603culp:SupplierFinancingArrangementsMembercountry:CNculp:AgriculturalBankOfChinaMember2025-08-030000723603culp:TimeBasedRestrictedStockUnitsMemberculp:NonEmployeeDirectorMember2024-09-260000723603culp:DisposalAndMarkdownsOfInventoryMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-08-030000723603country:CNus-gaap:ForeignLineOfCreditMember2025-04-270000723603us-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembercountry:US2025-04-282025-08-030000723603culp:AdditionalDepreciationExpenseForShortenedUsefulLivesOfEquipmentMember2024-04-292024-07-280000723603us-gaap:OperatingSegmentsMemberculp:BeddingMember2024-07-280000723603culp:BankOfChinaMembercountry:CNculp:WorkingCapitalLoanMember2024-07-280000723603culp:NetGainLossOnSaleAndImpairmentOfPropertyPlantAndEquipmentMember2025-04-282025-08-030000723603culp:SalesAgreementMembercountry:CA2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMembersrt:MaximumMember2024-01-082024-01-080000723603culp:BankOfChinaMembercountry:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementMember2025-08-032025-08-030000723603culp:SupplierFinanceArrangementMembercountry:CNculp:AgriculturalBankOfChinaMember2025-04-270000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMember2025-04-2700007236032024-04-280000723603culp:FederalAndStateMemberculp:DeferredIncomeTaxAssetsMember2025-08-030000723603culp:SP500IndexFundMemberus-gaap:FairValueMeasurementsRecurringMember2024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2023-09-280000723603country:CNsrt:MinimumMemberculp:AgriculturalBankOfChinaMemberculp:WorkingCapitalLoanMember2025-08-032025-08-030000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-04-270000723603culp:DisposalAndMarkdownsOfInventoryMemberus-gaap:CorporateNonSegmentMembercountry:CA2024-04-292024-07-280000723603us-gaap:AdditionalPaidInCapitalMember2025-04-282025-08-030000723603us-gaap:AllowanceForCreditLossMember2024-04-292024-07-280000723603us-gaap:CommonStockMember2024-07-280000723603us-gaap:ForeignCountryMembercountry:CA2025-04-282025-08-0300007236032025-04-270000723603culp:StrategicTransformationMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-04-282025-08-030000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMembercountry:US2024-07-280000723603us-gaap:CorporateNonSegmentMember2024-07-2800007236032025-04-240000723603us-gaap:AdditionalPaidInCapitalMember2024-04-292024-07-280000723603culp:BankOfChinaMembercountry:CNus-gaap:ForeignLineOfCreditMemberculp:CreditAgreementMember2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMember2024-04-292024-07-280000723603culp:TimeBasedRestrictedStockUnitsMember2024-04-292024-07-280000723603us-gaap:CorporateNonSegmentMembercountry:US2024-07-280000723603culp:BeddingAssetGroupMemberculp:BeddingMember2025-04-282025-08-030000723603country:US2024-04-292024-07-280000723603culp:BeddingAssetGroupMember2025-04-282025-08-030000723603country:CNus-gaap:ForeignLineOfCreditMember2024-07-280000723603us-gaap:OperatingSegmentsMembercountry:CNculp:UpholsteryMember2025-04-270000723603srt:MaximumMemberus-gaap:CustomerRelationshipsMember2025-08-030000723603us-gaap:AdditionalPaidInCapitalMember2025-04-270000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:US2025-04-270000723603us-gaap:RetainedEarningsMember2024-04-292024-07-280000723603us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2025-04-270000723603culp:BankOfChinaMembercountry:CNculp:CreditAgreementMemberculp:WorkingCapitalLoanMember2025-08-030000723603culp:SupplierFinanceArrangementMembercountry:CNculp:AgriculturalBankOfChinaMembersrt:MaximumMember2025-04-282025-08-030000723603us-gaap:RetainedEarningsMember2025-08-030000723603us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2024-07-280000723603us-gaap:CommonStockMember2025-08-030000723603culp:FacilityConsolidationAndRelocationExpensesMember2025-04-282025-08-030000723603us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMemberculp:DebtToValueRatioThirtyThreePointThreeThreeToSixtySixPointSixSevenPercentMembercountry:US2025-04-282025-08-030000723603country:CNsrt:SubsidiariesMember2025-08-030000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-07-280000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2023-09-2800007236032025-08-030000723603us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2025-04-270000723603culp:UpholsterySegmentMemberculp:StrategicTransformationMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-04-282025-08-030000723603country:HT2025-04-282025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2023-09-280000723603country:CNus-gaap:ForeignCountryMember2025-04-282025-08-030000723603srt:MaximumMember2025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:US2025-08-030000723603us-gaap:CustomerRelationshipsMember2025-04-282025-08-030000723603country:CNculp:AgriculturalBankOfChinaMemberculp:WorkingCapitalLoanMember2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2024-01-082024-01-080000723603culp:TerminationAgreementMember2024-07-280000723603culp:LeaseTerminationCostsMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-08-030000723603culp:BeddingFabricsMemberus-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2025-04-282025-08-030000723603us-gaap:CorporateNonSegmentMember2025-08-030000723603us-gaap:NoncompeteAgreementsMember2025-04-270000723603culp:SalesAgreementMembercountry:CA2025-04-302025-04-300000723603us-gaap:RetainedEarningsMember2024-04-280000723603us-gaap:OperatingSegmentsMemberculp:BeddingMember2024-04-292024-07-280000723603us-gaap:MaterialReconcilingItemsMember2025-04-282025-08-030000723603us-gaap:AllowanceForCreditLossMember2025-04-282025-08-030000723603culp:TimeBasedRestrictedStockUnitsMemberculp:NonEmployeeDirectorMember2024-09-262024-09-260000723603us-gaap:CustomerRelationshipsMember2025-04-270000723603us-gaap:RevolvingCreditFacilityMembercountry:CNculp:AgriculturalBankOfChinaMember2025-04-270000723603culp:TerminationAgreementMember2025-02-282025-02-280000723603culp:UpholsteryMember2024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMembersrt:ExecutiveOfficerMember2023-09-282023-09-280000723603us-gaap:AllowanceForCreditLossMember2024-04-280000723603culp:DisposalAndMarkdownsOfInventoryMember2024-04-292024-07-280000723603culp:SalesAgreementMembercountry:CA2025-04-300000723603us-gaap:OtherRestructuringMember2025-04-270000723603country:CNculp:AgriculturalBankOfChinaMemberculp:WorkingCapitalLoanMember2025-04-270000723603us-gaap:RevolvingCreditFacilityMembercountry:CNculp:AgriculturalBankOfChinaMember2025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMember2025-08-030000723603culp:SP500IndexFundMemberus-gaap:FairValueMeasurementsRecurringMember2025-04-270000723603culp:UpholsteryMember2024-04-292024-07-280000723603srt:MinimumMemberculp:SalesAgreementMembercountry:CA2025-04-302025-04-300000723603culp:TimeBasedRestrictedStockUnitsMembersrt:ManagementMember2025-04-282025-08-030000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-04-282025-08-030000723603culp:UpholsteryMember2025-04-282025-08-030000723603culp:FederalAndStateMemberculp:DeferredIncomeTaxAssetsMember2024-07-280000723603culp:SupplierFinanceArrangementMembercountry:CNculp:AgriculturalBankOfChinaMember2024-07-280000723603country:CNsrt:SubsidiariesMember2025-04-282025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMember2025-08-030000723603us-gaap:RevolvingCreditFacilityMember2025-04-282025-08-030000723603culp:ExecutiveOfficersAndKeyEmployeesMember2025-04-282025-08-030000723603country:CNculp:AgriculturalBankOfChinaMemberculp:WorkingCapitalLoanMember2024-07-280000723603country:CNus-gaap:ForeignLineOfCreditMemberculp:AgriculturalBankOfChinaMember2025-04-282025-08-030000723603culp:WellsFargoBankMemberus-gaap:RevolvingCreditFacilityMembercountry:US2025-04-270000723603us-gaap:EmployeeSeveranceMember2025-04-270000723603us-gaap:CommonStockMember2025-04-270000723603us-gaap:TransferredOverTimeMemberculp:UpholsteryMemberus-gaap:ServiceMember2024-04-292024-07-280000723603us-gaap:TransferredAtPointInTimeMemberculp:UpholsteryMemberus-gaap:ProductMember2025-04-282025-08-030000723603us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2025-08-030000723603country:US2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMembersrt:MaximumMember2024-08-082024-08-080000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-07-280000723603us-gaap:CorporateNonSegmentMember2025-04-282025-08-030000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2025-01-060000723603country:HTculp:BeddingMember2024-07-280000723603us-gaap:NoncompeteAgreementsMember2024-04-292024-07-280000723603us-gaap:OperatingSegmentsMemberculp:UpholsteryMembercountry:US2025-08-030000723603culp:DebtToValueRatioLessThanThirtyThreePointThreeThreePercentMemberus-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembercountry:US2025-04-282025-08-030000723603us-gaap:AccruedLiabilitiesMembercountry:CN2024-04-280000723603us-gaap:RevolvingCreditFacilityMembercountry:US2025-04-270000723603culp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMemberculp:ImpairmentChargesAndLossesOnDisposalOfEquipmentMember2025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:US2024-07-2800007236032024-04-292024-07-280000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-08-030000723603us-gaap:TransferredAtPointInTimeMemberculp:UpholsteryMemberus-gaap:ProductMember2024-04-292024-07-280000723603us-gaap:OperatingSegmentsMembercountry:CNculp:UpholsteryMember2025-08-030000723603us-gaap:EmployeeSeveranceMember2025-04-282025-08-0300007236032025-04-282025-08-030000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2024-08-082024-08-080000723603culp:BeddingMembercountry:US2024-07-280000723603country:CNculp:AgriculturalBankOfChinaMemberculp:WorkingCapitalLoanMember2025-04-282025-08-030000723603us-gaap:RevolvingCreditFacilityMembercountry:US2024-07-280000723603culp:TimeBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2025-04-282025-08-030000723603us-gaap:OtherRestructuringMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-08-030000723603us-gaap:EmployeeSeveranceMember2025-08-030000723603us-gaap:NoncompeteAgreementsMember2024-04-280000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-04-270000723603us-gaap:BaseRateMembercountry:CNculp:AgriculturalBankOfChinaMemberculp:WorkingCapitalLoanMember2025-08-032025-08-030000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2024-08-080000723603culp:SecuredLineOfCreditByTradeReceivableMemberculp:BankOfChinaMembercountry:CNculp:CreditAgreementMember2024-11-050000723603country:CNculp:AgriculturalBankOfChinaMemberculp:WorkingCapitalLoanMembersrt:MaximumMember2025-08-032025-08-030000723603us-gaap:RevolvingCreditFacilityMembercountry:US2025-08-030000723603culp:AprilTwentyNineTwoThousandTwentyFourRestructuringPlanMembercountry:CA2024-04-292025-08-030000723603us-gaap:CorporateNonSegmentMembercountry:US2025-08-030000723603culp:BeddingFabricsSegmentMembercountry:CA2025-04-270000723603culp:BeddingFabricsSegmentMembercountry:CA2025-04-272025-04-270000723603us-gaap:CustomerRelationshipsMember2024-07-280000723603us-gaap:OperatingSegmentsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2025-04-282025-08-030000723603culp:DebtToValueRatioGreaterThanSixtySixPointSixSevenPercentMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembercountry:US2025-04-282025-08-030000723603us-gaap:CorporateNonSegmentMember2025-04-270000723603us-gaap:CommonStockMemberculp:StockRepurchaseProgramMarchTwoThousandAndTwentyMember2020-03-310000723603us-gaap:NoncompeteAgreementsMember2024-07-280000723603us-gaap:OperatingSegmentsMember2025-08-030000723603us-gaap:OtherRestructuringMember2024-04-292024-07-280000723603culp:BeddingFabricsSegmentMembercountry:CA2025-04-282025-08-030000723603culp:BankOfChinaMembercountry:CNculp:CreditAgreementMemberculp:WorkingCapitalLoanMember2025-11-062025-11-060000723603culp:WellsFargoBankMemberus-gaap:RevolvingCreditFacilityMembercountry:US2025-08-030000723603us-gaap:RevolvingCreditFacilityMembercountry:USculp:ThirdAmendmentMember2025-08-032025-08-030000723603culp:SupplierFinancingArrangementsMembercountry:CNculp:AgriculturalBankOfChinaMember2024-07-280000723603culp:OneBigBeautifulBillActMember2025-07-042025-07-040000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2023-09-282023-09-280000723603us-gaap:ForeignCountryMembercountry:CA2024-04-292024-07-280000723603culp:BankOfChinaMembercountry:CNculp:WorkingCapitalLoanMember2025-04-270000723603us-gaap:AllowanceForCreditLossMember2025-08-030000723603us-gaap:AdditionalPaidInCapitalMember2025-08-0300007236032024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2024-08-080000723603us-gaap:CostOfSalesMember2024-04-292024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMember2024-01-080000723603us-gaap:TransferredAtPointInTimeMemberus-gaap:ProductMember2025-04-282025-08-030000723603culp:SupplierFinanceArrangementMembercountry:CNsrt:MinimumMemberculp:AgriculturalBankOfChinaMember2025-04-282025-08-030000723603culp:TimeBasedRestrictedStockUnitsMember2025-08-030000723603culp:BeddingMember2025-04-270000723603srt:MinimumMember2025-08-030000723603us-gaap:NoncompeteAgreementsMember2025-08-030000723603us-gaap:RevolvingCreditFacilityMembercountry:CN2025-08-030000723603culp:AdditionalDepreciationExpenseForShortenedUsefulLivesOfEquipmentMember2025-04-282025-08-030000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueMeasurementsRecurringMember2025-04-270000723603us-gaap:RetainedEarningsMember2025-04-270000723603culp:CreditAgreementMemberus-gaap:LetterOfCreditMembercountry:US2025-08-030000723603us-gaap:CommonStockMember2025-04-282025-08-030000723603us-gaap:CorporateNonSegmentMember2025-04-282025-08-030000723603culp:DebtToValueRatioLessThanThirtyThreePointThreeThreePercentMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembercountry:US2025-04-282025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMemberculp:DepreciationRelatedToShorteningUsefulLivesOfEquipmentMembercountry:CA2024-04-292024-07-280000723603us-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2025-04-270000723603us-gaap:AdditionalPaidInCapitalMember2024-04-280000723603culp:BeddingMembercountry:US2025-08-030000723603us-gaap:CommonStockMember2024-04-292024-07-280000723603culp:CufHaitiMemberculp:CUFTerminationAgreementMember2023-01-240000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2024-01-080000723603us-gaap:NoncompeteAgreementsMemberculp:BeddingAssetGroupMemberculp:BeddingMember2025-08-030000723603us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2025-08-030000723603culp:SupplierFinancingArrangementsMembercountry:CNculp:AgriculturalBankOfChinaMember2025-04-282025-08-030000723603country:CNus-gaap:ForeignCountryMember2024-04-292024-07-280000723603culp:BeddingFabricsSegmentMember2025-04-282025-08-030000723603culp:BankOfChinaMembercountry:CNculp:CreditAgreementMemberus-gaap:LetterOfCreditMember2024-11-052024-11-050000723603culp:SeniorExecutivesAndKeyEmployeesMemberculp:TimeBasedRestrictedStockUnitsMember2022-09-062022-09-060000723603culp:EquityIncentivePlanTwoThousandFifteenMember2015-09-160000723603culp:ValuationCapitalLossCarryforwardsAndCreditsMember2025-08-030000723603country:US2025-04-282025-08-030000723603country:CNus-gaap:ForeignLineOfCreditMember2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMembersrt:ExecutiveOfficerMember2024-01-082024-01-080000723603culp:TimeBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-04-292024-07-280000723603us-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMemberculp:DebtToValueRatioThirtyThreePointThreeThreeToSixtySixPointSixSevenPercentMembercountry:US2025-04-282025-08-030000723603us-gaap:BaseRateMemberculp:DebtToValueRatioGreaterThanSixtySixPointSixSevenPercentMemberus-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembercountry:US2025-04-282025-08-030000723603srt:MaximumMember2025-04-282025-08-030000723603culp:BeddingAssetGroupMemberus-gaap:PropertyPlantAndEquipmentMember2025-08-030000723603culp:SP500IndexFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-07-280000723603us-gaap:RevolvingCreditFacilityMember2024-04-292024-07-280000723603culp:GainLossOnDisposalOfEquipmentMemberus-gaap:CorporateNonSegmentMembercountry:CA2025-04-282025-08-030000723603culp:AprilTwentyNineTwoThousandTwentyFourRestructuringPlanMember2025-04-282025-08-030000723603culp:CufHaitiMembercountry:US2024-07-280000723603culp:TerminationAgreementMember2024-04-292024-07-280000723603culp:ImpairmentOfReadsTradenameMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-08-030000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-280000723603us-gaap:RevolvingCreditFacilityMembercountry:CN2025-04-270000723603us-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembersrt:MaximumMembercountry:US2025-08-030000723603country:HTculp:EconomicZoneMember2025-04-282025-08-030000723603culp:TerminationAgreementMemberus-gaap:FairValueInputsLevel2Member2025-08-030000723603culp:SupplierFinancingArrangementsMembercountry:CNculp:AgriculturalBankOfChinaMember2025-04-270000723603culp:PerformanceBasedRestrictedStockUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-04-292024-07-280000723603culp:AmendedAndRestatedTwoThousandAndFifteenEquityIncentivePlanMember2023-09-272023-09-270000723603culp:LeaseTerminationCostsMember2025-04-282025-08-030000723603us-gaap:OperatingSegmentsMembercountry:CNculp:UpholsteryMember2024-07-280000723603us-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2024-07-280000723603srt:MinimumMember2025-04-282025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:CA2025-04-270000723603culp:SecuredLineOfCreditByTradeReceivableMemberculp:BankOfChinaMembercountry:CNculp:CreditAgreementMember2025-08-030000723603us-gaap:TransferredOverTimeMemberculp:UpholsteryMemberus-gaap:ServiceMember2025-04-282025-08-030000723603culp:BeddingAssetGroupMemberculp:BeddingMemberus-gaap:CustomerRelationshipsMember2025-08-030000723603us-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembercountry:US2025-08-030000723603us-gaap:BaseRateMembercountry:CNus-gaap:ForeignLineOfCreditMember2025-04-282025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMember2025-04-282025-08-030000723603culp:CufHaitiMembercountry:US2025-04-270000723603culp:BeddingFabricsMember2025-04-282025-08-030000723603culp:CufHaitiMember2023-01-240000723603culp:StrategicTransformationMemberculp:AprilTwentyFourTwoThousandTwentyFiveRestructuringPlanMember2025-08-030000723603us-gaap:AdditionalPaidInCapitalMember2024-07-280000723603us-gaap:OtherRestructuringMember2024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMembersrt:ExecutiveOfficerMember2024-08-082024-08-080000723603culp:AmendedAndRestatedTwoThousandAndFifteenEquityIncentivePlanMember2025-08-030000723603culp:BeddingMember2024-07-280000723603us-gaap:OperatingSegmentsMemberculp:BeddingMember2025-04-270000723603country:HT2024-04-292024-07-280000723603us-gaap:FairValueMeasurementsRecurringMemberculp:USGovernmentMoneyMarketFundMember2025-08-030000723603culp:NetGainLossOnSaleAndImpairmentOfPropertyPlantAndEquipmentMember2024-04-292024-07-280000723603us-gaap:OperatingSegmentsMember2024-04-292024-07-280000723603culp:GrowthAllocationMutualFundsMemberus-gaap:FairValueMeasurementsRecurringMember2025-08-030000723603us-gaap:EmployeeSeveranceMember2024-07-280000723603us-gaap:RevolvingCreditFacilityMembercountry:CNculp:AgriculturalBankOfChinaMember2024-07-280000723603culp:BankOfChinaMembercountry:CNculp:WorkingCapitalLoanMember2025-08-030000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:CA2024-07-280000723603us-gaap:CorporateNonSegmentMember2024-04-292024-07-280000723603us-gaap:OperatingSegmentsMember2025-04-282025-08-0300007236032025-09-100000723603us-gaap:AllowanceForCreditLossMember2025-04-270000723603culp:SupplierFinanceArrangementMembercountry:CNculp:AgriculturalBankOfChinaMember2025-08-030000723603us-gaap:MaterialReconcilingItemsMember2024-04-292024-07-280000723603srt:MinimumMemberus-gaap:CustomerRelationshipsMember2025-08-030000723603us-gaap:CommonStockMember2024-04-280000723603us-gaap:OperatingSegmentsMember2025-04-270000723603us-gaap:OperatingSegmentsMemberculp:BeddingMembercountry:HT2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-08-080000723603us-gaap:CustomerRelationshipsMember2025-08-030000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-280000723603us-gaap:EmployeeSeveranceMember2024-04-292024-07-280000723603country:CNus-gaap:ForeignLineOfCreditMember2025-03-050000723603culp:BankOfChinaMembercountry:CNculp:CreditAgreementMemberculp:WorkingCapitalLoanMember2024-11-050000723603culp:BeddingFabricsSegmentMembercountry:US2024-07-280000723603us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMembercountry:US2025-08-030000723603culp:SP500IndexFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-08-030000723603culp:PerformanceBasedRestrictedStockUnitsMembersrt:ExecutiveOfficerMembersrt:MaximumMember2023-09-282023-09-280000723603culp:LeaseTerminationCostsMember2024-04-292024-07-280000723603culp:PerformanceBasedRestrictedStockUnitsMemberculp:SeniorExecutivesMember2024-01-080000723603us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-292024-07-280000723603us-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembercountry:US2025-08-032025-08-030000723603us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-07-280000723603us-gaap:RevolvingCreditFacilityMemberculp:CreditAgreementMembersrt:MaximumMembercountry:US2025-04-282025-08-03xbrli:purexbrli:sharesiso4217:CNYiso4217:CADculp:Segmentiso4217:USDxbrli:sharesiso4217:USD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~January~~August 263, 2025

Commission File No. 1-12597

CULP, INC.

(Exact name of registrant as specified in its charter)

     North Carolina

     56-1001967

     (State or other jurisdiction of
incorporation or other organization)

     (I.R.S. Employer
Identification No.)


410 W. English Road 5th Floor
High Point, North Carolina	27262
(Address of principal executive offices)	(zip code)

1823 Eastchester Drive High Point, North Carolina, 27265-1402 (Former address of principal executive offices)

(336) 889-5161

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


		Name of Each Exchange
Title of Each Class	Trading Symbol(s)	On Which Registered
Common Stock, par value $.05/ Share	CULP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period after the registrant was required to submit such files). ☒ Yes No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common shares outstanding as of ~~March~~September 710, 2025: 12,~~559~~605,~~129~~306

Par Value: $0.05 per share

INDEX TO FORM 10-Q

For the period ended ~~January~~August 263, 2025

	Part I - Financial Statements	Page
Item 1.	Financial Statements: (Unaudited)	I-1
	Consolidated Statements of Net Loss — Three Months Ended January 26, 2025, and January 28, 2024	I-1
	Consolidated Statements of Net Loss — Three Months Ended August 3, 2025, and July 28, 2024	I-1
	Consolidated Statements of Net Loss — Nine Months Ended January 26, 2025, and January 28, 2024	I-2
	Consolidated Statements of Comprehensive Loss – Three Months Ended August 3, 2025, and July 28, 2024	I-2
	Consolidated Statements of Comprehensive Loss – Three Months and Nine Months Ended January 26, 2025, and January 28, 2024	I-3
	Consolidated Balance Sheets — August 3, 2025, July 28 2024, and April 27, 2025	I-3
	Consolidated Balance Sheets — January 26, 2025, January 28 2024, and April 28, 2024	I-4
	Consolidated Statements of Cash Flows — Three Months Ended August 3, 2025, and July 28, 2024	I-4
	Consolidated Statements of Cash Flows — Nine Months Ended January 26, 2025, and January 28, 2024	I-5
	Consolidated Statements of Shareholders’ Equity – Three Months Ended August 3, 2025	I-5
	Consolidated Statements of Shareholders’ Equity – Nine Months Ended January 26, 2025	I-6
	Consolidated Statements of Shareholders’ Equity – Three Months Ended July 28, 2024	I-6
	Consolidated Statements of Shareholders’ Equity – Nine Months Ended January 28, 2024	I-7
	Notes to Consolidated Financial Statements	I-7
	Notes to Consolidated Financial Statements	I-8
	Cautionary Statement Concerning Forward-Looking Information	I-32
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	I-33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	I-5049
Item 4.	Controls and Procedures	I-5049
	Part II - Other Information
Item 1.	Legal Proceedings	II-1
Item 1A.	Risk Factors	II-1
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	II-21
Item 5.	Other Information	II-21
Item 6.	Exhibits	II-32
Signatures		II-43

Item 1: Financial Statements

CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR THE THREE MONTHS ENDED ~~JANUARY~~AUGUST 263, 2025, AND ~~JANUARY~~JULY 28, 2024

UNAUDITED

(Amounts in Thousands, Except for Per Share Data)

	THREE MONTHS ENDED
	January 26,			January 28,
	August 3,			July 28,
	2025			2024
Net sales	$	5250,~~253~~691		$	6056,~~418~~537
Cost of sales		(4543,~~906~~463	)		(5251,~~715~~461	)
Gross profit		67,~~347~~228			75,~~703~~076
Selling, general and administrative expenses		(89,~~579~~119	)		(9,~~493~~296	)
Restructuring (expense) credit		(1,655	)		50
Restructuring credit (expense)		3,508			(2,631	)
Loss from operations		(3,887	)		(1,740	)
Income (loss) from operations		1,617			(6,851	)
Interest expense		(63183	)		—(28	)
Interest income		~~255~~235			~~284~~262
Other income (expense)		15			(705	)
Other expense		(531	)		(404	)
Loss before income taxes		(3,680	)		(2,161	)
Income (loss) before income taxes		1,138			(7,021	)
Income tax expense		(~~446~~1,369	)		(~~1,027~~240	)
Net loss	$	(~~4,126~~231	)	$	(37,~~188~~261	)
Net loss per share - basic	$	(0.3302	)	$	(0.2658	)
Net loss per share - diluted	$	(0.3302	)	$	(0.2658	)
Average shares outstanding, basic		12,~~559~~570			12,470
Average shares outstanding, diluted		12,~~559~~570			12,470

See accompanying notes to consolidated financial statements.

I-1

CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR THE NINE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

UNAUDITED

(Amounts in Thousands, Except for Per Share Data)

	NINE MONTHS ENDED
	January 26,			January 28,
	2025			2024
Net sales	$	164,464		$	175,804
Cost of sales		(147,050	)		(153,067	)
Gross profit		17,414			22,737
Selling, general and administrative expenses		(27,235	)		(29,366	)
Restructuring expense		(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	)
Income tax expense		(635	)		(2,244	)
Net loss	$	(17,031	)	$	(8,954	)
Net loss per share - basic	$	(1.36	)	$	(0.72	)
Net loss per share - diluted	$	(1.36	)	$	(0.72	)
Average shares outstanding, basic		12,514			12,419
Average shares outstanding, diluted		12,514			12,419

See accompanying notes to consolidated financial statements.

I-2

CULP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~JANUARY~~AUGUST 263, 2025, AND ~~JANUARY~~JULY 28, 2024

UNAUDITED

(Amounts in Thousands)

	THREE MONTHS ENDED
	January 26,			January 28,
	August 3,			July 28,
	2025			2024
Net loss	$	(~~4,126~~231	)	$	(37,~~188~~261	)
Unrealized holding (loss) gain on investments, net of tax		(5	)		94
Unrealized holding gain on investments, net of tax		142			80
Comprehensive loss	$	(~~4,131~~89	)	$	(37,~~094~~181	)

	NINE MONTHS ENDED
	January 26,			January 28,
	2025			2024
Net loss	$	(17,031	)	$	(8,954	)
Unrealized holding gain on investments, net of tax		98			69
Comprehensive loss	$	(16,933	)	$	(8,885	)

See accompanying notes to consolidated financial statements.

I-32

CULP, INC.

CONSOLIDATED BALANCE SHEETS

~~JANUARY~~AUGUST 263, 2025, ~~JANUARY~~JULY 28, 2024, AND APRIL 2827, ~~2024~~2025

UNAUDITED

(Amounts in Thousands)

January 26,

January 28,

April 28,

August 3,

July 28,

April 27,

2025

2024

~~2024~~2025*

Current assets:

Cash and cash equivalents

511,~~279~~094

1213,~~585~~472

105,~~012~~629

Short-term investments - rabbi trust

1,~~753~~395

~~937~~954

~~903~~1,325

Accounts receivable, net

2318,~~159~~382

2321,~~686~~587

21,~~138~~844

Inventories

4850,~~599~~109

4641,~~877~~668

4449,~~843~~309

Short-term notes receivable

~~526~~5,104

~~260~~268

~~264~~280

Current income taxes receivable

~~1,137~~—

~~476~~532

~~350~~—

Assets held for sale

~~2,214~~40

—607

—2,177

Other current assets

2,~~619~~767

43,~~237~~590

32,~~371~~970

Total current assets

8588,~~286~~891

8982,~~058~~678

8083,~~881~~534

Property, plant and equipment, net

2523,~~939~~552

3430,~~021~~476

3324,~~182~~836

Right of use assets

65,~~103~~162

64,~~952~~483

65,~~203~~908

Intangible assets

~~1,594~~865

1,~~970~~782

~~1,876~~960

Long-term investments - rabbi trust

65,~~250~~715

7,~~083~~089

75,~~102~~722

Long-term notes receivable

1,~~254~~078

1,~~530~~394

1,~~462~~182

Deferred income taxes

~~490~~475

~~531~~528

~~518~~637

Other assets

~~639~~676

~~853~~709

~~830~~591

Total assets

~~127~~126,~~555~~414

~~141~~129,~~998~~139

~~132~~123,~~054~~370

Current liabilities:

Lines of credit

5,384

—

Lines of credit - current

11,120

4,017

8,114

Accounts payable - trade

3224,~~717~~319

2926,~~793~~540

2527,~~607~~323

Accounts payable - capital expenditures

~~439~~8

1956

~~343~~23

Operating lease liability - current

2,~~025~~209

21,~~524~~565

2,~~061~~394

Deferred compensation - current

1,~~753~~395

~~937~~954

~~903~~1,325

Deferred revenue

~~697~~485

1,~~798~~600

~~1,495~~422

Accrued expenses

65,~~079~~850

76,~~300~~097

65,~~726~~333

Accrued restructuring

~~723~~105

—633

—610

Income taxes payable - current

~~828~~2,412

~~1,070~~759

~~972~~1,420

Total current liabilities

5047,~~645~~903

4342,~~441~~221

3846,~~107~~964

Operating lease liability - long-term

3,127

2,656

2,422

Lines of credit - long-term

7,025

—

4,600

Income taxes payable - long-term

1,400

2,072

2,088

Operating lease liability - long-term

1,995

2,219

2,535

Deferred income taxes

6,582

6,177

6,379

Income taxes payable - long-term

841

2,180

790

Deferred compensation - long-term

6,151

6,856

6,929

Deferred income taxes

5,302

6,449

5,155

Total liabilities

67,905

61,202

55,925

Deferred compensation - long-term

5,701

6,946

5,686

Total liabilities

68,767

60,015

65,730

Commitments and Contingencies (Notes 11, 17, and 18)

Shareholders' equity

Preferred stock, $0.05 par value, authorized 10,000,000

—

Common stock, $0.05 par value, authorized 40,000,000 shares, issued and outstanding 12,559,129 at January 26, 2025; 12,469,903 at January 28, 2024, and 12,469,903 at April 28, 2024

628

624

Common stock, $0.05 par value, authorized 40,000,000 shares, issued and outstanding 12,605,306 at August 3, 2025; 12,469,903 at July 28, 2024, and 12,559,129 at April 27, 2025

630

624

628

Capital contributed in excess of par value

45,~~461~~683

4445,~~843~~187

45,~~011~~589

Accumulated earnings

1311,~~345~~042

3523,~~241~~115

3011,~~376~~273

Accumulated other comprehensive income

~~216~~292

88198

~~118~~150

Total shareholders' equity

5957,~~650~~647

8069,~~796~~124

7657,~~129~~640

Total liabilities and shareholders' equity

~~127~~126,~~555~~414

~~141~~129,~~998~~139

~~132~~123,~~054~~370

* Derived from audited consolidated financial statements.

See accompanying notes to consolidated financial statements.

I-43

CULP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JANUARY~~AUGUST 263, 2025, AND ~~JANUARY~~JULY 28, 2024

UNAUDITED

(Amounts in Thousands)

	NINE MONTHS ENDED
	THREE MONTHS ENDED
	January 26,			January 28,
	August 3,			July 28,
	2025			2024
Cash flows from operating activities:
Net loss	$	(~~17,031~~231	)	$	(87,~~954~~261	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		41,~~288~~111			41,~~897~~581
Non-cash inventory credit		(~~1,022~~67	)		(~~1,978~~268	)
Amortization		~~301~~95			~~291~~99
Stock-based compensation		~~522~~156			~~747~~176
Deferred income taxes		~~231~~309			~~172~~60
Gain on sale of equipment		(279	)		(~~284~~4	)
Non-cash restructuring expenses		2,143			330
Non-cash restructuring (credit) expense		(3,664	)		1,643
Foreign currency exchange loss (gain)		(97	)		(347	)
Foreign currency exchange loss		122			45
Changes in assets and liabilities:
Accounts receivable		(23,~~029~~482	)		~~1,040~~(445	)
Inventories		(~~2,730~~683	)		—3,458
Other current assets		~~737~~212			(~~1,190~~221	)
Other assets		9813			~~(107~~90	)
Accounts payable – trade		7(3,~~184~~126	)		~~963~~884
Deferred revenue		~~(798~~63	)		~~606~~105
Accrued restructuring		~~753~~(506	)		—640
Accrued expenses and deferred compensation		~~(335~~1,016	)		(~~1,437~~478	)
Income taxes		(1,~~613~~012	)		(~~719~~310	)
Net cash used in operating activities		(~~9,425~~695	)		(~~5,970~~206	)
Cash flows from investing activities:
Capital expenditures		(~~2,440~~179	)		(~~3,249~~501	)
Proceeds from the sale of equipment		1,450			363
Proceeds from the sale of property, plant, and equipment		966			37
Proceeds from note receivable		270			240
Proceeds from notes receivable		120			90
Proceeds from the sale of investments (rabbi trust)		~~699~~237			~~1,224~~229
Purchase of investments (rabbi trust)		(~~599~~158	)		(~~704~~187	)
Net cash used in investing activities		(620	)		(2,126	)
Net cash provided by (used in) investing activities		986			(332	)
Cash flows from financing activities:
Procceds from lines credit		7,898			—
Proceeds from lines credit		5,886			4,010
Payments on lines of credit		(~~2,500~~552	)		—
Common stock surrendered for withholding taxes payable		(68	)		(146	)
Payment of debt issuance costs		(120	)		—
Net cash provided by (used in) financing activities		5,330			(146	)
Common stock surrendered for withholding taxes payable		(60	)		—
Effect of exchange rate changes on cash and cash equivalents		(18	)		(137	)
Net cash provided by financing activities		5,154			4,010
Decrease in cash and cash equivalents		(4,733	)		(8,379	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		20			(12	)
Cash and cash equivalents at beginning of year		10,012			20,964
Increase in cash and cash equivalents		5,465			3,460
Cash and cash equivalents at end of period	$	5,279			12,585
Cash and cash equivalents at beginning of year		5,629			10,012
Cash and cash equivalents at end of period	$	11,094		$	13,472

See accompanying notes to consolidated financial statements.

I-54

CULP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JANUARY~~AUGUST 263, 2025

UNAUDITED

(Dollars in thousands, except share data)

							Capital						Accumulated
							Contributed						Other			Total
	Common Stock						in Excess			Accumulated			Comprehensive			Shareholders'
	Shares			Amount			of Par Value			Earnings			Income			Equity
Balance, April 28, 2024 *		12,469,903		$	624		$	45,011		$	30,376		$	118		$	76,129
Balance, April 27, 2025 *		12,559,129		$	628		$	45,589		$	11,273		$	150		$	57,640
Net loss		—			—			—			(~~7,261~~231	)		—			(~~7,261~~231	)
Stock-based compensation		—			—			~~176~~156			—			—			~~176~~156
Unrealized gain on investments		—			—			—			—			80142			80142
Balance, July 28, 2024		12,469,903		$	624		$	45,187		$	23,115		$	198		$	69,124
Common stock issued in connection with the vesting of time-based restricted stock units		59,352			3			(3	)		—			—			—
Net loss		—			—			—			(5,644	)		—			(5,644	)
Common stock surrendered in connection with payroll withholding taxes		(13,175	)		(1	)		(59	)		—			—			(60	)
Stock-based compensation		—			—			188			—			—			188
Balance, August 3, 2025		12,605,306		$	630		$	45,683		$	11,042		$	292		$	57,647
Unrealized gain on investments		—			—			—			—			23			23
Common stock issued in connection with the vesting of time-based restricted stock units		102,720			5			(5	)		—			—			—
Common stock surrendered in connection with payroll withholding taxes		(13,494	)		(1	)		(67	)		—			—			(68	)
Balance, October 27, 2024		12,559,129		$	628		$	45,303		$	17,471		$	221		$	63,623
Net loss		—			—			—			(4,126	)		—			(4,126	)
Stock-based compensation		—			—			158			—			—			158
Unrealized loss on investments		—			—			—			—			(5	)		(5	)
Balance, January 26, 2025		12,559,129		$	628		$	45,461		$	13,345		$	216		$	59,650

* Derived from audited consolidated financial statements.

See accompanying notes to consolidated financial statements.

I-65

CULP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JANUARY~~JULY 28, 2024

UNAUDITED

(Dollars in thousands, except share data)

							Capital						Accumulated
							Contributed						Other			Total
	Common Stock						in Excess			Accumulated			Comprehensive			Shareholders'
	Shares			Amount			of Par Value			Earnings			Income (Loss)			Equity
Balance, April 30, 2023 *		12,327,414		$	616		$	44,250		$	44,195		$	19		$	89,080
Balance, April 28, 2024 *		12,469,903		$	624		$	45,011		$	30,376		$	118		$	76,129
Net loss		—			—			—			(37,~~342~~261	)		—			(37,~~342~~261	)
Stock-based compensation		—			—			~~322~~176			—			—			~~322~~176
Unrealized gain on investments		—			—			—			—			5780			5780
Immediately vested common stock award		16,616			1			(1	)		—			—			—
Balance, July 28, 2024		12,469,903		$	624		$	45,187		$	23,115		$	198		$	69,124
Balance, July 30, 2023		12,344,030		$	617		$	44,571		$	40,853		$	76		$	86,117
Net loss		—			—			—			(2,424	)		—			(2,424	)
Stock-based compensation		—			—			163			—			—			163
Unrealized loss on investments		—			—			—			—			(82	)		(82	)
Common stock issued in connection with the vesting of time-based restricted stock units		151,653			8			(8	)		—			—			—
Common stock surrendered in connection with payroll withholding taxes		(25,780	)		(1	)		(145	)		—			—			(146	)
Balance, October 29, 2023		12,469,903		$	624		$	44,581		$	38,429		$	(6	)	$	83,628
Net loss		—			—			—			(3,188	)		—			(3,188	)
Stock-based compensation		—			—			262			—			—			262
Unrealized gain on investments		—			—			—			—			94			94
Balance, January 28, 2024		12,469,903		$	624		$	44,843		$	35,241		$	88		$	80,796

* Derived from audited consolidated financial statements.

See accompanying notes to consolidated financial statements.

I-76

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Culp, Inc. and its majority-owned subsidiaries (the “company”) include all adjustments that are, in the opinion of management, necessary for fair presentation of the results of operations and financial position. All these adjustments are of a normal recurring nature. Results of operations for interim periods may not be indicative of future results. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements that are included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 1211, ~~2024~~2025, for the fiscal year ended April 2827, ~~2024~~2025.

The company's ~~nine~~three months ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, ~~each~~ represent 3914-week and 13-week periods, respectively.

2. Significant Accounting Policies

As of ~~January~~August 263, 2025, there were no changes in the nature of our significant accounting policies or the application of those policies from those reported in our Annual Report on Form 10-K for the year then ended April 2827, ~~2024~~2025. However, during the first quarter of fiscal 2026, we renamed our business segments to better reflect our product offerings: the mattress fabrics segment is now referred to as the bedding segment and the upholstery fabrics segment is now referred to as the upholstery segment. See Note 14 of the consolidated financial statements for further details regarding our business segments.

Recently Adopted Accounting Pronouncements

There were no recently adopted accounting pronouncements ~~through~~during the ~~third~~first quarter of fiscal ~~2025~~2026.

Recently Issued Accounting Pronouncements

InEffective ~~November~~December 14 2023, the ~~Financial Accounting Standards Board ("~~FASB") issued ~~Accounting Standards Update ("~~ASU") 2023-07 09 Improvements to ~~Reportable~~Income ~~Segment~~Tax Disclosures ("ASU 2023-0709"), which ~~enhances~~is ~~disclosure~~an ~~requirements~~update to ~~segment~~Topic ~~reporting~~740, ~~including~~Income ~~(i)~~Taxes. ~~significant~~The ~~segment~~amendments ~~expenses~~in ~~that~~this ~~are~~update ~~regularly~~relate ~~provided~~ to improvements regarding the ~~Chief~~transparency ~~Operating~~of ~~Decision~~income ~~Maker~~tax ~~(CODM)~~disclosures ~~that~~by ~~are~~requiring ~~included~~consistent ~~within~~categories ~~each~~and ~~measure~~greater disaggregation by jurisdiction of ~~segment~~information ~~profit~~included orin ~~loss~~the effective income tax rate reconciliation and for income taxes paid. Also, ~~(ii)~~the ~~other~~amendments ~~segment~~allow ~~items~~investors byto ~~reportable~~better ~~segment~~assess asan ~~defined~~entity's by(i) ~~ASU~~capital ~~2023-07~~allocation decisions, (ii) worldwide operations, and (iii) ~~the~~related ~~title~~tax risks, tax planning, and ~~position~~operational ofopportunities that affect the ~~CODM~~effective income tax rate and anprospects ~~explanation~~for offuture ~~how~~cash ~~the~~flows. ~~CODM~~The ~~uses~~other amendments in this update improve the ~~reported~~effectiveness ~~measure(s)~~and comparability of ~~each~~disclosures ~~segment's~~relating ~~profit~~to pretax income (or loss) inand ~~assessing~~income ~~segment~~tax ~~performance~~expense (or benefit) and ~~deciding~~remove ~~how~~disclosures tothat ~~allocate~~are ~~resources~~no longer considered cost beneficial or relevant. ASU 2023-0709 is effective for public entities starting in annual periods beginning after December 15, ~~2023,~~2024 (i.e., our fiscal ~~2025~~2026 annual report) ~~and interim periods beginning after December 15, 2024 (i~~.~~e.,~~ ~~first~~Early ~~quarter~~adoption ofis ~~fiscal 2026 interim report)~~permitted. The company expects that the adoption of ASU 2023-0709 will not have an impact on our results of operations and financial condition, but will have a material impact on the disclosures required in the notes to the consolidated financial statements, which are disclosed in Note 1415.

In ~~December~~November ~~2023~~2024, the FASB issued ASU ~~2023~~2024-0903 ~~Improvements~~Income toStatement - Reporting Comprehensive Income ~~Tax~~- Expense Disaggregation Disclosures ("“ASU ~~2023~~2024-~~09"~~03”), which is an update to Topic ~~740~~220, Income ~~Taxes.~~Statement ~~The~~- ~~amendments~~Reporting inComprehensive ~~this~~Income. ~~update~~ASU ~~relate~~2024-03 toenhances ~~improvements~~transparency ~~regarding~~and ~~the~~decision-usefulness ~~transparency~~ of ~~income~~expense ~~tax~~ disclosures byin ~~requiring~~response ~~consistent~~to ~~categories~~investors' ~~and~~requests ~~greater~~for ~~disaggregation~~more bydetailed, ~~jurisdiction~~disaggregated expense of information, ~~included~~enabling ina ~~the~~clearer ~~effective~~understanding ~~income~~of ~~tax~~a ~~rate~~public ~~reconciliation~~business ~~and~~entity's ~~for~~performance ~~income~~and ~~taxes~~cost ~~paid~~structure. ~~Also,~~The ~~the~~ amendments ~~allow~~improve ~~investors~~disclosure torequirements ~~better~~in ~~assess~~financial anstatement ~~entity's~~notes for specific expense categories including: (ia) ~~capital~~purchases ~~allocation~~of ~~decisions~~inventory, (iib) ~~worldwide~~employee ~~operations~~compensation, ~~and~~ (~~iii~~c) ~~related~~depreciation, ~~tax~~(d) ~~risks,~~intangible ~~tax~~asset ~~planning~~amortization, ~~and~~(e) ~~operational~~certain ~~opportunities~~amounts that ~~affect~~are ~~the~~already ~~effective~~required ~~income~~to ~~tax~~be ~~rate~~disclosed ~~and~~under ~~prospects~~current ~~for~~generally ~~future~~accepted ~~cash~~accounting ~~flows.~~principles ~~The~~in ~~other~~the ~~amendments~~same indisclosure ~~this~~as ~~update~~other ~~improve~~disaggregation ~~the~~requirements, ~~effectiveness~~(f) ~~and~~qualitative ~~comparability~~description of ~~disclosures~~amounts ~~relating~~remaining toin ~~pretax~~relevant ~~income~~expense ~~(or~~captions ~~loss)~~that ~~and~~are ~~income~~not ~~tax~~necessarily ~~expense~~disaggregated ~~(or~~quantitatively, ~~benefit~~as well as (g) ~~and~~the total ~~remove~~amount ~~disclosures~~of ~~that~~selling ~~are~~expenses, noand ~~longer~~in ~~considered~~annual ~~cost~~reporting ~~beneficial~~periods, orthe ~~relevant~~entity's definition of selling expense. ASU ~~2023~~2024-0903 is effective for ~~public entities starting in~~ annual reporting periods beginning after December 15, ~~2024~~ 2026, (i.e., our fiscal ~~2026~~2028 annual report). ~~Early~~and ~~adoption~~interim isreporting ~~permitted.~~periods ~~The~~beginning ~~company~~after ~~expects~~December ~~that~~15, ~~the~~2027 ~~adoption~~(i.e., offirst ~~ASU~~quarter ~~2023-09~~of ~~will~~fiscal ~~not~~2029 ~~have~~interim anreport). Early ~~impact~~adoption onis ~~our~~permitted. ~~results~~The ofcompany ~~operations~~is ~~and~~currently ~~financial~~evaluating ~~condition,~~ASU ~~but~~2024-03 ~~will~~to ~~have~~determine athe ~~material~~ impact onit ~~the~~will ~~disclosures~~have ~~required~~on inits ~~the notes to the~~ consolidated financial statements, ~~which~~and ~~are~~related ~~disclosed in Note 15~~disclosures.

~~In November 2024, the FASB issued ASU 2024~~I-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024-03”) which is an update to Topic 220, Income Statement - Reporting Comprehensive Income. ASU 2024-03 enhances transparency and decision-usefulness of expense disclosures in response to investors' requests for more detailed, disaggregated expense information, enabling a clearer understanding of a public business entity's performance and cost structure. The amendments improve disclosure requirements in financial statement notes for specific expense categories including: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, (e) certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same disclosure as other disaggregation requirements, (f) qualitative description of amounts remaining in relevant expense captions that are not 7

~~I-8~~Except as disclosed above, there are currently no new accounting pronouncements that are expected to have a material effect on our consolidated financial statements.

necessarily disaggregated quantitatively, as well as (g) the total amount of selling expenses, and in annual reporting periods, the entity's definition of selling expense. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, (i.e., our fiscal 2028 annual report) and interim reporting periods beginning after December 15, 2027 (i.e., first quarter of fiscal 2029 interim report). Early adoption is permitted. The company is currently evaluating ASU 2024-03 to determine the impact it will have on its consolidated financial statements and related disclosures.

3. Allowance for Doubtful Accounts

A summary of the activity in the allowance for doubtful accounts follows:

	Nine months ended
	Three months ended
(dollars in thousands)	~~January~~August 263, 2025		~~January~~July 28, 2024
Beginning balance	$	~~356~~651	$	~~342~~356
Provision for bad debts		~~150~~65		~~349~~57
Write-offs, net of recoveries		17		~~(30~~—	)
Ending balance	$	~~507~~723	$	~~661~~413

~~During~~As ~~the~~of ~~nine-month~~August ~~periods ended January 26~~3, 2025, and ~~January~~July 28, 2024, we assessed the credit risk of our customers within our accounts receivable portfolio. Our risk assessment includes the respective customers’: (i) financial position; (ii) past payment history; (iii) management’s general ability; and (iv) historical loss experience; as well as (v) any other ongoing economic conditions. After our risk assessment was completed, we assigned credit grades to our customers, which, in turn, were used to determine our allowance for doubtful accounts totaling $~~507~~723,000 and $~~661~~413,000 as of ~~January~~August 263, 2025, and ~~January~~July 28, 2024, respectively.

4. Revenue from Contracts with Customers

Nature of Performance Obligations

Our operations are classified into two business segments: bedding (formerly known as mattress fabrics) and upholstery (formerly known as upholstery fabrics). The ~~mattress~~bedding ~~fabrics~~ segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. The upholstery ~~fabrics~~ segment develops, sources, manufactures, and sells fabrics primarily to residential, commercial, and hospitality furniture manufacturers. In addition, the upholstery fabrics segment includes Read Window Products LLC (“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.

~~Our~~In ~~primary~~addition, ~~performance~~the ~~obligations~~upholstery ~~include~~segment ~~the~~includes ~~sale~~Read ofWindow ~~mattress~~Products ~~fabrics~~LLC (“Read”), a wholly owned subsidiary with operations located in Knoxville, Tennessee, that provides window treatments and sourcing of upholstery fabrics and other products, as well as related measuring and installation services to customers in the ~~performance~~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 (fourth quarter of ~~customized~~fiscal ~~fabrication~~2025), the company announced a strategic transformation of its operating model that will combine certain activities within the bedding and ~~installation~~upholstery ~~services~~business segments and create one integrated Culp-branded business. As part of this strategic transformation, we will close our leased facilities operated by our upholstery segment located in Burlington, North Carolina and Knoxville, Tennessee and will transition their production and distribution activities utilizing a shared management model within our owned facility located in Stokesdale, North Carolina. See note 10 of the consolidated financial statements for ~~Read’s~~further ~~products~~details ~~associated~~regarding ~~with~~this ~~window~~strategic ~~treatments~~transformation initiative.

Our primary performance obligations include the sale of bedding and upholstery products, as well as the performance of customized fabrication and installation services associated with window treatments.

Contract Assets & Liabilities

Certain contracts, ~~primarily~~relating ~~those~~to ~~for~~ customized fabrication and installation services associated with Read, require ~~payments~~upfront ~~in advance in the form of~~ customer deposits that result in a contract liability which is recorded in the Consolidated Balance Sheets as deferred revenue. Revenue on contract liabilities associated with customized fabrication and installation services is generally recognized within one year, as the satisfaction of performance obligations are generally one year or less. If ~~payments~~upfront indeposits ~~advance~~or prepayments are not required, customers may be granted terms ~~which~~that generally range from 15- to 60 days. Our terms are customary within the industries in which we operate and are not considered financing arrangements. ~~There were no contract assets recognized as of January 26, 2025, January 28, 2024, or April 28, 2024.~~

I-8

There were no contract assets recognized as of August 3, 2025, July 28, 2024, or April 27, 2025.

A summary of the activity associated with deferred revenue follows:

	Nine months ended
	Three months ended
(dollars in thousands)	~~January~~August 263, 2025			~~January~~July 28, 2024
Beginning balance	$	~~1,495~~422		$	1,~~192~~495
Revenue recognized on contract liabilities		(~~3,134~~564	)		(~~2,893~~781	)
Payments received for services not yet rendered		~~2,336~~627			~~3,499~~886
Ending balance	$	~~697~~485		$	1,~~798~~600

~~I-9~~As of August 3, 2025, deferred revenue of $485,000 pertained to (i) upfront customer deposits associated with customized fabrication and installation services related to Read totaling $422,000, and (ii) an upfront license fee paid to us for the licensing of a certain trademark to be used by an upholstery customer totaling $63,000. As of July 28, 2024, deferred revenue of $1.6 million pertained to (i) upfront customer deposits associated with customized fabrication and installation services relating to Read totaling $1.5 million, and (ii) an upfront license fee paid to us for the licensing of a certain trademark to be used by an upholstery customer totaling $146,000.

Revenue recognized during the three-month periods ended August 3, 2025, and July 28, 2024, that was included in the deferred revenue balance at the beginning of each period was $437,000 and $595,000, respectively.

Disaggregation of Revenue

The following table presents our disaggregated revenue by segment, timing of revenue recognition, and product sales versus services rendered for the three-month period ended ~~January~~August 263, 2025:

	Mattress		Upholstery
(dollars in thousands)	Bedding		Upholstery		Total
(dollars in thousands)	Fabrics		Fabrics		Total
Products transferred at a point in time	$	28,046	$	20,774	$	48,820
Products transferred at a point in time	$	28,642	$	20,345	$	48,987
Services transferred over time		—		1,871		1,871
Services transferred over time		—		3,266		3,266
Total net sales	$	28,046	$	22,645	$	50,691
Total Net Sales	$	28,642	$	23,611	$	52,253

The following table presents our disaggregated revenue by segment, timing of revenue recognition, and product sales versus services rendered for the ~~nine~~three-month period ended ~~January~~July 2628, ~~2025~~2024:

	Mattress		Upholstery
(dollars in thousands)	Bedding		Upholstery		Total
(dollars in thousands)	Fabrics		Fabrics		Total
Products transferred at a point in time	$	28,076	$	25,465	$	53,541
Products transferred at a point in time	$	86,792	$	68,312	$	155,104
Services transferred over time		—		2,996		2,996
Services transferred over time		—		9,360		9,360
Total net sales	$	28,076	$	28,461	$	56,537
Total Net Sales	$	86,792	$	77,672	$	164,464

The following table presents our disaggregated revenue by segment, timing of revenue recognition, and product sales versus services rendered for the three-month period ended January 28, 2024:

	Mattress		Upholstery
(dollars in thousands)	Fabrics		Fabrics		Total
Products transferred at a point in time	$	30,021	$	28,604	$	58,625
Services transferred over time		—		1,793		1,793
Total Net Sales	$	30,021	$	30,397	$	60,418

The following table presents our disaggregated revenue by segment, timing of revenue recognition, and product sales versus services rendered for the nine-month period ended January 28, 2024:

	Mattress		Upholstery
(dollars in thousands)	Fabrics		Fabrics		Total
Products transferred at a point in time	$	90,619	$	77,572	$	168,191
Services transferred over time		—		7,613		7,613
Total Net Sales	$	90,619	$	85,185	$	175,804

5. Inventories

Inventories are carried at the lower of cost or net realizable value. Cost is determined using the FIFO (first-in, first-out) method.

A summary of inventories follows:

(dollars in thousands)

~~January~~August 263, 2025

~~January~~July 28, 2024

April 2827, ~~2024~~2025

Raw materials

5,~~502~~698

87,~~214~~076

65,~~214~~733

Work-in-process

23,~~371~~374

21,~~388~~876

12,~~854~~747

Finished goods

4041,~~726~~037

3632,~~275~~716

3640,~~775~~829

4850,~~599~~109

4641,~~877~~668

4449,~~843~~309

I-109

Measurement of Inventory to Net Realizable Value

We recorded a non-cash inventory net credit of $1.0 million for the nine months ended January 26, 2025, which represents adjustments made to our inventory markdowns reserve estimated based on our policy for aged inventory for both the mattress and upholstery fabrics segments (see Note 10 of the consolidated financial statements for further details regarding markdowns of inventory associated with the Fiscal 2025 Restructuring Plan).

We recorded a non-cash inventory net credit of $2.0 million for the nine months ended January 28, 2024. This non-cash inventory credit represents a credit of $2.0 million related to adjustments made to our inventory markdown reserve estimated based on our policy for aged inventory for both our mattress and upholstery fabrics segments, partially offset by a charge of $40,000 which represents markdowns of inventory related to the discontinuance of production of cut and sewn upholstery kits at our facility in Ouanaminthe, Haiti.

Assessment

As of January 26, 2025, we reviewed our mattress fabrics and upholstery fabrics inventories to determine if any additional reductions of inventory in excess of the amount recorded based on our policy for aged inventory were necessary. Based on our assessment, no additional write downs of inventories to their net realizable value were recorded for the nine months ended January 26, 2025, other than the markdowns of inventory associated with our restructuring activities described in Note 10 of the consolidated financial statements.

Based on the current unfavorable macroeconomic conditions related to the home furnishings and bedding industry, it is possible that estimates used by management to determine the write down of inventory to its net realizable value could be materially different from the actual amounts or our results. These differences could result in higher than expected inventory provisions, which could adversely affect the company’s results of operations and financial condition in the near term.

6. Intangible Assets

A summary of intangible assets follows:

(dollars in thousands)

~~January~~August 263, 2025

~~January~~July 28, 2024

April 2827, ~~2024~~2025

Tradename

~~540~~—

540

~~540~~—

Customer relationships, net

~~809~~659

~~1,110~~960

~~1,035~~734

Non-compete agreement, net

~~245~~206

~~320~~282

~~301~~226

~~1,594~~865

1,~~970~~782

~~1,876~~960

Tradename

Our tradename pertains to Read, a separate reporting unit within the upholstery ~~fabrics~~ segment. This tradename was determined to have an indefinite useful life at the time of its acquisition, and therefore iswas not ~~being~~ amortized. However, we are required to assess this tradename annually or between annual tests if we believe indicators of impairment exist. Based on our assessment as of January 26, 2025, no indicators of impairment existed, and therefore we did not record any asset impairment charges associated with our tradename through the third quarter of fiscal 2025.

We were required to assess our tradename for impairment annually or between annual tests if we believed indicators of impairment existed. Accordingly, we performed our annual impairment assessment of Read's tradename as of April 27, 2025. Initially, we performed a qualitative assessment in which we concluded it was more-likely-than-not the fair value of Read's tradename was less than its carrying amount. This conclusion was based on management's decision, announced on April 24, 2025, to strategically transform the company's operating model by combining certain activities within the bedding and upholstery business segments and creating one integrated and Culp-branded business. Since the company is transforming to a single Culp-branded business, Read's tradename will be phased out during fiscal 2026, and will no longer be used to market upholstery fabric products to customers associated with the hospitality industry. Consequently, we recorded an asset impairment charge totaling $540,000 during the fourth quarter of fiscal 2025, which represents the entire carrying value of our Read tradename. This charge was classified as restructuring expense within our Consolidated Statement of Net Loss for the twelve-month period ended April 27, 2025.

Customer Relationships

A summary of the change in the carrying amount of our customer relationships follows:

	Nine months ended
	Three months ended
(dollars in thousands)	~~January~~August 263, 2025			~~January~~July 28, 2024
Beginning balance	$	~~1,035~~734		$	1,~~335~~035
Amortization expense		(~~226~~75	)		(~~225~~75	)
Ending balance	$	~~809~~659		$	~~1,110~~960

I-11

Our customer relationships are amortized on a straight-line basis over useful lives ranging from nine to seventeen years.

The gross carrying amount of our customer relationships was $3.1 million as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, respectively. Accumulated amortization for these customer relationships was $2.35 million, $2.01 million, and $2.14 million as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, respectively.

The remaining amortization expense for each of the next five fiscal years and thereafter ~~are~~is as follows: FY ~~2025 - $75,000; FY~~ 2026 - $~~301~~226,000; FY 2027 - $280,000; FY 2028 - $51,000; FY 2029 - $51,000; and ~~thereafter~~FY 2030 - $51,000.

The weighted average amortization period for our customer relationships was 3.2.8 years as of ~~January~~August 263, 2025.

Non-Compete Agreement

A summary of the change in the carrying amount of our non-compete agreement follows:

	Nine months ended
	Three months ended
(dollars in thousands)	~~January~~August 263, 2025			~~January~~July 28, 2024
Beginning balance	$	~~301~~226		$	~~377~~301
Amortization expense		(5620	)		(5719	)
Ending balance	$	~~245~~206		$	~~320~~282

~~Our non~~I-~~compete agreement is associated with a prior acquisition by our mattress fabrics segment and is amortized on a straight-line basis over the fifteen-year life of the agreement.~~10

~~The~~Our ~~gross carrying amount of our~~ non-compete agreement ~~was~~is ~~$2.0~~associated ~~million~~with asa ofprior ~~January~~acquisition ~~26,~~by ~~2025,~~our ~~January~~bedding ~~28,~~segment ~~2024,~~ and ~~April~~is ~~28,~~amortized ~~2024,~~on ~~respectively. Accumulated~~a ~~amortization for our non~~straight-~~compete~~line ~~agreement~~basis ~~was~~over ~~$1.8~~the ~~million,~~fifteen-year ~~$1.7~~life ~~million, and $1.7 million as~~ of ~~January~~the ~~26, 2025, January 28, 2024, and April 28, 2024, respectively~~agreement.

The ~~remaining~~gross ~~amortization~~carrying ~~expense~~amount ~~for~~of ~~each~~our non-compete agreement was $2.0 million as of ~~the~~August ~~next~~3, ~~five~~2025, ~~years~~July 28, 2024, and ~~thereafter~~April ~~are~~27, as2025, ~~follows:~~respectively. FYAccumulated ~~2025~~amortization for our non-compete agreement was $191.9 million,~~000;~~ FY$1.8 ~~2026~~million, -and $761.8 million as of August 3,~~000;~~ FY2025, ~~2027~~July -28, ~~$76~~2024,~~000;~~ FYand ~~2028~~April -27, ~~$74~~2025,~~000~~ respectively.

The ~~weighted~~remaining ~~average~~ amortization ~~period~~expense for ~~the~~each ~~non-compete~~of ~~agreement~~the ~~was~~next ~~3.3~~three fiscal years is as offollows: ~~January~~FY 262026 - $56,000; ~~2025~~FY 2027 - $76,000; and FY 2028 - $74,000.

~~Impairment~~The ofweighted ~~Definite~~average ~~Lived~~amortization ~~Assets~~period for the non-compete ~~Mattress~~agreement ~~Fabrics~~was ~~Segment~~2.8 years as of August 3, 2025.

AsImpairment of ~~January~~Definite ~~26,~~Lived ~~2025,~~Assets ~~management reviewed the long~~-~~lived~~ ~~assets~~Bedding associated with our mattress fabrics segment, which consisted of property, plant, and equipment, right of use assets, and definite-lived intangible assets (collectively known as the "Mattress Asset Group"), for impairment, as events and changes in circumstances occurred that indicated the carrying amount of the Mattress Asset Group may not be recoverable. The mattress fabrics segment experienced a significant cumulative operating loss totaling $35.3 million commencing in the second quarter of fiscal 2023, and continuing through the third quarter of fiscal 2025. We believe this significant cumulative operating loss stemmed from a decline in consumer discretionary spending on mattress products, which we believe was driven by the following factors: (i) inflationary effects of commodities such as gas, food, and other necessities; (ii) a significant increase in interest rates; (iii) the pulling forward of demand for home goods products during the early years of the COVID-19 pandemic, which demand has now shifted to travel, leisure, and other services; and (iv) excess inventory held by customers due to the decline in consumer demand. Segment

~~Based~~As onof ~~the~~August ~~above~~3, ~~evidence~~2025, wemanagement ~~were~~reviewed ~~required to determine~~ the ~~recoverability~~long-lived ofassets ~~the~~associated ~~Mattress~~with ~~Asset~~our ~~Group~~bedding segment, which isconsisted ~~classified~~of asproperty, ~~held~~plant, and ~~used~~equipment, byright ~~comparing~~of ~~the~~use ~~carrying~~assets, ~~amount~~and ofdefinite-lived ~~the~~intangible ~~Mattress~~assets ~~Asset~~(collectively ~~Group~~known toas the ~~sum~~"Bedding ofAsset ~~the~~Group"), ~~future~~for ~~undiscounted~~impairment, ~~cash~~as ~~flows~~events ~~expected~~and tochanges ~~result~~in ~~from~~circumstances ~~its~~occurred ~~use~~that ~~and~~indicated ~~eventual disposition. If~~ the carrying amount of anthe ~~asset~~Bedding ~~group~~Asset ~~exceeds~~Group ~~its~~may ~~estimated~~not ~~future~~be ~~cash~~recoverable. ~~flows,~~The anbedding ~~impairment~~segment ~~charge~~has isexperienced ~~recognized~~significant ~~for~~cumulative ~~the~~operating ~~excess~~losses oftotaling ~~the~~$33.2 ~~carrying~~million ~~amount~~commencing ~~over~~in the ~~fair~~second ~~value~~quarter of ~~the~~fiscal ~~asset~~2023, ~~group.~~and ~~The~~continuing ~~carrying~~through ~~amount~~the first quarter of fiscal 2026. We believe the ~~Mattress~~significant ~~Asset~~cumulative ~~Group~~operating ~~totaled~~losses ~~$24.9~~started ~~million,~~from ~~which~~a ~~represents~~decline ~~property,~~in ~~plant,~~consumer ~~and~~discretionary ~~equipment~~spending ofon ~~$24.2~~bedding ~~million~~products, ~~right~~which ofwe ~~use~~believe ~~assets~~stemmed offrom ~~$200,000,~~the ~~customer~~following ~~relationships~~factors: (i) inflationary effects of ~~$268~~commodities such as gas,~~000~~ food, and aother ~~non-compete~~necessities; ~~agreement~~(ii) ofa ~~$245,000.~~significant ~~The~~increase ~~total~~in ~~carrying~~interest ~~amount~~rates; of(iii) the ~~Mattress~~pulling ~~Asset~~forward ~~Group~~of ~~did~~demand ~~not~~for ~~exceed~~home ~~the~~goods ~~sum~~products ofduring ~~its~~the ~~future~~early ~~undiscounted~~years ~~cash~~of ~~flows~~the ~~from~~COVID-19 ~~its~~pandemic, ~~use~~which ~~and~~such ~~disposition.~~demand Assubsequently ashifting ~~result~~to travel, weleisure, ~~determined~~and ~~there~~other ~~was~~services; noand ~~impairment~~(iv) ~~associated~~excess ~~with~~inventory ~~the~~held ~~Mattress~~by ~~Asset~~customers ~~Group~~due asto ofthe ~~January~~decline ~~26,~~in ~~2025~~consumer demand.

IBased on the above evidence, we were required to determine the recoverability of the Bedding Asset Group, which is classified as held and used, by comparing the carrying amount of the Bedding Asset Group to the sum of the future undiscounted cash flows expected to result from its use and eventual disposition. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized for the excess of the carrying amount over the fair value of the asset group. The carrying amount of the Bedding Asset Group totaled $22.6 million, which represents property, plant, and equipment of $22.1 million, right of use assets of $50,000, customer relationships of $243,000, and a non-12compete agreement of $206,000. The total carrying amount of the Bedding Asset Group did not exceed the sum of its future undiscounted cash flows from its use and disposition. As a result, we determined there was no impairment associated with the Bedding Asset Group as of August 3, 2025.

7. Notes Receivable

Rayonese Textile, Inc.

In connection with the sale of the company's manufacturing facility and related land (collectively referred to as the "Property") located in Quebec, Canada, we entered into an amended agreement, effective April 2, 2025, which incorporated an original agreement and prior amendment (collectively referred to as the "Sales Agreement"), to sell our Property to a third party (the "Seller") with a closing date of April 30, 2025. Pursuant to the Sales Agreement, the total sales price for the Property was $8.6 million CAD ($6.2 million USD as of April 30, 2025), with $2.0 million CAD ($1.4 million USD as of April 30, 2025) paid prior to and at closing, and the remaining balance of $6.6 million CAD ($4.8 million USD as of April 30, 2025) due by April 30, 2026. Interest is earned on the note receivable at rates ranging from 6% to 10% and collected monthly as specified in the Sales Agreement. Refer to Notes 8 and 10 of the consolidated financial statements for further details of the sale of the Property and a description of our restructuring activities.

As of August 3, 2025, the outstanding balance of this note receivable was $6.6 million CAD ($4.8 million USD) which represents its fair value because of the relative short maturity of this note receivable as specified in the Sales Agreement. As of August 3, 2025, we believe there is no expected credit loss related to the collectibility of this note receivable, as the Seller has made all the required interest payments as specified in the Sales Agreement. We will continue to evaluate the facts and circumstances at the end of each reporting period to determine if an expected credit loss is deemed necessary.

I-11

Culp Upholstery Fabrics - Haiti, Ltd. ("CUF Haiti")

InEffective ~~connection~~January ~~with~~24, ~~the~~2023, ~~restructuring~~CUF ~~activity~~Haiti ~~within~~entered ~~our~~into ~~upholstery~~an ~~fabrics~~agreement ~~cut~~to ~~and~~terminate ~~sew~~a ~~operation~~lease ("CUF Termination Agreement") of a facility located in Ouanaminthe, Haiti,. ~~effective~~Pursuant ~~January~~to ~~24,~~the ~~2023~~terms of the CUF Termination Agreement, the original lease agreement (the "Original Lease") was formally terminated when CUF Haiti ~~entered~~vacated ~~into~~and anreturned ~~agreement~~possession of the leased facility to ~~terminate~~the lessor. Subsequently, a ~~lease~~third party (the "Lessee") took possession of athis facility (“and agreed to pay CUF Haiti $2.4 million in the form of a note receivable over a period commencing on April 1, 2023 and ending on December 31, 2029, based on the terms stated in the CUF Termination Agreement”). ~~See~~In ~~Note~~addition 10, as described in the CUF Termination Agreement, an affiliate of the ~~consolidated~~Lessee ~~financial~~guaranteed ~~statements~~payment ~~for~~in ~~further~~full ~~details~~of ~~regarding~~all ~~this~~amounts ~~restructuring~~due ~~activity~~and payable to CUF Haiti by the Lessee, and CUF Haiti was fully and unconditionally discharged from all of its remaining obligations under the Original Lease.

~~Pursuant~~The toinitial ~~the~~gross ~~terms~~carrying amount of ~~the~~this ~~original~~note ~~lease~~receivable ~~agreement~~was ~~(the~~$2.4 ~~“Original~~million ~~Lease”),~~and ~~CUF Haiti~~ was ~~required~~recorded toat ~~pay~~its infair ~~advance~~value of $2.80 million, ~~for~~which represented the ~~full~~present ~~amount~~value of ~~rent~~future ~~due~~discounted ~~prior~~cash toflows ~~the~~based ~~commencement~~on of the ~~Original~~payment ~~Lease,~~amounts and ~~the~~timing ~~initial~~of ~~lease~~such ~~term~~payments ~~was~~due ~~set~~from tothe ~~expire~~Lessee onas ~~December~~stated ~~31,~~in ~~2029~~the CUF Termination Agreement. ~~Pursuant~~We toused ~~the~~an ~~terms~~interest rate of 6% to determine the ~~Termination~~present ~~Agreement,~~value of the ~~Original~~future ~~Lease~~discounted ~~was~~cash ~~formally~~flows, ~~terminated~~based ~~when~~on ~~CUF~~significant ~~Haiti~~unobservable ~~vacated~~inputs and ~~returned~~assumptions ~~possession~~determined ~~of the~~by ~~leased~~management ~~facility~~such toas: (i) the ~~lessor.~~credit ~~After~~characteristics ~~CUF~~of ~~Haiti~~the ~~vacated~~Lessee and ~~returned~~guarantor ~~possession~~ of the ~~leased~~CUF ~~facility,~~Termination aAgreement; ~~third party~~ (~~the “Lessee”~~ii) ~~took~~the ~~possession~~length of ~~this~~the ~~facility,~~payment ~~and~~terms as defined in the ~~Lessee~~CUF ~~agreed~~Termination toAgreement; ~~pay~~(iii) ~~CUF~~the ~~Haiti~~payment ~~$2.4~~terms ~~million~~as defined in the ~~form~~CUF ofTermination aAgreement ~~note~~being ~~receivable~~denominated ~~over~~in aUSD; ~~period~~and ~~commencing~~(iv) onthe ~~April~~fact 1,that ~~2023,~~the ~~and~~facility ~~ending~~is onlocated ~~December 31~~in, ~~2029,~~and ~~based~~the onLessee ~~the~~and ~~terms~~guarantor ~~stated~~conduct business in, ~~the~~Haiti, ~~Termination~~a ~~Agreement~~foreign country. InSince ~~connection~~management ~~with~~used ~~the~~significant ~~Termination~~unobservable ~~Agreement,~~inputs anand ~~affiliate~~assumptions ofto determine the ~~Lessee~~fair ~~has~~value ~~guaranteed~~of ~~payment~~this innote ~~full~~receivable, ofthis ~~all~~note ~~amounts~~receivable ~~due~~was ~~and~~classified ~~payable~~as toLevel ~~CUF~~3 ~~Haiti~~within by the ~~Lessee,~~fair ~~and~~value ~~CUF~~hierarchy ~~Haiti~~(see ~~has~~Note ~~been~~12 ~~fully~~of ~~and~~the ~~unconditionally~~consolidated ~~discharged~~financial ~~from~~statements ~~all~~for offurther ~~its~~explanation ~~remaining~~of ~~obligations under~~ the ~~Original~~fair ~~Lease~~value hierarchy).

AsEffective ofMay ~~the~~1, ~~end of our third quarter of fiscal~~ 2023, ~~the~~CUF ~~carrying~~Haiti ~~amount~~formally ofassigned ~~the~~this note receivable ~~totaling~~to ~~$2.4 million was recorded at its fair value of $2.0 million~~Culp, ~~which represented the present value of future discounted cash flows based on the payment amounts and timing of such payments due from the Lessee as stated in the Termination Agreement~~Inc. ~~We used an interest rate of 6% to determine the present value of the future discounted cash flows, based on significant unobservable inputs and assumptions determined by management such as~~ (i)its the credit characteristics of the Lessee and guarantor of the Termination Agreement; (ii) the length of the payment terms as defined in the Termination Agreement; (iii) the payment terms as defined in the Termination Agreement being denominated in USD; and (iv) the fact that the facility is located in, and the Lessee and guarantor conduct business in, Haiti, a foreign countryU.S. Since management used significant unobservable inputs and assumptions to determine the fair value of this note receivable, this note receivable was classified as Level 3 within the fair value hierarchy (see Note 12 for further explanation of the fair value hierarchyparent).

~~Effective~~As ~~May~~of 1August 3, ~~2023~~2025, ~~CUF~~July ~~Haiti~~28, ~~formally~~2024, ~~assigned~~and April 27, 2025, the outstanding balance under this agreement was $21.4 million, ~~note~~$1.7 ~~receivable~~million, toand ~~Culp~~$1.5 million, ~~Inc~~respectively. ~~(its~~As Uof August 3, 2025, we believe there is no expected credit loss related to the collectability of this note receivable, as the Lessee has made all of the required principal payments stated in the CUF Termination Agreement.S. ~~parent)~~We will continue to evaluate the facts and circumstances at the end of each reporting period to determine if an expected credit loss is deemed necessary.

~~The following table represents the remaining future principal payments as of January 26, 2025:~~ Other

(dollars in thousands)
2025	$	90
2026		360
2027		360
2028		360
2029		360
Thereafter		240
Undiscounted value of note receivable	$	1,770
Less: unearned interest income		(240	)
Present value of note receivable	$	1,530

The following table represents the remaining future principal payments for the notes receivable referenced above as of August 3, 2025:

As of January 26, 2025, this note receivable totaled $1.5 million, of which $276,000 and $1.3 million were classified as short-term note receivable and long-term note receivable, respectively. As of January 28, 2024, this note receivable totaled $1.8 million, of which $260,000 and $1.5 million were classified as short-term note receivable and long-term note receivable, respectively. As of April 28, 2024, this note receivable totaled $1.7 million, of which $264,000 and $1.5 million were classified as short-term note receivable and long-term note receivable, respectively.


(dollars in thousands)
2026	$	5,088
2027		330
2028		360
2029		360
2030		240
Undiscounted value of note receivable	$	6,378
Less: unearned interest income		(196	)
Present value of note receivable	$	6,182

WeAs ~~classified~~of ~~amortization~~August of3, ~~unearned~~2025, ~~interest~~notes ~~income~~receivable ~~totaling~~totaled $746.2 million,~~000~~ of which $5.1 million and $851.1 million were classified as short-term notes receivable and long-term notes receivable,~~000~~ ~~within~~respectively. ~~interest~~As ~~income~~of onJuly ~~our~~28, ~~consolidated~~2024, ~~statements~~notes receivable totaled $1.7 million, of ~~net~~which ~~loss~~$268,000 ~~during~~and ~~the~~$1.4 ~~nine~~million were classified as short-~~month~~term ~~periods~~notes ~~ended~~receivable ~~January~~and 26long-term notes receivable, respectively. As of April 27, 2025, ~~and~~notes ~~January~~receivable 28totaled $1.5 million, ~~2024~~of which $280,000 and $1.2 million were classified as short-term notes receivable and long-term notes receivable, respectively.

AsWe ofclassified ~~January~~amortization ~~26,~~of ~~2025,~~unearned weinterest ~~believe~~income ~~there~~totaling is$22,000 noand ~~expected credit loss related to the collectability of this note receivable~~$26,000 aswithin ~~the~~interest ~~Lessee~~income ~~has~~in ~~made~~our ~~all~~consolidated statements of ~~the~~net ~~required~~loss ~~principal~~during ~~payments stated in~~ the ~~Termination~~three-month ~~Agreement.~~periods Weended ~~will~~August ~~continue~~3, to2025, ~~evaluate the facts~~ and ~~circumstances~~July at28, ~~the~~2024, ~~end of each reporting period to determine if an expected credit loss is deemed necessary~~respectively.

I-1312

Culp Home Fashions - Haiti, Ltd. ("CHF Haiti")

Effective August 2, 2024, CHF Haiti entered into an agreement to terminate a lease of a facility (“CHF Termination Agreement”). Pursuant to the terms of the CHF Termination Agreement, CHF Haiti is entitled to a payment of $250,000 from the lessor at the earlier of February 28, 2025, or 15 days after a new lease with a third party lessee is signed. In connection with the CHF Termination Agreement, CHF Haiti has been fully and unconditionally discharged from all of its remaining obligations under this lease.

As of January 26, 2025, there is no expected credit loss related to the collectability of this note receivable as it was paid in full on February 28, 2025, (fourth quarter of fiscal 2025) in accordance with the terms of the agreement.

8. Assets Held for Sale

InA ~~connection~~summary ~~with the closure~~ of ~~our mattress fabrics manufacturing facility located in Quebec, Canada, (see Note 10 of the consolidated financial statements for further details regarding our Fiscal 2025 Restructuring Plan), we had~~ assets held for sale ~~totaling $2.2 million that are presented separately on the January 26, 2025, consolidated balance sheet, and are no longer being depreciated.~~ follows:

During the third quarter of fiscal 2025, we determined that the carrying value of the assets classified as held for sale were less than or equal to their fair value. The fair value used in this determination was based on quoted market prices and from third party buyer sales offers which are either directly or indirectly observable, and therefore we believe this information is classified as Level 2 within the fair value hierarchy (see Note 12 for further explanation of the fair value hierarchy).


(dollars in thousands)	August 3, 2025		July 28, 2024		April 27, 2025
Bedding - U.S. (1) (2)	$	40	$	357	$	—
Bedding - Haiti (3)		—		250		—
Bedding - Canada (4)		—		—		2,177
	$	40	$	607	$	2,177

(1) In connection with our restructuring activities announced on April 24, 2025 (see Note 10 of the consolidated financial statements for further details), equipment with a fair value totaling $40,000 was classified as held for sale as of August 3, 2025. We determined that the carrying value of $296,000 was higher than its fair value of $40,000, and accordingly, we recorded an impairment charge of $256,000 during the first quarter of fiscal 2026. This impairment charge was classified within restructuring credit in the Consolidated Statement of Net Loss for the three-month period ended August 3, 2025. The fair value of this equipment was based on quoted market prices from dealers of this type of equipment, which such prices are either directly or indirectly observable, and therefore we believe this information is classified as level 2 within the fair value hierarchy (see note 12 of the consolidated financial statements for further explanation of the fair value hierarchy).

(2) In connection with our restructuring activities announced on May 1, 2024 (see Note 10 of the consolidated financial statements for further details), equipment with a carrying value totaling $357,000 was classified as held for sale as of July 28, 2024. We determined that the fair value of this equipment exceeded its carrying value, and therefore, no impairment charge was recorded during the first quarter of fiscal 2025. The fair value of this equipment was based on quoted market prices from dealers of this type of equipment, which such prices are either directly or indirectly observable, and therefore we believe this information is classified as level 2 within the fair value hierarchy (see note 12 of the consolidated financial statements for further explanation of the fair value hierarchy).

(3) In connection with our restructuring activities announced on May 1, 2024 (see Note 10 of the consolidated financial statements for further details), we entered into an agreement ("Termination Agreement") on August 2, 2024, to terminate a lease of a manufacturing facility ("Right of Use Asset") located in Ouanaminthe, Haiti. Accordingly, as of July 28, 2024, we classified this Right of Use Asset as held for sale at its fair value totaling $250,000, which was lower than its carrying value of $656,000. Consequently, we recorded an impairment charge of $406,000 that was classified as restructuring expense in the Consolidated Statement of Net Loss for the three-month period ended July 28, 2024. The fair value of this Right of Use Asset represents the amount due from the Lessor totaling $250,000, which is the amount stated in the Termination Agreement, and was paid on February 28, 2025. We believe the fair value amount of $250,000 as stated in the Termination Agreement, represents a significant observable input, and therefore we believe this information was classified as Level 2 within the fair value hierarchy (see note 12 of the consolidated financial statements for further explanation of the fair value hierarchy).

(4) In connection with the closure of our manufacturing facility located in Quebec, Canada, we classified Property of $2.1 million and certain equipment totaling $75,000 as held for sale as of April 27, 2025. We determined that the fair value of these assets held for sale exceeded its carrying value, and therefore no impairment change was recorded during the fourth quarter of fiscal 2025. The fair value of the Property and equipment was based on quoted market prices from third party sales offers, which we believe are significant observable inputs, and therefore we believe this information was classified as Level 2 within the fair value hierarchy (see note 12 of the consolidated financial statements for further explanation of the fair value hierarchy). During the first quarter of fiscal 2026, we sold the Property and equipment, 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 period ended August 3, 2025. See notes 7 and 10 of the consolidated financial statements for further details regarding the Sales Agreement associated with the sale of the Property and description of the restructuring announced on May 1, 2024.

I-13

9. Accrued Expenses

A summary of accrued expenses follows:

(dollars in thousands)

~~January~~August 263, 2025

~~January~~July 28, 2024

April 2827, ~~2024~~2025

Compensation, commissions and related benefits

23,~~318~~360

3,~~771~~310

42,~~204~~534

Other accrued expenses

32,~~761~~490

32,~~529~~787

2,~~522~~799

65,~~079~~850

76,~~300~~097

65,~~726~~333

10. Restructuring Activities

~~Mattress~~Restructuring ~~Fabrics~~Activities ~~Segment,~~Announced ~~Upholstery~~May ~~Fabrics Segment~~1, ~~and Unallocated Corporate~~2024

~~Fiscal~~On April 29, 2024 (first quarter of fiscal 2025), ~~Restructuring~~our ~~Plan~~board of directors made a decision to: (i) consolidate the company's North American mattress fabrics 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.

OnAs ~~April~~of ~~29,~~the ~~2024~~end (of the first quarter of fiscal ~~2025)~~2026, ~~our~~all ~~board~~ of ~~directors~~the ~~made~~above arestructuring ~~decision~~activities related to ~~(1)~~this ~~consolidate~~announcement ~~the~~have ~~company's~~been ~~North American mattress fabrics operations~~completed, including athe ~~gradual discontinuation of operations and~~ sale of the ~~company's~~Property ~~manufacturing~~and ~~facility~~certain equipment located in Quebec, Canada;. ~~(2)~~Accordingly, ~~move~~we recorded a ~~portion~~gain offrom the ~~knitting~~sale ~~and~~of ~~finishing~~this ~~capacity~~Property ~~from~~and ~~the~~equipment ~~company's~~totaling ~~manufacturing~~$4.0 ~~facility~~million ~~located~~that inwas ~~Quebec,~~classified ~~Canada~~within torestructuring ~~the~~credit ~~company's~~in ~~manufacturing~~the ~~facility~~Consolidated ~~located~~Statement inof ~~Stokesdale,~~Net ~~North~~Loss ~~Carolina;~~for ~~(3) transition~~ the ~~mattress~~period ~~fabrics~~ended ~~segment's~~August ~~weaving~~3, ~~operation~~2025. toSee anotes ~~strategic~~7 ~~sourcing~~and ~~model~~8 ~~through~~of the ~~company's~~consolidated ~~long~~financial ~~standing~~statements ~~supply~~for ~~partners;~~further ~~(4)~~details ~~consolidate~~regarding the ~~company's~~Sales ~~sewn~~Agreement ~~mattress~~associated ~~cover~~with ~~operation~~the ~~located~~sale inof ~~Ouanaminthe,~~the ~~Haiti,~~Property ~~from two leased facilities into one building~~ and ~~reduce~~determination ~~other~~of ~~operating~~fair ~~expenses~~value atregarding ~~this~~the ~~location;~~Property ~~as well as (5) reduce unallocated corporate expenses~~ and ~~shared service expenses~~equipment.

AsDuring ofthree ~~the~~months ~~end~~ended ofAugust ~~the~~3, ~~third quarter of fiscal~~ 2025, ~~production at our facility located in Quebec, Canada has been discontinued and~~ we ~~have~~recorded ~~entered into~~ a ~~conditional~~restructuring ~~agreement~~credit ~~for~~of ~~the~~$3.9 ~~sale~~million ofthat ~~this~~was ~~facility,~~mostly ~~subject~~related to ~~due~~the ~~diligence~~gain ~~and~~on ~~other~~sale ~~conditions. The consolidation~~ of ~~our~~the ~~sewn~~Property ~~mattress~~noted ~~cover~~above ~~operation~~and ~~located~~was insolely ~~Haiti~~related ~~was~~to ~~completed~~the ~~during~~bedding ~~the~~segment. ~~first~~Since ~~quarter~~inception of ~~fiscal~~this ~~2025. For~~restructuring ~~fiscal 2025~~initiative, ~~these~~we ~~actions~~incurred ~~are~~cumulative ~~expected to result in~~ restructuring and restructuring related charges oftotaling ~~approximately~~ $84.58 million, most of which ~~approximately~~related ~~$5.3 million is expected~~ to ~~be cash expenditures. The $8.5 million of estimated restructuring and restructuring related charges represents approximately $8.3 million and $155,000 associated with~~ the ~~mattress~~bedding ~~fabrics and upholstery fabrics segments, respectively~~segment.

~~The~~Restructuring ~~$8.3~~Activities ~~million~~Announced ofApril estimated restructuring and restructuring related charges associated with our mattress fabrics segment represents (i) other associated costs of $3.3 million mostly related to relocating equipment from our facility in Quebec24, ~~Canada to~~ 2025

On April 24, 2025 (fourth quarter of fiscal 2025), the company announced a strategic transformation of its operating model that will combine certain activities within the bedding and upholstery segments and create one integrated Culp-branded business. As part of this strategic transformation, we will close our leased facilities operated by our upholstery segment located in Burlington, North Carolina, and Knoxville, Tennessee, and will transition 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.

During the three months ended August 3, 2025, we incurred restructuring expense of $349,000 related to this strategic transformation, of which $256,000 and $93,000 relate to the bedding and upholstery segments, respectively. The estimated cumulative restructuring and restructuring related charges for this initiative are expected to be $2.2 million, of which $674,000 is expected to be cash expenditures. The $2.2 million of estimated cumulative restructuring and restructuring related charges associated with this initiative represents: (i) a non-cash charge for impairment of Read's tradename totaling $540,000 (see Note 6 located in the notes to the consolidated financial statements for further details); (ii) a non-cash charge of $450,000 associated with the disposal and markdowns of inventory; (iii) non-cash lease termination costs of $125,000; (iv) non-cash accelerated depreciation expense, along with impairments and losses on disposal of fixed assets totaling $424,000; (v) cash charges for employee termination benefits of $207,000; (vi) cash charges for facility consolidation and relocation expenses of $432,000; (vii) and cash charges for other associated costs of $35,000. We expect the initiatives associated with this strategic transformation to be substantially completed by December 31, 2025.

I-14

~~our~~The ~~facility~~following insummarizes Stokesdale, North Carolina, (ii) additional depreciation expense related to the shortening of useful lives of equipment associated with the gradual discontinuance of our operations located in Canada noted above totaling $1.3 million, (iii) employee termination benefits of $1.4 million, (iv) $1.5 million related to losses on disposal and valuation of inventory, and (v) lease termination costs of $849,000, partially offset by net gains on the disposal of equipment totaling $42,000. These restructuring and restructuring related charges ~~exclude~~associated ~~any~~with ~~expected gain from~~ the ~~sale~~above ofannouncements ~~the~~for ~~Canadian facility, which would ultimately reduce~~ the ~~amount~~three ofmonth ~~the~~periods ~~restructuring~~ended ~~charges~~August ~~incurred. Based on changes in business and current unfavorable economic conditions related to the home furnishings and bedding industries~~3, it2025 ~~is possible that the above estimates provided by management, to determine restructuring~~ and ~~restructuring~~July ~~related charges incurred during fiscal 2025 could be materially different from the actual results~~28, ~~and therefore could adversely affect the success of this restructuring plan.~~ 2024:

The above-referenced conditional agreement for the sale of our Canadian facility includes a purchase price of $15.5 million CAD ($10.8 million USD as of January 26, 2025), contingent on the satisfaction of certain due diligence and closing conditions. Assuming the completion of the transaction, the company currently expects the proceeds from the sale (net of all taxes and commissions) to exceed the amount of cash restructuring charges incurred in connection with the Fiscal 2025 Restructuring Plan.


	Three Months Ended			Three Months Ended
(dollars in thousands)	August 3, 2025			July 28, 2024
Additional depreciation expense for shortened useful lives	$	22		$	875
Employee termination benefits		(4	)		689
Lease Termination Costs		62			670
Facility consolidation and relocation expenses		52			251
Net (gain) loss on sale and impairment of property, plant, and equipment		(3,747	)		95
Other Associated Costs		107			51
Loss on disposal and markdowns of inventory		—			116
Restructuring (credit) expense and restructuring related charge (1) (2)	$	(3,508	)	$	2,747

(1) The ~~following~~total ~~summarizes~~$3.5 ~~accrued~~million credit was classified within restructuring ~~costs~~credit in the Consolidated Statement of Net Loss for the ~~nine~~three-month period ended ~~January~~August 263, 2025:. The $3.5 million restructuring credit mostly related to the bedding segment.

	Employee			Other
	Termination			Associated
(dollars in thousands)	Benefits			Costs			Total
Beginning balance	$	—		$	—		$	—
Expenses incurred		1,535			2,730			4,265
Change in estimate adjustments		(107	)		—			(107	)
Payments		(896	)		(2,509	)		(3,405	)
Foreign currency exchange remeasurement		(14	)		(16	)		(30	)
Ending Balance	$	518		$	205		$	723

(2) Of the total $2.7 million restructuring and restructuring related charges, $2.6 million and $116,000 were classified within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the three month period ended July 28, 2024. The $2.7 million expense mostly related to the bedding fabrics segment.

The following summarizes ~~restructuring~~accrued ~~and~~ restructuring ~~related~~costs ~~charges~~ for the three-month ~~and~~period ~~nine-month periods~~ ended ~~January~~August 263, 2025:

	Three Months Ended			Nine Months Ended
	Employee			Other			Facility Consolidation
(dollars in thousands)	January 26, 2025			January 26, 2025
	Termination			Associated			and Relocation
Additional depreciation expense for shortened useful lives of equipment	$	—		$	1,339
(dollars in thousands)	Benefits			Costs			Costs			Total
Employee termination benefits		176			1,428
Beginning balance	$	522		$	88		$	—		$	610
Other associated costs		1,512			2,730
Expenses incurred		—			84			52			136
Loss on disposal, valuation, and markdowns of inventory		624			1,509
Change in estimate adjustments		(4	)		23			—			19
Lease termination costs		—			849
Payments		(446	)		(163	)		(52	)		(661	)
Net gain on disposal of equipment		(33	)		(43	)
Foreign currency exchange remeasurement		—			1			—			1
Restructuring expense and restructuring related charges (1) (2)	$	2,279		$	7,812
Ending Balance	$	72		$	33		$	—		$	105

~~(1)~~The Offollowing ~~the~~summarizes ~~total~~accrued ~~$2.3 million~~ restructuring ~~and~~costs ~~restructuring related charges, $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 ~~ending~~ended ~~January~~July 2628, ~~2025. The $2.3 million mostly relates to the mattress fabrics segment.~~2024:

(2) Of the total $7.8 million restructuring and restructuring related charges, $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 ending January 26, 2025. The $7.8 million mostly relates to the mattress fabrics segment.


	Employee			Other			Facility Consolidation
	Termination			Associated			and Relocation
(dollars in thousands)	Benefits			Costs			Costs		Total
Beginning balance (1)	$	—		$	3		$	—	$	3
Expenses incurred		689			302			—		991
Payments		(72	)		(282	)		—		(354	)
Foreign currency exchange remeasurement		(7	)		—			—		(7	)
Ending Balance	$	610		$	23		$	—	$	633

Upholstery Fabrics Segment

Shanghai, China

Upholstery Fabrics Finishing Operation

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

I-15

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

The following summarizes the activity in accrued restructuring costs for the nine-month period ended January 26, 2025:

(dollars in thousands)	Total
Beginning balance (1)	$	3
Expenses incurred (2)		14
Payments		(17	)
Ending balance	$	—

(1) Accrued restructuring expense of $3,000 was reported within accrued expenses in the Consolidated Balance Sheet for the period ended April 28, 2024.

~~(2) Expenses incurred represent other associated costs and were recognized in our Consolidated Statement of Net Loss for the nine~~I-~~month period ended January 26, 2025.~~ 15

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 associated with one facility and, in turn, moved the production of upholstery cut and sewn kits to an 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.

The following summarizes our restructuring (credit) expense and restructuring related (credit) charge for the three months and nine months ended January 28, 2024:

	Three Months Ended			Nine Months Ended
(dollars in thousands)	Janaury 28, 2024			Janaury 28, 2024
Employee termination benefits	$	—		$	103
Impairment loss - leasehold improvements and equipment		—			329
Gains on sale of equipment		(50	)		—
(Gain) loss on disposal and markdowns of inventory		(61	)		40
Restructuring expense and restructuring related (credits) charges (1) (2)	$	(111	)	$	472

(1) Of the total $(111,000), $(50,000) and $(61,000) were recorded within restructuring credit and cost of sales, respectively, in the Consolidated Statement of Net Loss for the three-month period ended January 28, 2024.

(2) Of the total $472,000, $432,000 and $40,000 were recorded within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the nine-month period ended January 28, 2024.

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.

11. Lines of Credit

The summary of outstanding borrowings under our lines of credit follows:


(dollars in thousands)	August 3, 2025		July 28, 2024		April 27, 2025
Wells Fargo - U.S. revolving line of credit	$	7,025	$	—	$	4,600
Agricultural Bank of China - revolving line of credit		4,031		4,017		3,988
Agricultural Bank of China - supplier financing arrangements		2,780		—		2,751
Agricultural Bank of China - working capital loan		2,919		—		—
Bank of China - working capital loan		1,390		—		1,375
Lines of credit (1)	$	18,145	$	4,017	$	12,714

(1) Of the total $18.1 million, $11.1 million and $7.0 million were recorded within lines of credit - current and lines of credit - long-term, respectively, within the Consolidated Balance Sheet as of August 3, 2025. The total $4.0 million was recorded within lines of credit - current within the Consolidated Balance Sheet as of July 28, 2024. Of the total $12.7 million, $8.1 million and $4.6 million were recorded within lines of credit - current and lines of credit - long-term, respectively, within the Consolidated Balance Sheet as of April 27, 2025.

Revolving Credit Agreement – United States

On June 12, 2025, Culp, Inc., as borrower (the “~~borrower~~Company”), and Read and Culp Fabrics Global, LLC, each a wholly owned domestic subsidiary of the Company, as ~~guarantor~~guarantors (collectively, the “~~Guarantor~~Guarantors”), ~~are~~entered ~~parties~~into toa anThird ~~agreement~~Amendment (to the ~~"ABL~~Second Amended and Restated Credit Agreement" (the “Third Amendment”), by and among the ~~borrower~~Company, the ~~Guarantor~~Guarantors and Wells Fargo Bank, National Association, as ~~the~~ lender (the “Lender”). The Third Amendment amends the Second Amended and Restated Credit Agreement dated as of January 19, 2023, (as amended, restated, supplemented, or otherwise modified from time to ~~establish~~time, the “Credit Agreement”), an asset-based revolving credit facility (the “ABL Facility”). ~~The~~Proceeds ~~proceeds~~ from the ABL Facility may be used to pay fees and expenses related to the ABL Facility and to provide funding for ongoing working capital and general corporate purposes. The Credit Agreement amended, restated and superseded, and served as a replacement for, the Amended and Restated Credit Agreement, dated as of June 24, 2022, as amended, by and between the Company and the Lender.

~~I-16~~Pursuant to the Third Amendment, the term of the ABL Facility was extended for three years and now matures on June 12, 2028.

~~The~~Pursuant ~~ABL Facility may be used for revolving credit loans and letters of credit from time~~ to ~~time~~the upCredit ~~to a maximum principal amount of $35.0 million~~Agreement, ~~subject to~~ the ~~limitations described below. The~~ ABL Facility contains ~~a sub-facility that allows~~ the ~~company~~following to issue letters of credit in an aggregate amount not to exceed $1.0 million. The amount available under the ABL Facility is limited by a borrowing base consisting of certain eligible accounts receivable and inventory, reduced by specified reserves, as followsterms:

The ABL Facility may be used for revolving credit loans and letters of credit from time to time up to a maximum principal amount of $30.0 million, which may be increased upon mutual agreement by up to $10.0 million via an accordion feature, subject to the limitations described below.

The Company may issue letters of credit under a sub-facility within the ABL Facility in an aggregate amount not to exceed $2 million.

The amount available under the ABL Facility is limited by a borrowing base consisting of certain eligible accounts receivable and inventory, reduced by specified reserves, as follows:

•

85% of eligible accounts receivable, plus

•

the least of:

i) the sum of:

▪

lesser of (i) 65% of eligible inventory valued at cost based on a first-in first-out basis (net of intercompany profits) and (ii) 85% of the net-orderly-liquidation value percentage of eligible inventory, plus

▪

the least of (i) 65% of eligible in-transit inventory valued at cost based on a first-in first-out basis (net of intercompany profits), (ii) 85% of the net-orderly-liquidation value percentage of eligible in-transit inventory, and (iii) $54.0 million, plus

I-16

▪

the lesser of (i) 65% of eligible raw material inventory valued at cost based on a first-in first-out basis (net of intercompany profits) and (ii) 85% of the net-orderly-liquidation value percentage of eligible raw material inventory

In each case, the net-orderly-liquidation value is calculated based on the lower of (i) a first-in first-out basis and (ii) market value, and is (A) net of intercompany profits, (B) net of write-ups and write-downs in value with respect to foreign currency exchange rates and (C) consistent with most recent appraisals received and acceptable to Lender.

ii) $2220.50 million; and

iii) An amount equal to 200% of eligible accounts receivable,

•

minus applicable reserves.

The ABL Facility permits both base rate borrowings and borrowings that bear interest at annual rate equal to daily simple SOFR (the secured overnight financing rate administered by the Federal Reserve Bank of New York (or its successor)), in each case, plus an Applicable Margin equal to: (i) 75 basis points for base rate borrowings and 175 basis points for SOFR-based borrowings (if the average monthly excess availability under the ABL Facility is greater than 66 2/3%), (ii) 100 basis points for base rate borrowings and 200 basis points for SOFR-based borrowings (if the average monthly excess availability under the ABL Facility is less than or equal to 66 2/3% and greater than 33 1/3%), or (iii) 125 basis points for base rate borrowings and 225 basis points for SOFR-based borrowings (if the average monthly excess availability under the ABL Facility is less than or equal to 33 1/3%), as applicable, ~~reserves~~with a fee on unutilized commitments at an annual rate of 37.5 basis points (if usage is equal to or greater than 50% of the maximum credit available under the ABL Facility) or 50 basis points (if usage is less than 50% of the maximum credit available under the ABL Facility).

~~The~~Outstanding ~~ABL~~balances ~~Facility~~associated ~~permits~~with ~~both base rate borrowings and borrowings based upon daily simple SOFR (~~the ~~secured overnight financing rate administered by the Federal Reserve Bank of New York (or its successor)). Borrowings under the~~ ABL Facility ~~bear~~may ~~interest~~be atprepaid anfrom ~~annual~~time ~~rate equal~~ to ~~daily~~time, ~~simple~~in ~~SOFR~~whole ~~plus~~or ~~150~~in ~~basis~~part, ~~points~~without ~~(if~~a ~~the~~prepayment ~~average~~penalty ~~monthly~~or ~~excess~~premium. ~~availability~~In ~~under~~addition, ~~the~~customary ~~ABL~~mandatory ~~Facility~~prepayments isof ~~greater than 50%) or 175 basis points (if~~ the ~~average~~loans ~~monthly excess availability~~ under the ABL Facility isare ~~less~~required ~~than~~upon orthe ~~equal~~occurrence toof ~~50%)~~certain orevents 50including, ~~basis~~without ~~points~~limitation, ~~above~~outstanding ~~base~~borrowing ~~rate~~exposures ~~(if~~exceeding the ~~average~~borrowing ~~monthly excess availability under the ABL Facility is greater than 50%) or 75 basis points above~~ base ~~rate~~and ~~(if~~certain ~~the~~dispositions ~~average~~of ~~monthly~~assets ~~excess~~outside ~~availability~~of ~~under~~ the ~~ABL~~ordinary ~~Facility~~course ~~is less than or equal to 50%), as applicable, with a fee on unutilized commitments at an annual rate~~ of 37business.5 Accrued ~~basis~~interest ~~points~~is ~~and~~payable anmonthly ~~annual~~in ~~servicing fee of $12,000~~arrears.

The ~~ABL~~Company’s ~~Facility~~obligations ~~matures~~under onthe ~~January 19, 2026. The~~ ABL Facility ~~may~~(and becertain ~~prepaid~~related ~~from~~obligations) ~~time~~are: to(a) ~~time,~~guaranteed inby ~~whole~~the orGuarantors inand ~~part,~~each ~~without~~of athe ~~prepayment~~company’s ~~penalty~~future ordomestic ~~premium. In~~subsidiaries ~~addition,~~is ~~customary~~required ~~mandatory~~to ~~prepayments~~guarantee of the ~~loans under the~~ ABL Facility ~~are~~on ~~required~~a ~~upon~~senior ~~the~~secured ~~occurrence~~basis of(such ~~certain~~guarantors ~~events~~and ~~including,~~the ~~without limitation~~company, ~~outstanding borrowing exposures exceeding~~ the ~~borrowing~~“Loan ~~base~~Parties”) and ~~certain~~(b) ~~dispositions~~secured ofby all assets ~~outside~~ of the ~~ordinary~~Loan ~~course~~Parties ofon ~~business. Accrued~~a ~~interest~~first ispriority ~~payable~~basis, ~~monthly~~subject into ~~arrears~~certain exceptions.

~~The~~Cash ~~borrower’s~~Dominion. ~~obligations~~Under the terms of the ABL Facility, if: (i) an event of default has occurred or (ii) excess borrowing availability under the ABL Facility (based on the lesser of $30.0 million and ~~certain~~the ~~related~~borrowing ~~obligations~~base) ~~are~~(the ~~guaranteed~~"Excess byAvailability") ~~the~~falls ~~Guarantor~~below 6. In0 ~~addition~~million at such time, the ~~ABL~~Loan ~~Credit~~Parties ~~Agreement~~will ~~requires~~become ~~that~~subject ~~the~~to ~~borrower's~~cash ~~future~~dominion, ~~domestic~~which ~~subsidiaries~~will ~~guarantee~~require prepayment of loans under the ABL Facility onwith athe ~~senior~~cash ~~secured~~deposited ~~basis~~in ~~(such~~certain ~~future~~deposit ~~domestic~~accounts ~~subsidiaries~~of the Loan Parties, ~~together~~including ~~with~~a ~~the~~concentration ~~Guarantor~~account, and ~~the~~will ~~borrower,~~restrict the "Loan Parties")' ability to transfer cash from their concentration account. ~~The~~Such ~~borrower's~~cash ~~obligations~~dominion ~~under~~period ~~the~~(a ~~ABL~~"Dominion ~~Facility~~Period") ~~are~~shall ~~secured~~end bywhen ~~first~~Excess ~~priority~~Availability ~~liens~~shall ~~and~~be ~~other~~equal ~~security~~to ~~interests~~or ongreater ~~all~~than ~~assets~~$6.0 ofmillion ~~the~~for ~~Loan~~a ~~Parties,~~period ~~subject~~of to60 ~~certain~~consecutive ~~exceptions~~days and ~~permitted~~no ~~liens~~event of default is continuing.

~~Cash~~Financial ~~Dominion~~Covenants. ~~Under~~The ~~the terms of the~~ ABL Facility, ifcontains ~~(i)~~a anspringing ~~event~~covenant ofrequiring ~~default~~that ~~has~~the ~~occurred~~Company's orfixed ~~(ii)~~charge ~~excess~~coverage ~~borrowing~~ratio ~~availability~~be ~~under~~no ~~the~~less ~~ABL~~than ~~Facility~~1.10 ~~(based~~to ~~on the lesser of $35~~1.000 ~~million~~during ~~and~~any ~~the~~period ~~borrowing~~that: ~~base)~~ (~~the “Excess Availability”~~i) ~~falls~~an ~~below~~event ~~$7.0~~of ~~million,~~default athas ~~such~~occurred ~~time,~~or ~~the~~(ii) ~~Loan~~Excess ~~Parties~~Availability ~~will become subject to cash dominion, which will require prepayment of loans~~ under the ABL

I-17

~~ABL~~ Facility ~~with~~falls ~~the~~below ~~cash~~$4.5 ~~deposited~~million inat ~~certain~~such ~~deposit accounts of the Loan Parties, including a concentration account, and will restrict the Loan Parties’ ability to transfer cash from their concentration account~~time. Such ~~cash~~compliance ~~dominion~~ period ~~(a “Dominion Period”)~~ shall end when Excess Availability shall be equal to or greater than $74.05 million for a period of 60 consecutive days and no event of default is continuing.

~~Financial~~Affirmative and Restrictive Covenants. The ~~ABL~~Credit ~~Facility~~Agreement ~~contains~~governing athe ~~springing~~ABL ~~covenant~~Facility ~~requiring~~contains ~~that~~customary ~~the~~representations ~~company’s~~and ~~fixed~~warranties, ~~charge~~affirmative ~~coverage~~and ~~ratio~~negative becovenants no(subject, ~~less~~in ~~than~~each ~~1.10~~case, to ~~1.00~~exceptions ~~during~~and ~~any period that (i~~qualifications) anand ~~event~~events of default, ~~has~~including ~~occurred~~covenants orthat ~~(ii)~~limit ~~Excess Availability under~~ the ~~ABL~~company's ~~Facility~~ability ~~falls below $5.25 million. Such compliance period shall end when Excess Availability shall be equal~~ to, oramong ~~greater~~other ~~than $5.25 million for a period of 60 consecutive days and no event of default is continuing.~~ things:

•

Affirmative and Restrictive Covenants. The ABL Credit Agreement governing the ABL Facility contains customary representations and warranties, affirmative and negative covenants (subject, in each case, to exceptions and qualifications), and events of defaults, including covenants that limit the company’s ability to, among other things:

incur additional indebtedness;

•

make investments;

•

pay dividends and make other restricted payments;

•

sell certain assets;

•

create liens;

•

consolidate, merge, sell or otherwise dispose of all or substantially all of the company’'s assets; and

•

enter into transactions with affiliates.

~~Overall~~The applicable interest rate under the ABL Facility was 6.11%, 6.84%, and 5.78% as of August 3, 2025, July 28, 2024, and April 27, 2025, respectively.

~~Interest~~There iswere ~~charged~~$925,000, at$535,000, aand ~~rate~~$925,000 ~~(applicable~~of ~~interest~~outstanding ~~rate~~letters of ~~5.80%,~~credit ~~6.81%,~~provided ~~and~~by ~~6.81%~~the ABL Facility as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, respectively). ~~calculated~~As ~~using~~of August 3, 2025, we had $1.1 million remaining for the ~~Applicable~~issuance ~~Margin~~of ~~over~~additional ~~SOFR~~letters of credit based on ~~the~~an ~~borrower's~~aggregate ~~excess~~letters ~~availability~~of ~~under~~credit ~~the~~amount ~~ABL~~not ~~Facility,~~to exceed $2.0 million as ~~defined~~stated in the ~~ABL~~ Credit Agreement.

~~There were $925,000, $535,000, and $535,000 of outstanding letters of credit provided by the ABL Credit Agreement as of January 26, 2025, January 28, 2024, and April 28, 2024, respectively.~~ As of ~~January~~August 263, 2025, ~~the~~our ~~borrower~~available ~~had~~borrowings ~~$75,000~~calculated ~~remaining~~under ~~for~~ the ~~issuance~~provisions of ~~additional letters of credit under~~ the ~~ABL~~ Credit Agreement totaled $17.6 million.

~~There were no borrowings outstanding under the ABL~~ Credit ~~Agreement~~Agreements as- ofChina ~~January~~Operations ~~26, 2025, January 28, 2024, and April 28, 2024, respectively.~~

AsAgricultural ofBank ~~January 26, 2025, our available borrowings calculated under the provisions~~ of ~~the~~China ~~ABL~~- Unsecured Credit Agreement ~~totaled $23.2 million of which we borrowed $6.0 million from January 27, 2025, through March 7, 2025.~~

~~Denominated~~Effective inMarch 5, 2025, we entered into an unsecured credit agreement that provides for a line of credit up to 29.0 million RMB ($4.0 million USD as of August 3, 2025) that expires on March 4, 2026. Interest charged under this agreement is based on the Chinese ~~Yuan~~Loan ~~Renminbi~~Prime Rate (~~“RMB”~~"LPR") minus 50 basis points (applicable interest rates of 2.6%, 2.85%, and 2.6% as of August 3, 2025, July 28, 2024, and April 27, 2025, respectively). As of August 3, 2025, July 28, 2024, and April 27, 2025, the outstanding balance under this agreement was $4.0 million USD.

Agricultural Bank of China - ~~RMB~~Supplier ~~Unsecured~~Financing ~~Credit Agreement~~Arrangements

~~Effective~~Based ~~March~~on ~~20,~~the ~~2024~~company's request, wecertain suppliers entered into ansupply ~~unsecured~~chain ~~credit~~financing ~~agreement~~arrangements, ~~denominated~~which insuch ~~RMB~~arrangements ~~that~~totaled ~~provides for a line of credit up to 29~~20.0 million RMB ($42.08 million USD as of ~~January~~August 263, 2025)., Ofand ~~this~~are ~~29.0~~set ~~million~~to ~~RMB~~expire ~~line~~on ofdates ~~credit~~ranging from April 2, ~~9.6~~2026, ~~million~~through ~~RMB~~April 23, 92026.7 ~~million~~As ~~RMB~~a result of these expiration dates, we were able to extend our payment terms beyond those that are normal and 9customary.7 ~~million~~The ~~RMB~~suppliers ~~expire~~that onentered ~~March~~into 7,these ~~2025,~~supply ~~March~~chain 8financing arrangements assigned their receivables due from the company to the Agricultural Bank of China, ~~2025~~under a reverse factoring agreement with no recourse, and, ~~March~~in 9turn, ~~2025,~~received ~~respectively~~payments from the Agricultural Bank of China under terms that are normal and customary. Interest was charged under ~~this~~these ~~agreement~~agreements isat ~~based~~a onfixed ~~the~~rate ~~Loan~~of ~~Prime~~2.72% and ~~Rate~~was ~~("LPR")~~paid in ~~China~~full ~~minus~~at 50the ~~basis~~time ~~points~~these atagreements were effective. The outstanding balance associated with this agreement was $2.8 million USD and was classified as lines of credit-current in the ~~time~~Consolidated Balance Sheets as of ~~borrowing~~August 3, ~~which~~2025, ~~represents~~and 2April 27, 2025, respectively.~~95%~~ There were no supplier financing arrangements as of July 28, 2024.

As of January 26, 2025, the amount outstanding was 29.0 million RMB ($4.0 million USD) which we expect to repay during the fourth quarter when the line of credit expires based on the dates noted in the preceding paragraph. Currently, we are negotiating

I-18

~~the~~The ~~terms~~following ~~for~~summarizes athe ~~renewal~~activity ofassociated ~~this~~with ~~agreement,~~our ~~which~~supply ischain ~~expected~~financing toarrangements befor ~~finalized during~~ the ~~fourth~~three-month ~~quarter~~periods ofended ~~fiscal~~August ~~2025~~3, 2025 and ~~such~~July ~~terms~~28, ~~are not expected to adversely affect our liquidity.~~2024:

Bank of China - RMB Credit Agreement


	Three Months		Three Months
(dollars in thousands)	August 3, 2025		July 28, 2024
Outstanding at the beginning of the year	$	2,751	$	—
Vendor invoices financed during the year		—		—
Vendor invoices paid during the year		—		—
Foreign currency exchange rate remeasurement		29		—
Ending balance	$	2,780	$	—

~~Effective~~Agricultural ~~November~~Bank ~~5, 2024, we entered into a credit agreement (“Agreement”) denominated in RMB that provides 10.0 million RMB ($1.4 million USD as~~ of January 26, 2025) for an unsecured working capital loan and 25.0 million RMB ($3.5 million USD as of January 26, 2025) for letters of credit, guarantees, and other financing arrangements secured by trade accounts receivable associated with the company’s operations located in China~~. The~~ ~~working~~- ~~capital~~Working ~~loan~~Capital and letters of credit expire on November 6, 2025, and July 31, 2025, respectively. Interest is charged under the Agreement based on the LPR in China minus 50 basis points at the time of borrowing which represents 2.60%. Loans

AsDuring ~~of January 26, 2025,~~ the ~~amount~~first ~~outstanding~~quarter ~~under~~of ~~the~~fiscal ~~working capital loan~~2026, ~~which~~we ~~represents~~entered ~~the~~into ~~total~~unsecured ~~amount~~loan ~~available,~~agreements ~~was~~totaling 1021.0 million RMB ($12.49 million USD as of August 3, 2025), which such agreements are set to expire on dates ranging from May 7, 2026, through May 28, 2026. ~~The~~Interest ~~working~~charged ~~capital~~under ~~loan~~these ~~was~~agreements ~~used~~is tobased ~~fund~~on ~~certain~~the ~~working~~Chinese ~~capital~~LPR ~~expenditures~~50 ~~incurred~~basis inpoints ~~China~~(applicable interest rate of 2. As6% as of ~~January~~August 263, 2025,). ~~there~~As ~~were~~of noAugust ~~outstanding~~3, ~~for~~2025, ~~letters~~the ofoutstanding ~~credit~~balance under ~~the~~this ~~Agreement~~agreement was $2.9 million USD.

~~Overall~~Bank of China - Credit Agreement

~~Our~~Effective November 5, 2024, we entered into a credit agreement (“Agreement”) that provides for a 10.0 million RMB ($1.4 million USD as of August 3, 2025) unsecured working capital loan ~~agreements~~and ~~require~~25.0 million RMB ($3.5 million USD as of August 3, ~~among~~2025) for letters of credit, guarantees, and other ~~things~~financing arrangements secured by trade accounts receivable associated with the company’s operations located in China. The working capital loan and letters of credit expire on November 6, ~~that~~2025, and July 31, 2025, respectively. Currently, we ~~maintain~~are ~~compliance~~negotiating the terms for renewal of the working capital loan agreement that expires November 6, 2025, along with ~~certain~~the ~~financial~~letters ~~covenants~~of credit, guarantees, and other financing arrangements that expired on July 31, 2025. Interest charged under the Agreement is based on the Chinese LPR in China minus 50 basis points (applicable interest rates of 2.6% as of August 3, 2025 and April 27, 2025, respectively). As of ~~January~~August 263, 2025 and April 27, we2025, the outstanding balance under this Agreement were in$1.4 ~~compliance~~million ~~with~~USD. ~~our~~In ~~financial~~addition, ~~covenants~~as of August 3, 2025 and April 27, 2025, there were no outstanding letters of credit under this Agreement.

~~Interest payments of $16,000 were made during the nine-month period ended January 26, 2025. There were no interest payments during the nine-month period ended January 28, 2024.~~Other

Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. As of August 3, 2025, we were in compliance with our financial covenants.

Interest payments totaled $185,000 during the three-month period ended August 3, 2025. There were no interest payments during the three-month period ended July 28, 2024.

12. Fair Value

ASC Topic 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the company’s assumptions (unobservable inputs). Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either Level 1 or Level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy.

The hierarchy consists of three broad levels as follows:

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3 – Unobservable inputs developed using the company’s estimates and assumptions, which reflect those that market participants would use.

The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter based on various factors, and it is possible that an asset or liability may be classified differently from quarter to quarter. However, we expect that changes in classifications between different levels will be rare.

I-19

Recurring Basis

The following tables present information about assets measured at fair value on a recurring basis:

Fair value measurements as of January 26, 2025, using:

Fair value measurements as of August 3, 2025, using:

Quoted prices

Significant

in active

other

Significant

markets for

observable

unobservable

identical assets

inputs

(amounts in thousands)

Level 1

Level 2

Level 3

Total

Assets:

U.S. Government Money Market Fund

65,~~606~~568

N/A

65,~~606~~568

Growth Allocation Mutual Funds

~~835~~894

N/A

~~835~~894

S&P 500 Index Fund

~~275~~340

N/A

~~275~~340

Other

~~287~~308

N/A

~~287~~308

Fair value measurements as of January 28, 2024, using:

Fair value measurements as of July 28, 2024, using:

Quoted prices

Significant

in active

other

Significant

markets for

observable

unobservable

identical assets

inputs

(amounts in thousands)

Level 1

Level 2

Level 3

Total

Assets:

U.S. Government Money Market Fund

6,~~995~~823

N/A

6,~~995~~823

Growth Allocation Mutual Funds

~~656~~756

N/A

~~656~~756

S&P 500 Index Fund

~~156~~212

N/A

~~156~~212

Other

~~213~~252

N/A

~~213~~252

Fair value measurements as of April 28, 2024, using:

Fair value measurements as of April 27, 2025, using:

Quoted prices

Significant

in active

other

Significant

markets for

observable

unobservable

identical assets

inputs

(amounts in thousands)

Level 1

Level 2

Level 3

Total

Assets:

U.S. Government Money Market Fund

65,~~910~~682

N/A

65,~~910~~682

Growth Allocation Mutual Funds

~~691~~808

N/A

~~691~~808

S&P 500 Index Fund

~~176~~275

N/A

~~176~~275

Other

~~228~~282

N/A

~~228~~282

Investments - Rabbi Trust

We have a rabbi trust (the “Trust”) for the participants in our deferred compensation plan (the “Plan”), that enables participants to direct their contributions to various investment options under the Plan. The investments associated with the Trust consist of a money market fund and various mutual funds that are classified as available-for-sale.

As of ~~January~~August 263, 2025, our investments associated with the Trust totaled $87.01 million, of which $1.84 million, and $65.27 million were classified as short-term and long-term, respectively. As of ~~January~~July 28, 2024, our investments associated with the Trust totaled $8.0 million, of which $~~937~~954,000 and $7.1 million were classified as short-term and long-term, respectively. As of April 2827, ~~2024~~2025, our investments associated with the Trust totaled $87.0 million, of which $~~903,000~~1.3 million and $75.17 million were classified as short-term and long-term, respectively. The investments associated with the Trust had an accumulated unrealized ~~gain~~gains ~~(loss)~~totaling of $~~216~~292,000, $88198,000, and $~~118~~150,000 as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, respectively.

The fair value of our ~~long-term~~ investments associated with the Trust approximates their cost basis.

Other

The carrying amount of our cash and cash equivalents, accounts receivable, other current assets, lines of credit, accounts payable, and accrued expenses approximated their fair value because of the short maturity of these financial instruments.

I-20

Other

The carrying amount of our cash and cash equivalents, accounts receivable, other current assets, lines of credit - current, accounts payable, and accrued expenses approximates their fair value because of the short maturity of these financial instruments. The carrying amount of our line of credit - long-term approximates its fair value as the variable rates of interest associated with the respective lines of credit are comparable to the market rate of interest.

13. Net Loss Per Share

Basic net loss per share is computed using the weighted-average number of shares outstanding during the period. Diluted net loss per share uses the weighted-average number of shares outstanding during the period plus the dilutive effect of stock-based compensation calculated using the treasury stock method.

Weighted average shares used in the computation of basic and diluted net loss per share were 12,~~559~~570,000 and 12,470,000 for the three months ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, respectively.

Shares of unvested common stock that were not included in the computation of diluted net loss per share consist of the following:

	Three Months Ended
(in thousands)	~~January~~August 263, 2025		~~January~~July 28, 2024
Antidilutive effect from decrease in the price per share of our common stock		—	151
Antidilutive effect from net loss incurred during the fiscal quarter	~~123~~90		81137
Total unvested shares of common stock not included in
computation of diluted net loss per share		~~123~~90		96138

Weighted average shares used in the computation of basic and diluted net loss per share were 12,514,000 and 12,419,000 for the nine months ending January 26, 2025, and January 28, 2024, respectively.

Shares of unvested common stock that were not included in the computation of diluted net loss per share consist of the following:

	Nine months ended
(in thousands)	January 26, 2025		January 28, 2024
antidilutive effect from decrease in the price per share of our common stock		—	4
antidilutive effect from net loss incurred during the fiscal year	135		126
total unvested shares of common stock not included in
computation of diluted net loss per share		135		130

14. Segment Information

~~Overall~~During the first quarter of fiscal 2026, we renamed our two reportable business segments to better reflect our product offerings. Our former mattress fabrics segment is now known as the bedding segment and our former upholstery fabrics segment is now known as the upholstery segment. The bedding segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. The upholstery segment develops, sources, manufactures, and sells fabrics primarily to residential, commercial, and hospitality furniture manufacturers.

~~Our~~In ~~operations~~addition, ~~are~~the ~~classified~~upholstery ~~into~~segment ~~two~~includes ~~business~~Read, ~~segments:~~a ~~mattress~~wholly ~~fabrics~~owned subsidiary that operates a leased facility in Knoxville, Tennessee which 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 will combine certain activities within the bedding and upholstery business segments and create one integrated Culp-branded business. As part of this strategic transformation, we will close our leased facilities operated by our upholstery segment located in Burlington, North Carolina and Knoxville, Tennessee, and will transition their production and distribution activities to a shared management model within our owned facility located in Stokesdale, North Carolina. See note 10 of the consolidated financial statements for further details regarding this strategic transformation initiative.

~~Mattress~~Our ~~Fabrics~~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 (i.e. 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 (i.e., 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

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

I-21

~~compensation~~items ~~and~~that ~~benefits~~are ~~for~~not ~~certain~~expected ~~executives~~to ~~and~~occur ~~their~~on ~~support staff, all costs associated with being~~ a ~~public~~regular ~~company,~~basis ~~amortization~~(i.e. ofrestructuring ~~intangible~~related ~~assets,~~charges and ~~other~~credits), ~~miscellaneous~~(iv) ~~expenses. Segment~~ assets ~~include assets~~ used in ~~the~~ operations, ofwhich ~~each~~generally ~~segment~~include ~~and consist of~~ accounts receivable, ~~inventories~~inventory, property, plant, and equipment, ~~and~~ right of use assets., ~~The mattress~~and ~~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~~v). ~~Intangible~~capital 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 compensationspending.

Cost of sales for each segment includes costs to develop, manufacture, or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead, and incoming freight charges. Intangible assets are not included in segment assets, as these assets are not used by the CODM to evaluate the respective segment’s operating performance and allocate resources to the individual segments.

Statements of operations for our operating segments are as follows:

	Three months ended
	January 26, 2025			January 28, 2024
	August 3, 2025			July 28, 2024
Net sales by segment:
Mattress fabrics	$	28,642		$	30,021
Bedding	$	28,046		$	28,076
Upholstery fabrics		23,611			30,397
Upholstery		22,645			28,461
Net sales	$	5250,~~253~~691		$	6056,~~418~~537
Gross profit:
Cost of Sales by segment:
Mattress fabrics	$	2,743		$	1,520
Bedding	$	25,104		$	28,402
Upholstery fabrics		4,228			6,122
Upholstery		18,359			22,943
Segment gross profit		6,971			7,642
Total segment cost of sales	$	43,463		$	51,345
Restructuring related (charge) credit (1)(2)		(624	)		61
Restructuring related charge (1)		—			116
Gross profit	$	6,347		$	7,703
Cost of Sales	$	43,463		$	51,461
Selling, general, and administrative expenses by segment:
Gross profit (loss) by segment:
Mattress fabrics	$	3,176		$	3,102
Bedding	$	2,942		$	(326	)
Upholstery fabrics		3,549			4,030
Upholstery		4,286			5,518
Unallocated corporate expenses		1,854			2,361
Total segment gross profit	$	7,228		$	5,192
Selling, general, and administrative expenses	$	8,579		$	9,493
Restructuring related charge (1)		—			(116	)
(Loss) income from operations by segment:
Gross profit	$	7,228		$	5,076
Mattress fabrics	$	(433	)	$	(1,582	)
Selling, general, and administrative expenses		(9,119	)		(9,296	)
Upholstery fabrics		679			2,092
Restructuring credit (expense) (2)(3)		3,508			(2,631	)
Unallocated corporate expenses		(1,854	)		(2,361	)
Income (loss) from operations	$	1,617		$	(6,851	)
Total segment loss from operations	$	(1,608	)	$	(1,851	)
Interest expense		(183	)		(28	)
Restructuring related (charge) credit (1) (2)		(624	)		61
Interest income		235			262
Restructuring expense (3)(4)		(1,655	)		50
Other expense		(531	)		(404	)
Loss from operations	$	(3,887	)	$	(1,740	)
Income (loss) before income taxes	$	1,138		$	(7,021	)
Interest expense		(63	)		—
Interest income		255			284
Other income (expense)		15			(705	)
Loss before income taxes	$	(3,680	)	$	(2,161	)

(1) ~~During~~For the three-month ~~months~~period ended ~~January~~July 2628, ~~2025~~2024, cost of sales and gross profit ~~includes~~included restructuring related charges totaling $~~624~~116,000 for losses on the disposal and valuation of inventory related to the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada, which such facility was sold during the first quarter of fiscal 2026. See Note 10 to the consolidated financial statements for further details and a description of our restructuring activities.

(2) ~~During~~For the three-month ~~months~~period ended ~~January~~August 283, ~~2024~~2025, ~~gross~~the ~~profit~~$3.5 ~~includes~~million restructuring credit mostly represented a ~~restructuring~~gain ~~related~~from ~~credit~~the sale of ~~$61~~the Property located in Quebec,~~000~~ ~~for~~Canada, ~~the~~totaling ~~gain~~$4.0 onmillion, ~~disposal~~partially ofoffset ~~inventory~~by charges related to ~~the~~activities ~~discontinuation~~to oftransform ~~production~~our ofoperating ~~cut~~model and ~~sewn~~reduce ~~upholstery~~fixed ~~kits~~costs. atSee Note 10 to the ~~company's~~consolidated ~~facility~~financial ~~located~~statements infor ~~Ouanaminthe,~~further ~~Haiti.~~details and a description of our restructuring activities.

(3) ~~During~~For the three-month ~~months~~period ended ~~January~~July 2628, ~~2025~~2024, ~~restructuring expense of $1.7 million mostly relates to~~ the ~~mattress fabrics segment. The~~ $12.76 million restructuring expense ~~represents~~represented ~~(i)~~costs ~~$1.5~~that ~~million~~were ~~for~~mostly associated with consolidating the ~~consolidation~~company's ofNorth ~~our~~American mattress fabrics ~~operations~~manufacturing ~~located~~and indistribution ~~Quebec,~~facilities ~~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~~consolidation ~~and sale~~ of ~~equipment.~~two ~~See~~leased ~~Note~~facilities 10related to ~~the~~cut ~~consolidated financial statements for further details~~ and ~~description~~sewn ofmattress ~~our~~cover ~~Fiscal~~operations ~~2025~~located ~~Restructuring~~in ~~Plan~~Ouanaminthe, Haiti.

(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.

I-22

	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.

I-23

Balance sheet information for our operating segments follows:

(dollars in thousands)

~~January~~August 263, 2025

~~January~~July 28, 2024

April 2827, ~~2024~~2025

Segment assets:

Mattress Fabrics:

Bedding:

Accounts receivable

1110,~~607~~216

1110,~~463~~094

10,~~003~~576

Inventory

3135,~~377~~102

2725,~~925~~278

2733,~~671~~293

Property, plant and equipment (1)

2422,~~210~~061

3228,~~263~~844

3123,~~472~~259

Right of use assets (2)

~~200~~50

~~1,798~~568

~~1,627~~125

Assets held for sale (3)

~~2,214~~40

—607

—2,177

Total mattress fabrics assets

69,608

73,449

70,773

Total bedding assets

67,469

65,391

69,430

Upholstery Fabrics:

Upholstery:

Accounts receivable

118,~~552~~166

1211,~~223~~493

11,~~135~~268

Inventory

1715,~~222~~007

1816,~~952~~390

1716,~~172~~016

Property, plant and equipment (4)

~~1,117~~956

1,~~155~~098

1,~~125~~010

Right of use assets (5)

2,~~647~~159

21,~~345~~478

12,~~952~~678

Total upholstery fabrics assets

32,538

34,675

31,384

Total upholstery assets

26,288

30,459

30,972

Total segment assets

~~102~~93,~~146~~757

~~108~~95,~~124~~850

~~102~~100,~~157~~402

Non-segment assets:

Cash and cash equivalents

511,~~279~~094

1213,~~585~~472

105,~~012~~629

Short-term investments - rabbi trust

1,~~753~~395

~~937~~954

~~903~~1,325

Short-term notes receivable

~~526~~5,104

~~260~~268

~~264~~280

Current income taxes receivable

~~1,137~~—

~~476~~532

~~350~~—

Other current assets

2,~~619~~767

43,~~237~~590

32,~~371~~970

Long-term notes receivable

1,~~254~~078

1,~~530~~394

1,~~462~~182

Deferred income taxes

~~490~~475

~~531~~528

~~518~~637

Property, plant and equipment (6)

~~612~~535

~~603~~534

~~585~~567

Right of use assets (7)

32,~~256~~953

2,~~809~~437

23,~~624~~105

Intangible assets

~~1,594~~865

1,~~970~~782

~~1,876~~960

Long-term investments - rabbi trust

65,~~250~~715

7,~~083~~089

75,~~102~~722

Other assets

~~639~~676

~~853~~709

~~830~~591

Total assets

~~127~~126,~~555~~414

~~141~~129,~~998~~139

~~132~~123,~~054~~370

(1)

The $2422.21 million as of ~~January~~August 263, 2025, represents property, plant, and equipment of $2321.02 million, ~~$973,000~~ and $~~221~~888,000 located in the U.S., ~~Haiti,~~ and ~~Canada~~Haiti, respectively. The $3228.38 million as of ~~January~~July 28, 2024, represents property, plant, and equipment of $2120.9 million, $97.84 million, and $~~600~~511,000 located in the U.S., Canada, and Haiti, respectively. The $3123.53 million as of April 2827, ~~2024~~2025, represents property, plant, and equipment of $2122.53 million, ~~$9.4 million,~~ and $~~555~~955,000 located in the U.S., ~~Canada,~~ and Haiti, respectively.

(2)

The $~~200~~50,000 as of ~~January~~August 263, 2025, represents a right of use asset in Haiti. The $~~1.8~~568,000 ~~million~~ as of ~~January~~July 28, 2024, represents right of use assets of $~~1.2~~350,000 ~~million~~ and $~~604~~218,000 located in Haiti and Canada, respectively. The $~~1.6~~125,000 ~~million~~ as of April 2827, ~~2024~~2025, represents a right of use ~~assets~~asset ~~of $1.1 million and $545,000 located~~ in Haiti ~~and Canada, respectively~~.

(3)

The $40,000 as of August 3, 2025, represents assets held for sale located in the U.S. The $607,000 as of July 28, 2024, represents assets held for sale of $357,000 and $250,000 located in the U.S. and Haiti, respectively. The $2.2 million as of ~~January~~April 2627, 2025, represents assets held for sale located in Canada.

(4)

The $~~1.1~~956,000 ~~million~~ as of ~~January~~August 263, 2025, represents property, plant, and equipment of $~~1.0~~897,000 ~~million~~ and $8359,000 located in the U.S. and China, respectively. The $1.21 million as of ~~January~~July 28, 2024, represents property, plant, and equipment of $~~1.1~~990,000 ~~million~~ and $~~134~~108,000 located in the U.S. and China, respectively. The $1.10 million as of April 2827, ~~2024~~2025, represents property, plant, and equipment of $~~1.0~~940,000 ~~million~~ and $~~120~~70,000 located in the U.S. and China, respectively.

(5)

The $2.62 million as of ~~January~~August 263, 2025, represents right of use assets of $1.94 million and $~~764~~771,000 located in China and the U.S., respectively. The $21.35 million as of ~~January~~July 28, 2024, represents right of use assets of $~~944,000 and $~~1.41 million and $393,00 located in ~~China and the~~ U.S. and China, respectively. The $2.07 million as of April 2827, ~~2024~~2025, represents right of use assets of $1.37 million and $~~709,000~~1.0 million located in China and the U.S. ~~and China~~, respectively.

(6)

The $~~612~~535,000, $~~603~~534,000, and $~~585~~567,000 as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, 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.

I-2423

(7)

The $3.30 million, $2.84 million, and $23.61 million as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, 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
	Three months ended
(dollars in thousands)	~~January~~August 263, 2025		~~January~~July 28, 2024
Capital expenditures (1):
Mattress Fabrics	$	1,469	$	2,828
Bedding	$	100	$	134
Upholstery Fabrics		280		219
Upholstery		50		68
Unallocated Corporate		789		167
Non-Segment		14		12
Total capital expenditures	$	~~2,538~~164	$	3,214
Depreciation expense:
Mattress Fabrics (2)	$	5,166	$	4,422
Bedding	$	889	$	1,284
Upholstery Fabrics		464		475
Upholstery		40		39
Total depreciation expense	$	5,630	$	4,897
Selling, general and administrative		182		258
Total depreciation expense	$	1,111	$	1,581
Accelerated depreciation expense (2) (3)		22		875
Total	$	1,133	$	2,456

(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~~three-month period ended ~~January~~August 263, 2025, accelerated depreciation expense ~~for~~totaling ~~the~~$22,000 ~~mattress~~related ~~fabrics~~to the upholstery segment ~~included~~and ~~additional~~was classified within restructuring credit in the Consolidated Statements of Net Loss. The accelerated depreciation expense ~~related~~pertained to the shortening of useful lives of equipment ~~associated~~related ~~with~~to the ~~gradual~~consolidation ~~discontinuation~~ of ~~operations~~distribution atactivities from our ~~manufacturing facility located in Quebec~~Burlington, ~~Canada.~~North ~~The~~Carolina ~~amount~~facility ofto ~~additional~~the ~~depreciation~~manufacturing ~~expense was $1.3 million~~ and ~~was~~distribution ~~classified~~center aslocated ~~restructuring expense~~ in ~~the~~Stokesdale, ~~Consolidated~~North ~~Statements of Net Loss~~Carolina.

(3)

During the three-month period ended July 28, 2024, accelerated depreciation expense totaling $875,000 related to the bedding segment and was classified within restructuring expense in the Consolidated Statements of Net Loss. The accelerated depreciation expense related to the shortening of useful lives of equipment associated with the closure of our operations located in Quebec, Canada.

15. Income Taxes

Effective Income Tax Rate

We recorded income tax expense of $~~635~~1.4 million,~~000,~~ or (3120.93%) of ~~loss~~income before income taxes, for the ~~nine~~three-month period ended ~~January~~August 263, 2025, compared with income tax expense of $~~2.2 million~~240,000, or (333.4%) of loss before income taxes, for the ~~nine~~three-month period ended ~~January~~July 28, 2024.

Our consolidated effective income tax rates for the ~~nine~~three-month periods ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, 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~~three-month periods ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, we were subject to loss limitation rules. These loss limitation rules require any taxable 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 affected 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.

I-2524

The following schedule summarizes 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 for the ~~nine~~three-month periods ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024:

	January 26,			January 28,
	August 3,			July 28,
	2025			2024
U.S. federal income tax rate		21.0	%		21.0	%
U.S. valuation allowance		~~(26~~60.24	)		(4223.05	)
Tax effects of local currency foreign exchange gain		0.7			3.8
Withholding taxes associated with foreign jurisdictions		13.4			(1.0	)
Uncertain income tax positions		4.3			(0.1	)
Foreign income tax rate differential		12.7			0.7
Withholding taxes associated with foreign jurisdictions		(1.5	)		(8.1	)
global intangible low tax income tax (GILTI)		12.6			—
Captial expenditure deduction - Quebec Canada		(1.1	)		—
Tax effects of local currency foreign exchange loss		(1.0	)		(0.4	)
Foreign income tax rate differential		(0.8	)		(5.2	)
Uncertain income tax positions		0.6			1.2
Stock-based compensation		(0.46	)		(20.9	)
Other		0.1			0.1
Other (1)		—			(0.5	)
	(3.9)%			(33.4)%
Consolidated effective income tax rate (2) (3)		120.3	%	(3.4)%

(1)

~~Our~~"Other" ~~consolidated effective income tax rates~~ for ~~the~~all ~~first~~periods ~~nine~~presented ~~months~~represents ofmiscellaneous ~~fiscal~~adjustments ~~2025~~that ~~and~~pertain ~~2024~~to ~~were both adversely affected by the mix of earnings between our~~ U.S. ~~operations~~permanent ~~and~~differences ~~foreign~~such ~~subsidiaries,~~ as ~~our~~meals ~~taxable income stems mostly from our operations located in China, which has a higher income tax rate than the U.S. In addition, during the first nine months of fiscal 2025~~ and ~~the first nine months of 2024~~entertainment, ~~we incurred pre-tax losses associated with our U.S. operations for which an~~ income tax ~~benefit~~provision ~~was not recorded due~~ to areturn full valuation allowance applied against our U.S. net deferred income tax assets. The income tax charge associated with the full valuation allowance applied against our U.S. net deferred income tax assets was higher during the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024adjustments, asand ~~our~~other ~~$(16.8)~~and ~~million~~miscellaneous Uitems.~~S. pre-tax loss incurred during the first nine months of fiscal 2025 was greater than the $(11.3) million U.S. pre-tax loss incurred during the first nine months of fiscal 2024.~~

(2)

~~During~~Our consolidated effective income tax rates were adversely affected by the ~~first~~mix ~~nine~~of ~~months~~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 ~~2025~~2026 (see Notes 8 and 10 of the consolidated financial statements for further details), which jurisdictions have higher income tax rates than the U.S. In addition, we ~~incurred~~applied a ~~greater~~full ~~consolidated~~valuation allowance against our U.S. deferred income tax assets during the first quarters of fiscal 2026 and 2025, respectively. Consequently, an income tax benefit was not recognized for pre-tax ~~loss~~losses associated with our U.S. operations totaling $(16$3.43) million, ~~compared~~and ~~with $~~(6.$7.0) million that were incurred during the first ~~nine~~quarters ~~months~~ of fiscal ~~2024~~2026 and 2025, respectively. AsLastly, aour ~~result~~consolidated effective income tax rates were also adversely affected by pre-tax losses associated with our Haitian operations, ~~the~~which ~~principal~~are ~~differences~~not ~~between~~subject to income tax. ~~expense~~Our atHaitian ~~the~~operations ~~U.S.~~are ~~federal~~located in an economic zone that permits a 0% income tax rate ~~and~~for the ~~effective~~first fifteen years of operations, for which we have seven years remaining. As a result of the 0% income tax rate ~~reflected~~, inan ~~the~~income ~~consolidated~~tax ~~financial~~benefit ~~statements~~was ~~were~~not ~~more~~recognized ~~pronounced~~for ~~during~~ the ~~first~~pre-tax ~~nine~~losses ~~months~~associated ofwith ~~fiscal~~our ~~2024~~Haitian operations totaling $(362,000) asand ~~compared~~$(633,000) ~~with~~that were incurred during the first ~~nine~~quarters ~~months~~ of fiscal 2026 and 2025, respectively.

(3)

During the first quarter of fiscal 2026, we earned a lower consolidated pre-tax income totaling $1.1 million, compared with a significantly higher consolidated pre-tax loss of $(7.0) million. As a result, we reported a positive effective income tax rate during the first quarter of fiscal 2026, compared with a negative effective income tax rate during the first quarter of fiscal 2025. 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 2025.

One Big Beautiful Bill Act ("OBBBA")

On July 4, 2025, OBBBA was signed into law, making several provisions of the 2017 Tax Cuts and Jobs Act ("TCJA") permanent. Such provisions include: (i) no change to the standard corporate tax rate of 21.0%; (ii) increased depreciation allowances for certain property acquired after January 19, 2025; (iii) deduction of certain U.S. research and development expenditures; (iv) limitations on the deductibility of business interest expense; and (v) modifications to GILTI and foreign-derived intangible income. Topic 740 Income Taxes, requires the income tax effects of changes in tax laws or rates to be recognized at the date of enactment. Accordingly, as of August 3, 2025, we evaluated the provisions of OBBBA and determined OBBBA did not impact our consolidated effective income tax rate, income tax expense, or our U.S. net deferred income tax assets during the three-months ended August 3, 2025, due to the application of a full valuation allowance applied against our U.S. net deferred income tax assets described in the below section titled - U.S. Valuation Allowance.

U.S. Valuation Allowance

We evaluate the realizability of our U.S. net deferred income tax assets to determine if a valuation allowance is required. We assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not” standard, with significant weight being given to evidence that can be objectively verified. Since the company operates ~~in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering the effects of local tax law.~~

As of January 26, 2025, we evaluated the realizability of our U.S. net deferred income tax assets to determine if a full valuation allowance was required. Based on our assessment, we determined we still have a recent history of significant cumulative U.S. preI-tax losses in that we experienced U.S. pre-tax losses during each of the last three fiscal years from 2022 through 2024, and we currently expect significant U.S. pre-tax losses to continue during fiscal 2025. As a result of the significant weight of this negative evidence, we believe it is more likely than not that our U.S. net deferred income tax assets will not be fully realizable, and therefore we provided for a full valuation allowance against our U.S. net deferred income tax assets.25

~~Based~~in onmultiple ~~our~~jurisdictions, ~~assessments~~we asassess ofthe ~~January~~need ~~26,~~for ~~2025,~~a ~~January~~valuation ~~28,~~allowance ~~2024,~~on ~~and~~a ~~April~~jurisdiction-by-jurisdiction 28basis, ~~2024,~~considering ~~valuation~~the ~~allowances~~effects ~~against~~of ~~our~~local ~~net deferred income~~ tax ~~assets~~law. ~~pertain to the following:~~

(dollars in thousands)	January 26, 2025		January 28, 2024		April 28, 2024
U.S. federal and state net deferred income tax assets	$	23,962	$	19,162	$	19,674
U.S. capital loss carryforward		2,330		2,330		2,330
	$	26,292	$	21,492	$	22,004

As of August 3, 2025, we evaluated the realizability of our U.S. net deferred income tax assets to determine if a full valuation allowance was required. Based on our assessment, we determined we still have a recent history of significant cumulative U.S. pre-tax losses in that we experienced U.S. pre-tax losses during each of the last three fiscal years from 2023 through 2025, and we currently expect significant U.S. pre-tax losses to continue during fiscal 2026. As a result of the significant weight of this negative evidence, we believe it is more-likely-than-not that our U.S. net deferred income tax assets will not be fully realizable, and therefore we provided for a full valuation allowance against our U.S. net deferred income tax assets.

~~I-26~~Based on our assessments as of August 3, 2025, July 28, 2024, and April 27, 2025, valuation allowances against our net deferred income tax assets pertain to the following:


(dollars in thousands)	August 3, 2025		July 28, 2024		April 27, 2025
U.S. federal and state net deferred income tax assets	$	24,661	$	21,326	$	23,973
U.S. capital loss carryforward		2,330		2,330		2,330
	$	26,991	$	23,656	$	26,303

Undistributed Earnings

We assess whether the undistributed earnings from our foreign subsidiaries will be reinvested indefinitely or eventually distributed to our U.S. parent company and whether we are required to record a deferred income tax liability for those undistributed earnings from foreign subsidiaries that will not be reinvested indefinitely. As of ~~January~~August 263, 2025, we assessed the liquidity requirements of our U.S. parent company and determined that our undistributed earnings and profits from our foreign subsidiaries would not be reinvested indefinitely and would eventually be distributed to our U.S. parent company. The conclusion reached from this assessment was consistent with prior reporting periods.

As a result of the ~~2017 Tax Cuts and Jobs Act~~TCJA, a U.S. corporation is allowed a 100% dividend -received deduction for earnings and profits received from a 10% or more owned foreign corporation. Therefore, a deferred income tax liability will be required only for unremitted withholding taxes associated with earnings and profits generated by our foreign subsidiaries that will ultimately be repatriated to the U.S. parent company. As a result, as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, we recorded a deferred income tax liability of $5.13 million, $4.79 million, and $45.82 million, respectively.

Uncertain Income Tax Positions

An unrecognized income tax benefit for an uncertain income tax position can be recognized in the first interim period if the more-likely-than-not recognition threshold is met by the end of the reporting period, or is effectively settled through examination, negotiation, or litigation, or if the statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired. If it is determined that any of the above conditions occur regarding our uncertain income tax positions, an adjustment to our unrecognized income tax benefit will be recorded at that time.

As of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, we had ~~a total of~~ $~~1.4 million~~841,000, $1.23 million, and $~~1.3~~790,000 ~~million~~ of total gross unrecognized income tax benefits, of which the entire amount was classified as income taxes payable – long-term in the accompanying Consolidated Balance Sheets. AsThese ~~of January 26, 2025, the~~ unrecognized income tax ~~benefit~~benefits would favorably affect income tax expense in future periods by $841,000, $1.43 million, and $790,000 as of August 3, 2025, July 28, 2024, and April 27, 2025, respectively.

Our gross unrecognized income tax benefit of $~~1.4~~841,000 ~~million~~ as of ~~January~~August 263, 2025, relates to an income tax ~~positions~~position for which significant change ~~could~~is ~~occur~~currently not expected within the next year ~~if the statute of limitations for relevant taxing authorities to examine and challenge the tax position expires~~.

I-26

Income Taxes Paid

The following table sets forth taxes paid by jurisdiction:

	Nine Months			Nine Months
	Three Months			Three Months
	Ended			Ended
	January 26,			January 28,
	August 3,			July 28,
(dollars in thousands)	2025			2024
United States Transition Tax Payment		665			499
China Income Taxes, Net of Refunds		46			561
China Income Taxes, Net of Refunds		1,566			1,803
Canada - Income Taxes, Net of Refunds		—			—
Canada - Income Taxes, Net of Refunds		(219	)		468
	$	46		$	561
	$	2,012		$	2,770

16. Stock-Based Compensation

Equity Incentive Plan Description

On September 16, 2015, our shareholders approved an equity incentive plan titled the Culp, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan authorizes the grant of stock options intended to qualify as incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, time-based restricted stock units, performance-based restricted stock units, and other equity and cash related awards as determined by the Compensation Committee of our board of directors. An aggregate of 1,200,000 shares of common stock were authorized for issuance under the 2015 Plan, with certain sub-limits that would apply with respect to specific types of awards that may be issued as defined in the 2015 Plan. Effective September 27, 2023, our shareholders approved an amendment and restatement of the 2015 Plan (the "Amended and Restated Plan"). The Amended and Restated Plan authorizes the issuance of an additional 960,000 shares of common stock in addition to the shares of common stock still available for issuance under the 2015 Plan. The Amended and Restated Plan also removed certain sub-limits that previously applied with respect to specific types of awards that may be issued under the 2015 plan.

IAs of August 3, 2025, there were 669,853 shares available for future equity-27based grants under the Amended and Restated Plan.

Plan. The Amended and Restated Plan also removed certain sub-limits that previously applied with respect to specific types of awards that may be issued under the 2015 plan.

As of January 26, 2025, there were 451,537 shares available for future equity-based grants under the Amended and Restated Plan.

Performance-Based Restricted Stock Units

We grant performance-based restricted stock units to senior executives which could earn up to a certain number of shares of common stock if certain performance targets are met over ~~a three-fiscal year~~ performance ~~period~~periods as defined in the related restricted stock unit award agreements. The number of shares of common stock that are earned based on performance targets that have been achieved may, with respect to certain awards, be adjusted based on a market-based total shareholder return component as defined in the related restricted stock unit award agreements.

Our performance-based restricted stock units granted to senior executives were measured based on their fair market value on the date of grant. The fair market value per share was determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock for the performance-based component.

The following table provides assumptions used to determine the fair market value of the market-based total shareholder return component using the Monte Carlo simulation model on our outstanding performance-based restricted stock units granted to senior executives on August 8, 2024, January 8, 2024, and September 28, 2023~~, and August 10, 2022~~:

	August 8,			January 8,			September 28,			~~August 10,~~
		2024		2024			2023			~~2022~~
Closing price of our common stock	$	4.65		$	5.61		$	5.59		$	~~5.06~~
Expected volatility of our common stock		35.0	%		33.5	%		37.3	%		~~48.2~~	%
Expected volatility of peer companies	22.6- 104.0		%	33.7 - 102.6		%	35.7- 91.5		%	~~41.6 - 105.1~~		%
Risk-free interest rate		3.90	%		4.3	%		4.9	%		~~3.13~~	%
Dividend yield		-0.00	%		-0.00	%		-0.00	%		-	%
Correlation coefficient of peer companies	(0.01) - 0.17			0.01 - 0.21			0.01 - 0.21			~~0.05 - 0.23~~

~~The following table summarizes information related to our grants of performance~~I-~~based restricted stock units associated with senior executives that were unvested as of January 26, 2025:~~27

	(2)		(3)
	Performance-Based		Restricted Stock
	Restricted Stock		Units Expected
Date of Grant	Units Awarded		to Vest		Price Per Share			Vesting Period
August 8, 2024 (1)		505,003		50,500	$	5.35	(4)	36 months
January 8, 2024 (1)		24,598		4,238	$	6.23	(5)	31 months
September 28, 2023 (1)		192,771		—	$	6.43	(6)	34 months
August 10, 2022 (1)		146,048		—	$	5.77	(7)	3 years

The following table summarizes information related to our grants of performance-based restricted stock units associated with senior executives that were unvested as of August 3, 2025:

Performance-based restricted stock units awarded to senior executives.


	(1)		(2)
	Performance-Based		Restricted Stock
	Restricted Stock		Units Expected
Date of Grant	Units Awarded		to Vest		Price Per Share			Vesting Period
August 8, 2024		505,003		—	$	5.35	(3)	3 years
January 8, 2024		16,399		4,238	$	6.23	(4)	31 months
September 28, 2023		62,569		—	$	6.43	(5)	34 months

(1)

Amounts represent the maximum number of common stock shares that could be earned if certain performance targets are met as defined in the related restricted stock unit agreements as of the date of grant.

(2)

Compensation cost is based on an assessment each reporting period to determine the probability of whether or not certain performance ~~goals~~targets will be met and how many shares are expected to be earned as of the end of the vesting period. These amounts represent the number of shares that were expected to vest as of ~~January~~August 263, 2025.

(3)

Price per share represents the fair market value per share ($1.15 per $1, or an increase of $0.70 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($4.65) for the performance-based component of the performance-based restricted stock units granted to senior executives on August 8, 2024.

(4)

Price per share represents the fair market value per share ($1.11 per $1, or an increase of $0.62 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($5.61) for the performance-based component of the performance-based restricted stock units granted to a senior executive on January 8, 2024.

(5)

I-28

return component and the closing price of our common stock ($5.61) for the performance-based component of the performance-based restricted stock units granted to a senior executive on January 8, 2024.

Price per share represents the fair market value per share ($1.15 per $1, or an increase of $0.84 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($5.59) for the performance-based component of the performance-based restricted stock units granted to senior executives on September 28, 2023.

~~Price~~There ~~per~~were ~~share~~no represents the fair market value per share ($1.14 per $1, or an increase of $0.71 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the marketperformance-based ~~total~~restricted ~~shareholder return component and the closing price of our common~~ stock ~~($5.06)~~units ~~for~~that ~~the~~vested ~~performance-based~~during ~~component of~~ the ~~performance~~three-~~based~~month ~~restricted~~periods ~~stock~~ended ~~units~~August ~~granted~~3, to2025, ~~senior~~and ~~executives~~July on28, ~~August 10~~2024, ~~2022~~respectively.

~~There~~We ~~were~~recorded nocompensation expense of $3,000 and $6,000 within selling, general, and administrative expenses associated with our performance-based restricted stock ~~units~~unit ~~that~~awards ~~vested~~for ~~during~~ the ~~nine~~three-month periods ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, respectively. Compensation expense is recorded based on an assessment each reporting period to determine the probability of whether or not certain performance targets will be met and how many shares are expected to be earned as of the end of the vesting period. If certain performance goals are not expected to be achieved, compensation expense would not be recorded, and any previously recognized compensation expense would be reversed.

WeAs ~~recorded compensation expense~~ of ~~$49,000~~August ~~and $67~~3,~~000~~ ~~within selling~~2025, ~~general,~~the ~~and~~remaining ~~administrative~~unrecognized ~~expenses~~compensation ~~associated~~expense ~~with~~related to our performance-based restricted stock ~~unit~~units ~~awards~~was ~~for the nine-month periods ended January 26~~$10, ~~2025~~000, ~~and~~which ~~January~~is ~~28,~~expected ~~2024,~~to ~~respectively.~~be ~~Compensation~~recognized ~~expense~~over isa ~~recorded~~weighted ~~based~~average onvesting ~~an assessment each reporting~~ period toof ~~determine~~1.0 ~~the~~year. ~~probability~~As of ~~whether~~August or3, ~~not~~2025, ~~certain~~ performance-based ~~targets~~restricted ~~will~~stock beunits ~~met~~that ~~and how many shares~~ are expected to bevest ~~earned~~had asa offair ~~the~~value ~~end~~ of ~~the vesting period. If certain performance goals are not expected to be achieved~~$18, ~~compensation expense would not be recorded, and any previously recognized compensation expense would be reversed~~000.

~~As of January 26, 2025, the remaining unrecognized compensation expense related to our performance~~I-based restricted stock units was $240,000, which is expected to be recognized over a weighted average vesting period of 2.4 years. As of January 26, 2025, performance-based restricted stock units that are expected to vest had a fair value of $291,000.28

Time-Based Restricted Stock Units

The following table summarizes information related to our grants of time-based restricted stock unit awards associated with senior executives, key employees, and outside directors that were unvested as of ~~January~~August 263, 2025:

	Time-Based
	Restricted Stock		(1)
Date of Grant	Units ~~Awarded~~Outstanding		Price Per Share		Vesting Period
January 6, 2025 (3)		21,506	$	5.69	3 years
September 26, 2024 (2)		46,823	$	5.98	1 year
August 8, 2024 (3)		17,900	$	4.65	363 ~~months~~years
January 8, 2024 (3)		14,758	$	5.61	31 months
September 28, 2023 (3)		86,551	$	5.59	34 months
September 6, 2022 (3)		12,557	$	4.58	3 years
August 10, 2022 (3)		62,053	$	5.06	35 months

(1)

Price per share represents closing price of our common stock on the date the respective award was granted.

(2)

Time-based restricted stock units awarded to outside directors.

(3)

Time-based restricted stock units awarded to senior executives and key employees.

During the ~~nine~~three-month period ended ~~January~~August 263, 2025, time-based restricted stock units totaling ~~103~~60,~~320~~553 vested at a fair value of $~~581~~277,000, or $54.6357 per share. During the ~~nine~~three-month period ended ~~January~~July 28, 2024, time-based restricted stock units totaling ~~151~~30,~~653,~~835 vested at a fair value of $~~857~~157,000, or $5.6510 per share.

We recorded compensation expense of $~~473~~153,000 and $~~597~~170,000 within selling, general, and administrative expenses associated with our time-based restricted stock unit awards for the ~~nine~~three-month periods ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, respectively.

As of ~~January~~August 263, 2025, the remaining unrecognized compensation expense related to our time-based restricted stock units was $~~731~~392,000, which is expected to be recognized over a weighted average vesting period of 1.54 years. As of ~~January~~August 263, 2025, the time-based restricted stock units that are expected to vest had a fair value totaling $1852,000.4 ~~million.~~

I-29

Immediately Vested Common Stock Awards

We granted a total of 16,616 shares of common stock to our outside directors on July 3, 2023. These shares of common stock vested immediately and were measured at their fair value on the date of the grant. The fair value of these awards was $5.04 per share on July 3, 2023, which represents the closing price of our common stock on the date of grant.

We recorded $84,000 of compensation expense within selling, general, and administrative expenses for common stock awards that immediately vested to our outside directors during the nine-month period ended January 28, 2024.

17. Leases

Overview

We lease manufacturing facilities, showroom and office space, distribution centers, and equipment under operating lease arrangements. Our operating leases have remaining lease terms of one to ~~seven~~six years, with renewal options for additional periods ranging up to twelve years.

Balance Sheet

The right of use assets and lease liabilities associated with our operating leases as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, are as follows:

(dollars in thousands)

~~January~~August 263,2025

~~January~~July 28,2024

April 2827, ~~2024~~2025

Right of use assets

65,~~103~~162

64,~~952~~483

65,~~203~~908

Operating lease liability - current

2,~~025~~209

21,~~524~~565

2,~~061~~394

Operating lease liability – noncurrent

3,127

2,656

2,422

Operating lease liability – long-term

1,995

2,219

2,535

Supplemental Cash Flow Information

	Nine MonthsEnded		Nine MonthsEnded
	Three MonthsEnded		Three MonthsEnded
(dollars in thousands)	~~January~~August 263, 2025		~~January~~July 28, 2024
Operating lease liability payments	$	~~1,694~~746	$	~~1,992~~592
Right of use assets exchanged for lease liabilities		~~2,660~~—		~~978~~—

~~Operating lease expense for the three~~I-month periods ended January 26, 2025, and January 28, 2024, was $683,000 and $789,000, respectively. Operating lease expense for the nine-month periods ended January 26, 2025, and January 28, 2024, was $2.1 million and $2.3 million, respectively. Short-term lease and variable lease expenses were immaterial for the three-month and nine-month periods ended January 26, 2025, and January 28, 2024.29

Operating lease expense for the three-month periods ended August 3, 2025, and July 28, 2024, was $735,000 and $791,000, respectively. Short-term lease and variable lease expenses were immaterial for the three-month periods ended August 3, 2025, and July 28, 2024, respectively

Other Information

Maturity of our operating lease liabilities for the remainder of fiscal ~~2025~~2026, the subsequent ~~next~~ four fiscal years, and thereafter follows:

(dollars in thousands)
2025		655
2026		1,798
2026		2,217
2027		1,562
2027		1,556
2028		388
2029		227
Thereafter		576
2030		229
	$	5,619
Thereafter		348
Less: interest		(467	)
	$	4,552
Present value of lease liabilities	$	5,152
Less: interest		(348	)
Present value of lease liabilities	$	4,204

~~I-30~~As of August 3, 2025, the weighted average remaining lease term and discount rate for our operating leases follows:

As of January 26, 2025, the weighted average remaining lease term and discount rate for our operating leases follows:


	August 3, 2025
Weighted average lease term (in years)	2.82
Weighted average discount rate		5.55	%

	January 26, 2025
Weighted average lease term (in years)	3.24
Weighted average discount rate		5.50	%

18. Commitments and Contingencies

Litigation

The company is involved ~~from time to time~~ in legal proceedings and claims which arise in the ordinary course of business. Management has determined that itthese ~~is not reasonably possible that any pending~~ actions, when ultimately concluded ~~and~~or settled, will not have a material adverse effect ~~upon~~on the ~~consolidated~~company's financial position, ~~consolidated~~ results of operations, or ~~consolidated~~ cash flows ~~of the company~~.

Accounts Payable – Capital Expenditures

As of January 26, 2025, January 28, 2024, and April 28, 2024, we had amounts due regarding capital expenditures totaling $439,000, $19,000, and $343,000, respectively, which pertained to outstanding vendor invoices, none of which were financed.

Purchase Commitments – Capital Expenditures

As of January 26, 2025, we had open purchase commitments to acquire equipment for our mattress fabrics segment totaling $600,000.

19. Statutory Reserves

Our subsidiary located in China was required to transfer 10% of its net income, as determined in accordance with the People’s Republic of China (PRC) accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reached 50% of the company’s registered capital. As of ~~January~~August 263, 2025, the statutory surplus reserve fund represents the 50% registered capital requirement, and therefore, our subsidiary located in China is no longer required to transfer 10% of its net income in accordance with PRC accounting rules and regulations.

The transfer to this reserve fund must be made before distributions of any dividend to shareholders. As of ~~January~~August 263, 2025, the company’s statutory surplus reserve was $4.0 million. The statutory surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any. The statutory surplus reserve fund may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

The company’s subsidiary located in China can transfer funds to the parent company, except for the statutory surplus reserve of $4.0 million, to assist with debt repayment, capital expenditures, and other expenses of the company’s business.

20. Common Stock Repurchase Program

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~~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~~, including alternative investment opportunities~~.

~~We did not repurchase any shares of common stock during the nine~~I-~~month periods ended January 26, 2025, and January 28, 2024, respectively.~~30

We did not repurchase any shares of common stock during the three-month periods ended August 3, 2025, and July 28, 2024, respectively. As of ~~January~~August 263, 2025, $3.2 million is available for additional repurchases of our common stock.

I-31

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This report contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “will,” “may,” “should,” “could,” “potential,” “continue,” “target,” “predict”, “seek,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, strategic initiatives and plans, restructuring and integration actions, production levels, new product launches, sales, profit margins, profitability, operating (loss) income, capital expenditures, working capital levels, cost savings (including, without limitation, anticipated cost savings from restructuring and integration actions), income taxes, SG&A or other expenses, pre-tax (loss) income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, use of cash and cash requirements, ending cash balances and cash positions, borrowing capacity, investments, potential acquisitions, cash and non-cash restructuring and restructuring-related charges, expenses, and/or credits, net proceeds from restructuring-related asset dispositions, future economic or industry trends, public health epidemics, or other future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct.

Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, ~~demand for home furnishing products,~~ consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. ~~The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations.~~ Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in U.S. trade enforcement priorities, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. ~~Strengthening~~Also, ofeconomic ~~the~~or ~~U.S.~~political ~~dollar~~instability ~~against~~in ~~other~~international ~~currencies~~areas could ~~make~~affect our ~~products~~operations ~~less~~or ~~competitive~~sources ~~on the basis~~ of ~~price~~goods in ~~markets~~those ~~outside the United States~~areas, ~~and~~as ~~strengthening~~well ofas ~~currency~~demand infor ~~China can have a negative impact on~~ our ~~sales of~~ products ~~produced~~in ~~there.~~international ~~In addition, because our foreign operations use the U~~markets.S. ~~dollar~~The asfuture ~~their~~performance ~~functional currency, changes in the exchange rate between the local currency~~ of ~~those operations and the U.S dollar can affect~~ our ~~reported~~business ~~profits~~depends ~~from those foreign operations. Also, economic or political instability~~ in ~~international~~part ~~areas~~on ~~could affect~~ our ~~operations~~success orin ~~sources~~conducting ofand ~~goods~~finalizing inacquisition ~~those~~negotiations ~~areas,~~and asintegrating ~~well~~acquired asbusinesses ~~demand~~into ~~for~~ our ~~products~~existing ~~in international markets~~operations. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the ~~recent~~ coronavirus pandemic, could also adversely affect our operations and financial performance. In addition, the impact of potential asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and, in turn, increase our operating costs and decrease our profitability. Also, our success in diversifying our supply chain with reliable partners to effectively service our global platform could affect our operations and adversely affect our financial results. Finally, the future performance of our business also depends on our ability to ~~successfully~~achieve ~~restructure~~ our ~~mattress~~expected ~~fabric~~cost ~~operations~~savings from past restructuring programs and to return ~~the~~our ~~segment~~restructured bedding business to profitability, as well as our ability to successfully integrate our bedding and upholstery divisions and achieve the anticipated operating efficiency and cost reduction benefits of that initiative. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this report as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this report are made only as of the date of of this report. Unless required by United States federal securities laws, we neither intend nor assume any obligation to update these forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations or financial results.

I-32

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes and other exhibits included elsewhere in this report.

General

Our fiscal year is the 52 or 53-week period ending on the Sunday closest to April 30. The ~~nine~~company's three months ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, ~~both~~ represent 3914-week and 13-week periods, respectively. We refer to the three months ended August 3, 2025 as the "first quarter" and the three months ended July 28, 2024 as the "comparable quarter".

Our operations are classified into two business segments: bedding (formerly known as mattress fabrics) and upholstery (formerly known as upholstery fabrics).

~~Mattress Fabrics~~Bedding

The ~~mattress~~bedding ~~fabrics~~ 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.

On April 29, 2024 (the first quarter of fiscal 2025), our board of directors made a decision to: (1) consolidate the company's North American mattress fabrics operations, including athe ~~gradual~~closure ~~discontinuation of operations~~ and sale of the company's manufacturing facility and related land ("collectively referred to as the "Property") located in Quebec, Canada; (2) move a portion of the knitting and finishing capacity from the ~~company's manufacturing~~ facility located in Quebec, Canada, to the company's manufacturing facility located in Stokesdale, North Carolina; (3) transition the mattress fabrics segment's weaving operation to a strategic sourcing model through the company's long standing supply partners; ~~and~~ (4) consolidate the company's sewn mattress cover operation located in Ouanaminthe, Haiti, from two leased facilities into one building and reduce other operating expenses at this location; and (5) reduce unallocated corporate expenses and shared service expenses. See Note 10 of the consolidated financial statements for further details regarding ~~our~~this restructuring ~~activities~~activity.

Upholstery ~~Fabrics~~

The upholstery ~~fabrics~~ segment develops, sources, manufactures, and sells fabrics primarily to residential, commercial, and hospitality furniture manufacturers. WeCurrently, we have upholstery fabric operations located in Shanghai, China, ~~and~~ Burlington, North Carolina~~. During the fourth quarter of fiscal 2024~~, weand ~~established a wholly owned subsidiary, Culp Fabrics~~ Vietnam ~~Company Ltd~~., ~~with an administrative office located in Ho Chi Minh City, Vietnam, for the purpose of enhancing our strategic sourcing capabilities and to further diversify our supply chain in Asia.~~

~~Additionally~~Also, Read Window Products, LLC (“Read”), is a wholly owned subsidiary ~~with~~that ~~operations~~operates ~~located~~a leased facility in Knoxville, Tennessee, ~~and~~which ~~Burlington, North Carolina (established during the first quarter of fiscal 2025 within an existing upholstery fabrics facility),~~ 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 will combine certain activities within the bedding and upholstery business segments and create one integrated Culp-branded business. As part of this strategic transformation, we will close our leased facilities operated by our upholstery segment located in Burlington, North Carolina and Knoxville, Tennessee and will transition 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.

Executive Summary

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 business segment includes costs to develop, manufacture, and/or source our products, including costs such as raw material and finished good purchases, direct and indirect labor, overhead, and incoming freight charges. Unallocated corporate expenses primarily represent compensation and benefits for certain executive officers and their support staff, all costs associated with being a public company, amortization of intangible assets, and other miscellaneous expenses.

I-33

~~Results~~Executive ~~of Operations~~Summary

	Three Months Ended
(dollars in thousands)	January 26,2025			January 28,2024			Change
Net sales	$	52,253		$	60,418		(13.5)%
Gross profit		6,347			7,703		(17.6)%
Gross margin		12.1	%		12.7	%	(60)bp
Selling, general, and administrative expenses		8,579			9,493		(9.6)%
Restructuring expense (credit)		1,655			(50	)	N.M.
Loss from operations		(3,887	)		(1,740	)	123.4%
Operating margin		(7.4	)%		(2.9	)%	(450)bp
Loss before income taxes		(3,680	)		(2,161	)	70.3%
Income tax expense		446			1,027		(56.6)%
Net loss		(4,126	)		(3,188	)	29.4%

Consolidated Results of Operations

	Nine Months Ended
	Three Months Ended
(dollars in thousands)	~~January~~August 263,2025			~~January~~July 28,2024			Change
Net sales	$	~~164~~50,~~464~~691		$	~~175~~56,~~804~~537		(610.53)%
Gross profit		177,~~414~~228			225,~~737~~076		~~(23~~42.4)%
Gross margin		10.6	%		12.9	%	(230)bp
Gross profit margin		14.3	%		9.0	%	530bp
Selling, general, and administrative expenses		279,~~235~~119			299,~~366~~296		(71.39)%
Restructuring expense		6,317			432		N.M.
Restructuring credit (expense )		3,508			(2,631	)	N.M.
Loss from operations		(16,138	)		(7,061	)	128.6%
Income (loss) from operations		1,617			(6,851	)	(123.6)%
Operating margin		(93.82	)%		(412.01	)%	~~(580)bp~~N.M.
Loss before income taxes		(16,396	)		(6,710	)	144.4%
Income (loss) before income taxes		1,138			(7,021	)	(116.2)%
Income tax expense		~~(635~~1,369	)		~~(2,244~~240	)	~~(71~~470.7)4%
Net loss		(~~17,031~~231	)		(87,~~954~~261	)	90(96.28)%

Net Sales

Overall, our consolidated net sales for the ~~third~~first quarter of fiscal ~~2025~~2026 decreased by 1310.53% compared with the same period a year ago, with ~~mattress~~bedding ~~fabrics~~ sales ~~decreasing~~remaining ~~4.6%~~flat and upholstery ~~fabrics~~ sales decreasing 2220.~~3%. Our consolidated net sales for the first nine months of fiscal 2025 decreased by 6.5% compared with the same period a year ago, with mattress fabrics sales decreasing~~ 4.2% ~~and upholstery fabrics sales decreasing 8~~.~~8%.~~

WeSales in both of our business segments continue to ~~see~~be ~~sales~~limited inby ~~key~~overall ~~areas~~softness ofacross ~~our~~the ~~business~~home ~~impacted~~furnishings industry driven by macroeconomic ~~and~~factors ~~market conditions~~ outside of our control. The ~~year-over-year~~prolonged ~~decrease~~period inof ~~net~~low ~~sales~~demand ~~for~~in ~~our~~the mattress ~~fabrics~~fabric ~~segment~~market ~~for~~continued ~~both~~through the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~2025~~2026, ~~was~~impacting ~~driven~~performance ~~primarily~~within byour ~~continuing demand weakness in the domestic~~ bedding ~~industry~~segment and ~~was~~resulting ~~also impacted by fewer shipping days due to weather-related disruptions. The year-over-year decrease~~ in ~~net~~ sales ~~for~~generally ~~our~~in ~~upholstery~~line ~~fabrics~~with ~~segment for both~~ the ~~third~~prior ~~quarter~~year ~~and~~period despite the first ~~nine months of fiscal 2025 was driven primarily by persistent softness in the home furnishings industry. Sales for the third~~ quarter ~~also~~having ~~reflect~~one aadditional ~~related~~week ~~order~~compared ~~reduction from a significant customer~~ to ~~better align its inventory with~~ the ~~low~~prior ~~demand~~year ~~environment, as well as fewer shipping days due to weather-related disruptions~~period. ~~Despite what remains a challenging landscape across the industries in which we compete~~Nonetheless, we ~~have~~were ~~made~~able ~~significant~~to ~~investments~~achieve ~~and~~growth ~~enhancements~~in to our ~~production~~knit ~~platform~~fabric ~~and~~product ~~go-to-market~~lines ~~strategies~~and ~~that~~continued ~~we believe will generate opportunities~~ to ~~increase~~gain ~~sales~~additional ~~and~~ market share ~~when~~among ~~overall~~key ~~business~~mattress ~~conditions~~fabric ~~ultimately~~customers ~~improve.~~during the quarter.

Net sales in our upholstery segment decreased year-over-year due to continued weakness in the residential furniture market coupled with tariff-related challenges. The record-high tariffs on China-produced goods in the fourth quarter of fiscal 2025 essentially shut down residential upholstery order flow for approximately five weeks, and that disruption had a significant delayed impact on sales in the first quarter of fiscal 2026. The year-over-year decrease in sales in our upholstery segment continued to be impacted by an uneven comparison driven by abnormally heavy purchases by a major residential fabric customer in the first half of fiscal 2025, which is a dynamic that we expect to normalize in ensuing periods.

Although the markets in which we operate continue to face challenges, our investments and efforts to build-out and refine a production platform with a strong United States base supplemented by nearshore and offshore foreign locations provides our customers with increasingly valuable optionality for their supply chains and go-to-market strategies in the currently fluid trade and regulatory environments. As such, we believe that we are positioned to both continue to win market share now and increase sales when business conditions improve.

See the Segment Analysis section below for further details.

~~Loss~~Gross ~~Before Income Taxes~~Profit

~~Overall,~~Gross ~~our~~profit ~~loss before income taxes~~ for the ~~third~~first quarter of fiscal ~~2025~~2026 was $~~(3.~~7).2 million, ~~compared~~an ~~with~~increase ~~loss before income taxes~~ of $(2.2)1 million ~~for~~or ~~the prior-year period~~42.4%, ~~while~~compared ~~our~~with ~~loss~~gross ~~before~~profit ~~income~~of ~~taxes~~$5.1 million for the first ~~nine~~quarter ~~months~~ of fiscal 2025 ~~was $(16.4) million~~, ~~compared~~ with ~~loss~~bedding ~~before~~gross ~~income~~profit ~~taxes~~increasing of $(63.7)3 million ~~for~~and ~~the~~upholstery ~~prior-year~~gross ~~period~~profit decreasing $1.2 million.

~~Loss~~The ~~before~~significant ~~income~~improvement ~~taxes~~in ~~for~~consolidated ~~both~~gross ~~the~~profit ~~third quarter and the first nine months of fiscal 2025, as compared to the prior-year periods,~~ was ~~negatively~~driven ~~affected~~ by ~~lower~~cost ~~sales~~reductions and byefficiency ~~manufacturing~~gains ~~inefficiencies~~in ~~primarily~~our ~~related~~bedding ~~to the significant restructuring activity underway that mostly related to the mattress fabrics~~ segment, ~~along~~resulting ~~with~~from aour ~~restructuring and restructuring related charge of $2.3 million during the third quarter of~~ fiscal 2025, ~~as compared to a~~ restructuring ~~and restructuring related credit of $(111~~initiatives,~~000)~~ ~~during the third quarter of fiscal 2024,~~ and awas ~~restructuring~~partly ~~and~~offset ~~restructuring~~by ~~related~~lower ~~charge~~upholstery ~~of $7~~sales.~~8 million during the first nine months of fiscal 2025, as compared to a restructuring related charge of $472,000 during the first nine months of fiscal 2024.~~

I-34

See the Segment Analysis section below for further details.

Income (Loss) Before Income Taxes

I-34

Overall, our income before income taxes for the first quarter of fiscal 2026 was $1.1 million, compared with loss before income taxes of $(7.0) million for the same period a year ago.

First quarter operating performance, relative to performance in the prior-year period, benefited from a rationalized and more efficient manufacturing platform in the bedding segment following the extensive restructuring initiatives completed last year, which included, among other actions, the consolidation of operations in Canada into our U.S. manufacturing base in North Carolina. Operating performance for the quarter also benefited from an approximately $3.5 million restructuring credit associated with a gain on the sale of our manufacturing facility in Canada that was slightly offset by other restructuring and related expenses. Excluding restructuring and related credits and expenses, operating performance improved significantly year-over-year as a result of the more streamlined bedding segment platform, although this improvement was partially offset by comparatively lower gross profit in our upholstery segment.

We have several initiatives underway related to the integration of our two former divisions that should strengthen our operating profile as we progress through fiscal 2026. The anticipated cost and efficiency benefits resulting from the transition of upholstery operations at our leased facility in Burlington, North Carolina, to a shared management model within our owned U.S. location should begin to impact our results during our second quarter. Moreover, we recently initiated a similar transition of operations in our Read Window business at a leased facility in Tennessee that should begin to positively impact profitability in the third quarter. Once fully implemented, we expect these consolidations to significantly reduce our operating costs.

Income Taxes

We recorded income tax expense of $~~635~~1.4 million,~~000,~~ or (3120.93%) of ~~loss~~income before income taxes, for the ~~nine-month~~first ~~period ended January 26~~quarter, ~~2025,~~ compared with income tax expense of $~~2.2 million~~240,000 or (333.4%) of loss before income taxes, for the ~~nine-month~~comparable period ~~ended January 28, 2024~~.

Our consolidated effective income tax rates ~~for the first nine months of fiscal 2025 and 2024~~ were ~~both~~ adversely affected by the mix of earnings between our U.S. operations and foreign subsidiaries, as our taxable income ~~stems~~stemmed ~~mostly~~ 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 ~~has~~jurisdictions ahave higher income tax ~~rate~~rates than the U.S. In addition, we applied a full valuation allowance against our U.S. deferred income tax assets during the first ~~nine~~quarters ~~months~~ of fiscal ~~2025~~2026 and ~~the~~2025, ~~first~~respectively. ~~nine~~Consequently, ~~months~~an ofincome ~~2024,~~tax webenefit ~~incurred~~was not recognized for pre-tax losses associated with our U.S. operations ~~for~~totaling ~~which~~($3.3) anmillion ~~income~~and ~~tax~~($7.0) ~~benefit~~million ~~was~~that ~~not~~were ~~recorded~~incurred ~~due~~during tothe afirst ~~full~~quarters ~~valuation~~of ~~allowance~~fiscal ~~applied~~2026 ~~against~~and ~~our~~2025, Urespectively.S. ~~net~~Lastly, ~~deferred~~our consolidated effective income tax ~~assets.~~rates ~~The~~were ~~income~~also adversely affected by pre-tax ~~charge~~losses associated with ~~the~~our ~~full~~Haitian ~~valuation~~operations, ~~allowance~~which ~~applied~~are ~~against~~not ~~our~~subject Uto income tax.S. ~~net~~Our ~~deferred~~Haitian ~~income~~operations ~~tax~~are ~~assets~~located ~~was~~in ~~higher~~an ~~during~~economic ~~the~~zone ~~first~~that ~~nine~~permits ~~months~~a of0% ~~fiscal~~income ~~2025~~tax ~~compared~~rate ~~with~~for the first ~~nine~~fifteen ~~months~~years of ~~fiscal 2024~~operations, asfor ~~our~~which ~~$(16.8)~~we ~~million~~have Useven years remaining.S. ~~pre-tax~~As ~~loss~~a ~~incurred~~result ~~during~~of the ~~first~~0% ~~nine~~income ~~months~~tax ofrate ~~fiscal~~, ~~2025~~an income tax benefit was ~~greater~~not ~~than~~recognized for the pre-tax losses associated with our Haitian operations totaling $(~~11.3~~362,000) ~~million~~and ~~U.S.~~$(633,000) ~~pre-tax~~that ~~loss~~were incurred during the first ~~nine~~quarters ~~months~~ of fiscal ~~2024~~2026 and 2025, respectively.

During the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026, we ~~incurred~~earned a ~~greater~~lower consolidated pre-tax ~~loss~~income totaling $~~(16~~1.4)1 million, compared with a significantly higher consolidated pre-tax loss of $(6.7.0) million. As a result, we reported a positive effective income tax rate during the first ~~nine~~quarter ~~months~~ of fiscal ~~2024.~~2026, Ascompared with a ~~result~~negative effective income tax rate during the first quarter of fiscal 2025. Accordingly, the principal differences between our income tax expense at the U.S. ~~federal~~Federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced during the first ~~nine~~quarter ~~months~~ of fiscal ~~2024~~2026, as compared with the first ~~nine~~quarter ~~months~~ of fiscal 2025.

Refer to Note 15 of the consolidated financial statements for further details regarding our provision for income taxes.

Liquidity

As of ~~January~~August 263, 2025, our cash and cash equivalents (collectively, “cash”) totaled $511.31 million, which represents aan ~~decrease~~increase of $45.75 million compared with cash of $105.06 million as of April 2827, ~~2024~~2025. This ~~decrease~~increase was ~~primarily~~due ~~attributable~~mostly to (i) net ~~cash~~borrowings ~~used~~on inour ~~operating~~lines ~~activities~~of ~~totaling~~credit of $95.43 million, ~~and~~an ~~(ii)~~increase ~~capital~~of ~~expenditures totaling~~ $21.43 million, ~~partially~~compared ~~offset~~to bythe comparable quarter, and (~~iii~~ii) ~~net~~proceeds ~~borrowings~~ from ~~our~~the ~~lines~~sale of ~~credit~~property, plant, and equipment totaling $~~5.4~~966,000, ~~million~~partially ~~and~~offset ~~(iv)~~by ~~proceeds~~net ~~from~~cash ~~the~~used ~~sale~~in ofoperating ~~equipment~~activities of $1(695,000).~~5 million.~~

Our net cash used in operating activities ~~was~~of $~~9.4~~(695,000) ~~million~~increased during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026, ~~an increase of $3.4 million~~ compared with net cash used in operating activities of $~~6.0~~(206,000) ~~million~~ during the first ~~nine~~quarter ~~months~~ of fiscal ~~2024~~2025. This trend mostly reflects: (i) ~~a significant decrease in cash earnings, (ii)~~ an increase in inventory ~~purchases~~related to ~~maintain~~strategically ansourcing ~~appropriate~~certain ~~level~~fabrics ~~during~~that ~~the~~have company's restructuring activities, as described below in the section titled “—Segment Analysis—Mattress Fabrics Segment—Restructuring Activities,” and (iii) an increase in accounts receivable primarily due to longer ~~payment~~lead ~~trends~~times ~~related~~ to aacquire, ~~higher~~rising ~~sales mix with customers with longer credit terms~~prices, ~~partially~~and ~~offset~~tariffs byimposed higher accounts payable due to an increase in inventory purchases from significant vendors who extended their payment terms during the first nine months of fiscal 2025 compared with the first nine months fiscal 2024.

As of January 26, 2025, we had outstanding borrowings totaling $5.4 million under a line of credit agreement associated with our operations located in China.

I-35

by U.S. trade policy; (ii) a decrease in accounts payable due to a decrease in consumer demand along with timing of vendor payments as the first quarter of fiscal 2026 represented a 14-week period compared with a 13-week period for the first quarter of fiscal 2025; partially offset by (i) a decrease in cash losses and (ii) a decrease in accounts receivable due to a decrease in net sales for the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025 that was partially offset by longer payment trends during the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025.

We had outstanding borrowings totaling $18.1 million under our line of credit agreements, of which $11.1 million and $7.0 million were reported in line of credit-current and line of credit-long term, respectively, on the August 3, 2025, Consolidated Balance Sheet.

Segment Analysis

~~Mattress~~Our ~~Fabrics~~Chief ~~Segment~~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 (i.e. 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 (i.e., 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.

	Three Months Ended
(dollars in thousands)	January 26,2025			January 28,2024			Change
Net sales	$	28,642		$	30,021		(4.6)%
Gross profit		2,743			1,520		80.5%
Gross profit margin		9.6	%		5.1	%	450bp
Selling, general, and administrative expenses		3,176			3,102		2.4%
Restructuring expense		1,647			—		100.0%
Loss from operations		(433	)		(1,582	)	(72.6)%
Operating margin		(1.5	)%		(5.3	)%	380bp

	Nine Months Ended
(dollars in thousands)	January 26,2025			January 28,2024			Change
Net sales	$	86,792		$	90,619		(4.2)%
Gross profit		4,862			5,997		(18.9)%
Gross profit margin		5.6	%		6.6	%	(100)bp
Selling, general, and administrative expenses		9,880			9,913		(0.3)%
Restructuring expense		6,148			—		100.0%
Loss from operations		(5,018	)		(3,916	)	28.1%
Operating margin		(5.8	)%		(4.3	)%	(150)bp

Bedding Segment


	Three Months Ended
(dollars in thousands)	August 3, 2025			July 28, 2024			Change
Net sales	$	28,046		$	28,076		(0.1)%
Gross profit (loss)		2,942			(326	)	N.M
Gross profit margin		10.5	%		(1.2	)%	N.M

Net Sales

~~Mattress~~Net ~~fabrics~~ sales ~~decreased~~were ~~4.6%~~flat induring the ~~third~~first quarter of fiscal ~~2025~~2026 compared to the prior-year period. ~~Mattress fabrics sales decreased 4.2% in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.~~

~~The~~During ~~sales declines in~~ the ~~mattress~~quarter, ~~fabrics~~our bedding segment’s ~~stem~~markets ~~primarily~~were ~~from~~affected ~~what~~by ~~remains~~low aconsumer ~~muted~~ demand ~~environment~~primarily ~~across~~attributable ~~the~~to ~~domestic~~a ~~mattress market driven by~~ macroeconomic ~~uncertainty~~environment ~~among~~that ~~consumers~~limited ~~and its impacts on residential real estate markets and~~ discretionary spending. ~~However, during the quarter we continued to execute on a variety of significant measures designed to align our manufacturing costs~~ and ~~capacity~~housing ~~with the slower buying~~ activity ~~evident across the mattress industry. As planned~~, weleading ~~completed~~to ~~the~~continued ~~vast~~softness ~~majority~~in of the ~~restructuring~~domestic ~~initiatives in our~~ mattress ~~fabrics~~sector. ~~segment~~The ~~announced~~current ~~earlier~~tariff inenvironment ~~fiscal 2025, including the closure of our Canadian manufacturing operations~~ and related ~~consolidation~~cost ofuncertainty ~~equipment~~ and ~~resources. As~~price afluidity ~~result,~~also weimpacted ~~believe~~sales weactivity ~~are~~during ~~now better positioned to service customers in~~ the Uquarter.S. ~~market~~Despite ~~through~~these ~~our~~overall ~~vertical,~~market ~~textiles-forward facility in North Carolina. See “—Restructuring Activities” below for further details. Moving forward~~conditions, we ~~expect~~saw ~~the~~improvement ~~current~~in ~~general~~some ~~economic~~areas ~~and~~such ~~consumer~~as ~~uncertainty~~knit ~~to present challenges, but we believe our execution on plans to restructure our platform and refine our go-to-market strategies should position our mattress~~ fabrics ~~segment~~during ~~for~~the ~~sales~~quarter, ~~momentum~~ and ~~market~~we ~~share~~continued ~~gains when the macroeconomic fundamentals begin~~ to ~~shift~~win ~~and~~programs ~~provide~~with ~~the~~key ~~necessary foundation for a recovery cycle in the mattress industry~~customers.

~~The~~Looking ~~potential~~ahead, ~~ongoing~~we ~~geopolitical~~are ~~disruptions~~focused ~~related~~on togrowing ~~conflicts~~placements ~~in Ukraine~~ and ~~the~~market ~~Middle~~share ~~East,~~to asincrease ~~well as the potential impact of future tariffs~~revenue, ~~depend~~but onexpect ~~factors~~continued ~~beyond~~sales ~~our~~pressure ~~control~~due ~~and~~to ~~we cannot reasonably estimate~~ the ~~impact~~current ofmacroeconomic ~~these items on our mattress fabrics segment~~environment. ~~Moreover,~~ weWe ~~note~~believe that ifsignificant ~~these~~future ~~situations~~sales ~~worsen~~growth ~~and~~is ~~shipping~~dependent ~~disruptions~~upon ~~occur~~a orbroad ~~new~~industry ~~tariffs are imposed on our products, the impact on our operations and/or on our suppliers, customers, consumers, and the global economy could adversely affect our financial performance.~~

Gross Profit, Selling, General & Administrative Expenses, and Loss from Operations

Loss from operations was $433,000 for the third quarter of fiscal 2025, compared to loss from operations of $1.6 million for the third quarter of fiscal 2024. Loss from operations was $5.0 million for the first nine months of fiscal 2025, compared to loss from operations of $3.9 million for the first nine months of fiscal 2024.

Loss from operations for both the third quarter and the first nine months of fiscal 2025, as compared to the prior-year periods, was impacted by lower sales and manufacturing inefficiencies primarily related to the above-referenced restructuring activities. However, with nearly all of the restructuring initiatives now completed, we are beginning to see the cost savings and efficiency

I-36

~~improvements~~recovery ~~anticipated~~cycle ~~from~~along ~~those~~with ~~initiatives~~improved ~~positively~~economic ~~impact~~and ~~our~~global ~~results~~trade stability. ~~See~~Moreover, ~~“—Restructuring~~ongoing ~~Activities”~~geopolitical ~~below~~risks, ~~for~~including ~~further~~the ~~details.~~conflicts in Ukraine and the Middle East, could also disrupt global markets and affect our sales.

~~Looking~~Gross ~~ahead,~~Profit we enter our fourth quarter a more streamlined business, with greater operating efficiencies, a lower fixed cost and SG&A expense structure, and an agile, global production platform with domestic, nearshore and offshore locations. Moreover, we continue to explore the viability of additional strategic actions to enhance profitability under the current soft market conditions and better leverage any tailwinds flowing from an eventual recovery. (Loss)

~~Restructuring~~Gross ~~Activities~~profit was $2.9 million for the first quarter of fiscal 2026, compared with gross loss of $(326,000) for the first quarter of fiscal 2025.

OnThe ~~April~~cost ~~29,~~reductions 2024 (first quarter of fiscal 2025), our board of directors made a decision to (1) consolidate the company's North American mattress fabrics operations, including a gradual discontinuation of operations and ~~sale~~efficiency ofimprovements ~~the~~generated ~~company's~~by ~~manufacturing~~restructuring ~~facility~~initiatives ~~located~~ in ~~Quebec,~~our ~~Canada;~~bedding ~~(2)~~segment ~~move~~drove ~~a portion of~~ the ~~knitting~~strong ~~and~~turnaround ~~finishing capacity from the company's manufacturing facility located~~ in ~~Quebec,~~gross ~~Canada,~~profit compared to the ~~company's~~loss ~~manufacturing facility located~~ in ~~Stokesdale,~~the ~~North~~comparable ~~Carolina;~~quarter. ~~(3)~~With ~~transition~~ the ~~mattress~~restructuring ~~fabrics~~now ~~segment's~~fully ~~weaving~~completed ~~operation~~and toprice aadjustments ~~strategic~~taking ~~sourcing~~effect ~~model~~in ~~through~~ the ~~company's~~second ~~long~~quarter ~~standing~~of ~~supply~~fiscal ~~partners; (4) consolidate the company's sewn mattress cover operation located in Ouanaminthe~~2026, ~~Haiti,~~we ~~from~~anticipate ~~two~~continued ~~leased~~profitability ~~facilities~~improvement ~~into one building~~ and ~~reduce~~potential ~~other~~future ~~operating~~gains ~~expenses~~supported atby ~~this~~our ~~location;~~segment ~~and~~integration ~~(5)~~initiatives ~~reduce unallocated corporate expenses~~ and resulting shared ~~service~~management ~~expenses~~model.

As of the end of the third quarter of fiscal 2025, production at our facility located in Quebec, Canada has been discontinued and we have entered into a conditional contract for the sale of the facility, subject to due diligence and other conditions. The consolidation of our sewn mattress cover operations located in Haiti was completed during the first quarter of fiscal 2025. For fiscal 2025, these actions are expected to result in restructuring and restructuring related charges of approximately $8.5 million, of which approximately $5.3 million is expected to be cash expenditures. The $8.5 million of estimated restructuring and restructuring related charges represents approximately $8.3 million and $155,000 associated with the mattress fabrics and upholstery fabrics segments, respectively.

The $8.5 million of estimated restructuring and restructuring related charges associated with our mattress fabrics segment represents (i) associated costs of $3.3 million mostly related to relocating equipment from our facility in Quebec, Canada to our facility in Stokesdale, North Carolina, (ii) additional depreciation expense related to the shortening of useful lives of equipment associated with the gradual discontinuance of our operations located in Canada noted above totaling $1.3 million, (iii) employee termination benefits of $1.4 million, (iv) $1.5 million related to losses on disposal and valuation of inventory, and (v) lease termination costs of $849,000, partially offset by net gains on the disposal of equipment totaling $42,000. These restructuring and restructuring related charges exclude any expected gain from the sale of the Canadian facility, which is expected to ultimately reduce the amount of the restructuring charges incurred. Based on changes in business and current unfavorable economic conditions related to the home furnishings and bedding industries, it is possible that the above estimates provided by management to determine restructuring and restructuring related charges incurred during fiscal 2025 could be materially different from our actual results, and therefore could adversely affect the success of this restructuring plan.

The above-referenced conditional agreement for the sale of our Canadian facility includes a purchase price of $15.5 million CAD ($10.8 million USD as of January 26, 2025) contingent on the satisfaction of certain due diligence and closing conditions. Assuming the completion of the transaction, the company currently expects the proceeds from the sale (net of all taxes and commissions) to exceed the amount of cash restructuring charges incurred.

The following summarizes the restructuring and restructuring related charges for the mattress fabrics segment for the three-month and nine-month periods ended January 26, 2025:

	Three Months Ended			Nine Months Ended
(dollars in thousands)	January 26, 2025			January 26, 2025
Additional depreciation expense for shortened useful lives of equipment	$	—		$	1,339
Employee termination benefits		176			1,326
Lease termination costs		—			849
Other associated costs		1,504			2,676
Loss on disposal, valuation, and markdowns of inventory		624			1,509
Net gain on disposal of equipment		(33	)		(42	)
Restructuring expense and restructuring related charges (1) (2)	$	2,271		$	7,657

I-37

(1) Of the total $2.3 million restructuring and restructuring related charges, $1.8 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.

(2) Of the total $7.7 million restructuring and restructuring related charges, $6.2 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.

Refer to Note 10 of the consolidated financial statements for further details.

Segment assets

Segment assets consist of accounts receivable; inventory; property, plant, and equipment; right of use assets; and assets held for sale:

(dollars in thousands)	~~January~~August 263, 2025		~~January~~July 28, 2024		April 2827, ~~2024~~2025
Accounts receivable	$	1110,~~607~~216	$	1110,~~463~~094	$	10,~~003~~576
Inventory		3135,~~377~~102		2725,~~925~~278		2733,~~671~~293
Property, plant & equipment		2422,~~210~~061		3228,~~263~~844		3123,~~472~~259
Right of use assets		~~200~~50		~~1,798~~568		~~1,627~~125
Assets held for sale		~~2,214~~40		—607		—2,177
	$	69,608	$	73,449	$	70,773
Total Segment Assets	$	67,469	$	65,391	$	69,430

Refer to Note 14 of the consolidated financial statements for disclosures regarding determination of our segment assets.

Accounts Receivable

As of ~~January~~August 263, 2025, accounts receivable slightly increased by $~~144~~122,000, or 1.32%, compared with ~~January~~July 28, 2024. This slight increase inreflects ~~accounts receivable is mostly due to~~ longer payment trends during the ~~third~~first quarter of fiscal ~~2025~~2026, ~~compared~~as ~~with~~a significant customer utilized more cash discounts during the ~~third~~first quarter of fiscal ~~2024,~~2025 asand wesuch ~~experienced~~utilization aof ~~higher~~cash ~~sales~~discounts ~~mix~~did ~~with~~not ~~customers~~recur ~~with~~during ~~longer~~fiscal ~~credit terms~~2026. Accordingly, days’ sales outstanding increased to 3736 days for the ~~third~~first quarter of fiscal ~~2025~~2026, asfrom ~~compared~~33 ~~to 35~~ days for the ~~third~~first quarter of fiscal ~~2024~~2025.

As of ~~January~~August 263, 2025, accounts receivable ~~increased~~decreased by $~~1.6 million~~360,000, or 163.04%, compared with April 2827, ~~2024~~2025. This trend reflects ana ~~increase~~decrease in net sales for the ~~the~~first ~~third~~ quarter of fiscal ~~2025~~2026 compared with the fourth quarter of fiscal ~~2024~~2025. Net sales ~~for~~of ~~the third quarter were~~ $28.60 million, anduring ~~increase~~the offirst ~~$2.9~~quarter ~~million,~~of orfiscal ~~11.2%~~2026, ~~compared~~which ~~with~~were ~~net~~based ~~sales~~on ofa ~~$25.8~~14-week ~~million~~period, ~~during~~were ~~the~~lower ~~fourth~~based ~~quarter~~on ofa ~~fiscal~~weekly ~~2024. In addition~~average, ~~the~~as ~~increase~~compared inwith ~~accounts~~net ~~receivable~~sales ~~was~~of ~~due~~$27.1 tomillion ~~longer payment trends~~ during the ~~third~~fourth quarter of fiscal 2025 ~~compared with the fourth of fiscal 2024~~, aswhich wewere ~~experienced~~based on a ~~higher~~13-week ~~sales mix with customers with longer credit terms~~period. ~~Accordingly, days~~ Days’ sales outstanding ~~increased~~was to36 37 days for the ~~third~~first quarter of fiscal ~~2025~~2026, as compared to 35 days for the fourth quarter of fiscal ~~2024~~2025.

Inventory

As of ~~January~~August 263, 2025, inventory increased by $39.58 million, or 1238.49%, compared with ~~January~~July 28, 2024. In connection with the restructuring activity ~~described~~announced ~~above~~on inMay ~~“Restructuring Activities~~1,” ~~this~~2024 ~~trend~~(see ~~represents~~Note an10 ~~increase~~of inthe ~~finished~~consolidated ~~goods~~financial ~~inventory~~statements tofor ~~accommodate~~further ~~customers~~details), ~~while~~ the ~~weaving~~increase ~~operation~~in ~~was~~inventory ~~transitioned~~reflects to a ~~strategic~~transition ~~sourcing~~to ~~model~~strategically ~~and~~source ~~knitting~~certain ~~and~~mattress ~~finishing~~fabrics ~~capacity~~with ~~was~~long-standing ~~relocated~~supply ~~from~~partners. ~~the~~As ~~manufacturing~~a ~~facility~~result inof ~~Quebec,~~this ~~Canada~~increased sourcing, tomore ~~our~~finished ~~facility~~goods ininventory ~~Stokesdale,~~is ~~North~~required ~~Carolina.~~to ~~This~~be ~~increase~~on inhand ~~finished~~due ~~goods~~to ~~inventory~~longer ~~was~~lead ~~partially~~times ~~offset~~to byacquire ~~lower~~products ~~raw~~and ~~material~~accommodate ~~purchases~~our ~~related~~customers. toIn addition, the ~~gradual~~increase ~~discontinuation~~in ofinventory ~~operations~~is atalso ~~the~~due ~~company's~~to ~~manufacturing~~rising ~~facility~~costs ~~located~~to inproduce ~~Quebec,~~and ~~Canada~~source inventory, asalong ~~described~~with ~~above~~tariffs inimposed ~~“Restructuring~~by ~~Activities”~~U.S. trade policies related to imported products.

As of ~~January~~August 263, 2025, inventory increased by $31.78 million, or 135.4%, compared with April 2827, ~~2024~~2025. This ~~trend reflects the effect of the restructuring activity described in the preceding paragraph. In addition, the~~ increase in inventory ~~represents~~is andue ~~increase~~to inrising ~~net~~costs ~~sales~~to ofproduce ~~$2.9~~and ~~million,~~source ~~or 11.2%~~inventory, ~~during~~along ~~the~~with ~~third~~tariffs ~~quarter~~imposed ofby ~~fiscal~~U.S. ~~2025,~~trade aspolicies ~~compared~~related ~~with~~to ~~the~~imported ~~fourth quarter of fiscal 2024~~products.

Inventory turns were 32.49 for the ~~third~~first quarter of fiscal ~~2025~~2026, as compared with 4.03 for the ~~third~~first quarter of fiscal ~~2024~~2025 and 32.69 for the fourth quarter of fiscal ~~2024~~2025.

I-3837

Property, Plant, & Equipment

~~During fiscal 2024 and continuing through the third quarter of fiscal 2025~~Property, ~~property,~~ plant, and equipment has steadily decreased due to reduced capital spending stemming from current unfavorable macro-economic conditions within the home furnishings and bedding industries, as well as restructuring initiatives commencing at the ~~actions~~beginning ~~taken~~of asfiscal ~~described~~2025 ~~above~~and incontinuing ~~“Restructuring~~through ~~Activities~~the first quarter of fiscal 2026.” See note 10 of the consolidated financial statements for further details and description of our restructuring activities.

The $2422.21 million as of ~~January~~August 263, 2025, represents property, plant, and equipment of $2321.02 million, ~~$221,000,~~ and $~~973~~888,000 located in the U.S., ~~Canada,~~ and Haiti, respectively. The $3228.38 million as of ~~January~~July 28, 2024, represents property, plant, and equipment of $2120.9 million, $97.84 million, and $~~600~~511,000 located in the U.S., Canada, and Haiti, respectively. The $3123.53 million as of April 2827, ~~2024~~2025, represents property, plant, and equipment of $2122.53 million, ~~$9.4 million,~~ and $~~555~~955,000 located in the U.S., ~~Canada,~~ and Haiti, respectively.

Right of Use Assets

~~During~~Right ~~fiscal 2024 and continuing through the third quarter~~ of ~~fiscal 2025, right of~~ use assets have steadily decreased due to ~~rent~~restructuring ~~expense~~initiatives ~~incurred~~commencing ~~over~~at the ~~terms~~beginning of fiscal 2025 and continuing through the ~~existing~~first ~~lease~~quarter ~~agreements~~fiscal 2026. In ~~addition, in~~ connection with ~~the~~these restructuring ~~activity described above in “Restructuring Activities~~initiatives,” right of use assets ~~(i)~~ decreased due mostly to the termination of an agreement to lease a facility located in Ouanaminthe, Haiti, and ~~(ii)~~the ~~shortened~~shortening of the period of use associated with two leased facilities located in Quebec, Canada.

The $~~200~~50,000 as of ~~January~~August 263, 2025, represents a right of use asset located in Haiti. The $~~1.8~~568,000 ~~million~~ as of ~~January~~July 28, 2024, represents right of use assets of $~~1.2~~350,000 ~~million~~ and $~~604~~218,000 located in Haiti and Canada, respectively. The $~~1.6~~125,000 ~~million~~ as of April 2827, ~~2024~~2025, represents a right of use ~~assets~~asset ~~of $1.1 million and $545,000~~ located in Haiti ~~and Canada, respectively~~.

Assets Held for Sale

AsAssets ofheld ~~January~~for ~~26,~~sale ~~2025,~~are ~~and~~associated ~~in connection~~ with ~~actions~~our ~~described~~restructuring ~~above~~initiatives incommencing ~~“Restructuring~~at ~~Activities,”~~the webeginning ~~classified~~of afiscal ~~building~~2025 and ~~certain~~continuing ~~equipment~~through ~~relating~~the tofirst ~~our~~quarter. ~~Canadian~~of ~~operations~~fiscal ~~in Quebec, Canada, as held for sale~~2026. Refer to Note 8 of the consolidated financial statements for further details.

Upholstery ~~Fabrics~~ Segment

Net Sales

	Three Months Ended
(dollars in thousands)	~~January~~August 263,2025				~~January~~July 28,2024				% Change
Non-U.S. Produced	$	20,~~291~~708	8691	%	$	2825,~~425~~337	9489	%		(2818.63	)%
U.S. Produced		31,~~320~~937	149	%		13,~~972~~124	611	%		68(38.40	)%
Total	$	2322,~~611~~645	100	%	$	3028,~~397~~461	100	%		(2220.34	)%

	Nine Months Ended
(dollars in thousands)	January 26,2025				January 28,2024				% Change
Non-U.S. Produced	$	68,000	88	%	$	77,187	91	%		(11.9	)%
U.S. Produced		9,672	12	%		7,998	9	%		20.9	%
Total	$	77,672	100	%	$	85,185	100	%		(8.8	)%

Upholstery fabrics sales decreased 20.4% during the first quarter of fiscal 2026 compared to the comparable quarter.

~~Upholstery~~The ~~fabrics~~year-over-year sales ~~decreased~~decline ~~22.3%~~ in ~~the~~our ~~third~~upholstery ~~quarter~~segment ofwas ~~fiscal~~driven ~~2025~~primarily ~~compared~~by towhat ~~the~~remains ~~prior-year~~a ~~period.~~muted ~~Upholstery~~demand ~~fabrics~~climate ~~sales~~for ~~decreased~~residential ~~8.8%~~upholstery infabric ~~the~~due ~~first~~to ~~nine~~continuing ~~months~~overall ofweakness ~~fiscal~~across ~~2025 compared to~~ the ~~first~~home ~~nine~~furnishings ~~months of fiscal 2024~~industry. ~~While~~First wequarter ~~were~~upholstery ~~encouraged~~fabric ~~to see~~ sales ~~growth~~were inalso ~~certain~~impacted ~~channels~~by ofmarket ~~our~~uncertainty ~~upholstery~~stemming ~~fabrics~~from ~~segment during~~ the ~~quarter,~~global ~~the~~trade ~~continued~~and ~~sluggish~~tariff ~~demand~~landscape, inincluding ~~our~~the ~~residential~~lagging ~~business~~effects ~~driven~~of bythe ~~what~~historically ~~remains~~high atariffs ~~weakened~~on ~~home furnishings industry drove these year~~China-~~over-year~~produced ~~declines~~products in ~~overall sales in~~ the ~~segment.~~prior ~~The~~quarter ~~impacts~~that ofessentially ~~this~~grounded ~~market dynamic were particularly acute in our~~ residential ~~business~~upholstery ~~due~~order toflow ~~resulting~~for ~~lower~~approximately ~~ordering~~five ~~activity from a significant customer as it managed its inventory levels to better align with the soft industry demand~~weeks. WeIn ~~were~~addition, ~~able~~a topurchasing ~~achieve~~cadence ~~sales~~deviation ~~increases~~by ina ~~other~~large ~~areas of our~~ residential ~~business~~upholstery ~~during~~customer ~~the~~last ~~quarter~~year, ~~and~~including wea ~~saw~~notable ~~growth~~spike ~~trends~~ in ~~the~~last ~~luxury~~year’s ~~and~~first ~~value residential product channels. Moreover~~quarter, ~~market~~resulted ~~conditions and customer demand~~ in ~~our~~an ~~hospitality/contract~~uneven ~~business~~year-over-year ~~are~~comparison ~~more~~this ~~robust~~quarter ~~and~~that we ~~saw~~expect ~~growth~~to ~~across~~normalize ~~all~~as ~~channels~~we inmove ~~that~~through ~~business,~~fiscal ~~including Read, during the quarter~~2026.

~~The~~We ~~potential~~continue ~~ongoing~~to ~~geopolitical~~expect ~~disruptions~~the ~~related~~soft toindustry ~~conflicts~~demand inbackdrop ~~Ukraine~~for ~~and~~home ~~the~~furnishings ~~Middle~~to ~~East,~~affect asour ~~well~~residential asfabric ~~the~~business ~~potential~~going ~~impact~~forward, ofwhile ~~future~~demand ~~tariffs,~~in ~~depend~~our onhospitality/commercial ~~factors~~fabric ~~beyond~~business ~~our~~is ~~control~~expected ~~and~~to weremain ~~cannot~~relatively ~~reasonably~~solid. ~~estimate~~However, ~~the~~as ~~impact~~conditions ofimprove ~~these~~and ~~items~~a onbroad ~~our~~market ~~upholstery~~recovery ~~fabrics segment. Moreover~~begins, we ~~note~~believe ~~that~~our ifupholstery ~~these~~segment ~~situations~~is ~~worsen~~well ~~and~~positioned ~~shipping~~for ~~disruptions~~growth ~~occur~~through orour ~~new~~size ~~tariffs~~and ~~are~~scale ~~imposed on our products~~efficiencies, ~~the~~innovative ~~impact~~product onofferings including our ~~operations~~popular ~~and/or~~LiveSmart® onperformance ~~our suppliers~~line, ~~customers,~~flexible ~~consumers,~~ and ~~the~~multi-location ~~global~~production ~~economy~~platform, ~~could~~and ~~adversely~~long-term ~~affect~~supplier ~~our financial performance~~relationships.

~~I-39~~Notably, the potential ongoing geopolitical disruptions related to conflicts in Ukraine and the Middle East remain unknown and depend on factors beyond our control. At this time, we cannot reasonably estimate the impact on our upholstery fabrics segment, but we note that if conditions worsen in these situations, including shipping disruptions related to conflicts in the Middle East, the impact on our operations, and/or on our suppliers, customers, consumers, and the global economy, could adversely affect our financial performance.

~~Gross Profit, Selling, General & Administrative Expenses, and Income from Operations~~I-38

	Three Months Ended
(dollars in thousands)	January 26,2025			January 28,2024			Change
Gross profit	$	4,228		$	6,122		(30.9)%
Gross margin		17.9	%		20.1	%	(220)bp
Selling, general, and administrative expenses		3,549			4,030		(11.9)%
Restructuring expense (credit)		8			(50	)	N.M.
Income from operations		679			2,092		(67.5)%
Operating margin		2.9	%		6.9	%	(400)bp

Gross Profit

	Nine Months Ended
	Three Months Ended
(dollars in thousands)	~~January~~August 263,2025			~~January~~July 28,2024			Change
Gross profit	$	144,~~061~~286		$	165,~~780~~518		(1622.23)%
Gross margin		18.19	%		19.74	%	(~~160~~50)bp
Selling, general, and administrative expenses		11,056			11,969		(7.6)%
Restructuring expense		169			432		(60.9)%
Income from operations		3,005			4,811		(37.5)%
Operating margin		3.9	%		5.6	%	(170)bp

~~Income~~Gross ~~from~~profit ~~operations~~ was $~~679,000 for the third quarter of fiscal 2025, compared to $2~~4.~~1 million for the third quarter of fiscal 2024. Income from operations was $~~3.0 million for the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026, compared to ~~income~~gross ~~from~~profit ~~operations~~ of $45.85 million for the first ~~nine~~quarter ~~months~~ of fiscal ~~2024~~2025.

The ~~declines~~decrease in upholstery fabrics profitability for the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~2025~~2026, as compared to the prior-year ~~periods~~period, primarily ~~reflect~~reflects ~~lower sales, which were offset somewhat by lower SG&A expense and lower fixed costs during both periods. However,~~ the ~~actions~~impact ~~we completed during the first quarter~~ of fiscal 2025 to restructure our upholstery fabrics finishing operation in China and optimize our Asian platform continue to positively impact our operating performance (see “—Restructuring Activities—Shanghai, 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~~We ~~ahead,~~believe wethat ~~expect sales in our residential business to continue to be challenged by~~ the ~~muted~~anticipated ~~conditions~~cost ~~in the home furnishings industry~~ and ~~for~~efficiency ~~that~~benefits ~~dynamic~~resulting tofrom ~~impact~~the ~~profitability~~transition ~~until~~of ~~macroeconomic~~operations ~~conditions~~in ~~improve. However,~~ our ~~lower~~Read ~~fixed~~Window ~~cost~~business ~~and~~at ~~SG&A~~a ~~expense~~leased ~~structure~~facility ~~should~~in ~~allow~~Tennessee us to ~~better~~a ~~navigate~~shared ~~the~~management ~~difficult~~model ~~environment~~within in our ~~residential~~owned ~~fabrics~~U.S. ~~business~~location ~~and~~in ~~leverage~~North ~~the~~Carolina ~~more~~will ~~robust~~begin ~~demand~~to weimpact ~~are~~our ~~seeing~~results induring our ~~hospitality/commercial~~third ~~fabrics business~~quarter. InOnce ~~addition~~fully implemented, we ~~believe~~expect ~~that~~this ~~there~~consolidation ~~are other meaningful opportunities~~ to ~~increase~~significantly ~~operational~~improve ~~efficiency~~profitability ~~and~~in ~~reduce cost across~~ our ~~business,~~upholstery ~~and we plan to continue pursuing measures to optimize our platform~~segment.

~~Restructuring~~Looking ~~Activities~~forward, the residential home furnishings sector continues to face challenges stemming from evolving consumer spending patterns, global trade negotiations and tariff increases, inflation, declining home sales, and other macroeconomic factors impacting discretionary purchases. Consequently, we anticipate that the low-demand environment for residential upholstery fabrics may continue to affect profitability until the market enters a recovery cycle. However, we expect the solid demand in our hospitality and commercial upholstery fabrics business to continue, and for the fixed cost reductions resulting from the consolidation of our Read Window operations in connection with our divisional integration initiative to elevate the profitability profile of our upholstery segment. We will also consider further operational adjustments as necessary to align with prevailing demand trends while ensuring continued high-quality service for our customers.

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 segment for the three months ended January 26, 2025, and January 28, 2024:

	(1)		(2)
	Three Months Ended		Three Months Ended
(dollars in thousands)	January 26, 2025		January 28, 2024
Other associated costs	$	8	$	—
Gain on sale of equipment		—		(50	)
Gain on disposal of inventory		—		(61	)
Restructuring expense (credit) and restructuring related credit (3) (4)	$	8	$	(111	)

(1) The $8,000 relates to our U.S. upholstery fabrics operations under the Fiscal 2025 Restructuring Plan, which is described more fully in Note 10 of the consolidated financial statements.

(2) The total $(111,000) is related to the closure of our upholstery cut and sewn kits operation located in Ouanaminthe, Haiti, as described above.

(3) The total $8,000 was recorded within restructuring expense in the Consolidated Statement of Net Loss for the three-month period ended January 26, 2025.

(4) Of the $(111,000) total, $(50,000) and $(61,000) were recorded within restructuring expense (credit) and cost of sales, respectively, in the Consolidated Statement of Net Loss for the three-month period ended January 28, 2024.

The following summarizes our restructuring expense and restructuring related charges for all restructuring activities for the upholstery fabrics segment for the nine months ended January 26, 2025, and January 28, 2024:

	(1)		(2)
	Nine Months Ended		Nine Months Ended
(dollars in thousands)	January 26, 2025		January 28, 2024
Employee termination benefits	$	102	$	103
Impairment loss - equipment		—		329
Other associated costs		67		—
Loss on disposal and markdowns of inventory		—		40
Restructuring expense and restructuring related charge (3) (4)	$	169	$	472

I-41

(1) Of the $169,000, $155,000 relates to our U.S. upholstery fabrics operations under the Fiscal 2025 Restructuring Plan, which is described more fully in Note 10 of the consolidated financial statements. In addition, the $169,000 includes $14,000 related to the closure of our upholstery fabrics finishing operation located in Shanghai, China, as described above.

(2) The total $472,000 related to the closure of our upholstery cut and sewn kits operation located in Ouanaminthe, Haiti, as described above.

(3) The total $169,000 was recorded within restructuring expense in the Consolidated Statement of Net Loss for the nine-month period ending January 26, 2025.

(4) Of the $472,000 total, $432,000 and $40,000 were recorded within restructuring expense and cost of sales, respectively, in the Consolidated Statement of Net Loss for the nine-month period ended January 28, 2024.

Segment Assets

Segment assets consist of accounts receivable; inventory; property, plant, and equipment; and right of use assets:

(dollars in thousands)	~~January~~August 263, 2025		~~January~~July 28, 2024		April 2827, ~~2024~~2025
Accounts receivable	$	118,~~552~~166	$	1211,~~223~~493	$	11,~~135~~268
Inventory		1715,~~222~~007		1816,~~952~~390		1716,~~172~~016
Property, plant & equipment		~~1,117~~956		1,~~155~~098		1,~~125~~010
Right of use assets		2,~~647~~159		21,~~345~~478		12,~~952~~678
	$	32,538	$	34,675	$	31,384
Total Segment Assets	$	26,288	$	30,459	$	30,972

Refer to Note 14 of the consolidated financial statements for disclosures regarding determination of our segment assets.

Accounts Receivable

As of ~~January~~August 263, 2025, accounts receivable decreased by $~~671~~3.3 million,~~000,~~ or 528.59%, as compared ~~with~~to ~~January~~July 28, 2024. This ~~decrease~~trend inreflects ~~accounts receivable was due to~~ a ~~decline~~decrease in net sales offor ~~22.3% during~~ the ~~third~~first quarter of fiscal ~~2025~~2026 compared with the ~~third~~first quarter of fiscal ~~2024,~~2025. ~~as described in the section above titled "Segment Analysis-Upholstery Fabrics-~~Net ~~Sales." The decrease in accounts receivable due to the decline in net~~ sales ~~was~~of ~~mostly~~$22.6 ~~offset~~million ~~by longer payment trends~~ during the ~~third~~first quarter of fiscal ~~2025~~2026, ~~compared~~which ~~with~~were ~~the~~based ~~third~~on ~~quarter~~a of14-week ~~fiscal 2024~~period, ~~due~~were tomuch alower ~~higher~~based ~~sales~~on ~~mix~~a ~~with~~weekly ~~customers with longer credit terms. Additionally~~average, aas ~~timing~~compared ~~difference~~with innet ~~cash~~sales ~~receipts from certain significant customers during the last week~~ of ~~the~~$28.5 ~~third~~million ~~quarter of fiscal 2024 relative to cash receipts~~ during the ~~third~~first quarter of fiscal 2025, ~~also~~which ~~affected~~were ~~our~~based ~~accounts~~on ~~receivable~~a 13-week period. ~~Accordingly, days~~Days’ sales outstanding ~~for~~was ~~this~~33 ~~segment increased to 42~~ days for the ~~third~~first quarter of fiscal ~~2025~~2026, as compared with 3132 days for the ~~third~~first quarter of fiscal ~~2024~~2025.

As of ~~January~~August 263, 2025, accounts receivable ~~increased~~decreased by $~~417~~3.1 million,~~000,~~ or 327.75%, compared ~~with~~to April 2827, ~~2024~~2025. This ~~increase~~decrease in accounts receivable is mostly due to ~~longer~~shorter payment trends during the ~~third~~first quarter of fiscal ~~2025 compared with the fourth quarter of fiscal 2024~~2026, as we experienced a higher sales mix with customers ~~with~~who had longer credit terms during the fourth quarter of fiscal 2025, as compared with the first quarter of fiscal 2026. Accordingly, days’ sales outstanding ~~for~~decreased ~~this segment increased~~ to 4233 days for the ~~third~~first quarter of fiscal ~~2025~~2026, ~~compared~~from ~~with~~46 37 days for the fourth quarter of fiscal ~~2024~~2025.

Inventory

As of ~~January~~August 263, 2025, inventory decreased by $1.74 million, or 98.14%, compared with ~~January~~July 28, 2024. This decrease in inventory ~~primarily~~mostly represents ~~the~~a decrease in net sales during the ~~third~~first quarter of fiscal ~~2025~~2026 compared with the ~~prior-year~~first ~~period,~~quarter asof ~~described~~fiscal in2025. ~~the above section titled "Segment Analysis-Upholstery Fabrics-~~Net ~~Sales."~~

As of January 26, 2025, inventory remained flat compared with April 28, 2024. This trend reflects net sales for the third quarter of fiscal 2025 of $23.6 million, which remained flat as compared with net sales of $23.8 million for the fourth quarter of fiscal 2024.I-39

~~Inventory~~sales ~~turns~~of ~~were 4~~$22.26 ~~for~~million during the ~~third~~first quarter of fiscal ~~2025~~2026, which were based on a 14-week period, were much lower based on a weekly average, as compared with 5net sales of $28.15 ~~for~~million during the ~~third~~first quarter of fiscal ~~2024~~2025, ~~and~~which 4were based on a 13-week period.4 ~~for~~The decrease in inventory due to the ~~fourth~~decline ~~quarter~~in ofnet ~~fiscal~~sales ~~2024~~was partially offset by rising costs to produce and source inventory, along with tariffs imposed by U.S. trade policies related to imported products.

IAs of August 3, 2025, inventory decreased by $1.0 million or 6.3%, compared with April 27, 2025. This trend reflects a decrease in net sales for the first quarter of fiscal 2026 compared with the fourth quarter of fiscal 2025. Net sales of $22.6 million during the first quarter of fiscal 2026, which were based on a 14-42week period, were lower based on a weekly average, as compared with net sales of $21.7 million during the fourth quarter of fiscal 2025, which were based on a 13-week period. The decrease in inventory due to the decline in net sales was partially offset by rising costs to produce and source inventory, along with tariffs imposed by U.S. trade policies related to imported products.

Inventory turns were 4.8 for the first quarter of fiscal 2026, as compared with 5.3 for the first quarter of fiscal 2025 and 4.0 for the fourth quarter of fiscal 2025.

Property, Plant, & Equipment

As of ~~January~~August 263, 2025, property, plant, and equipment remained relatively flat compared with ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, respectively. This trend is mainly due to a reduced level of capital spending commensurate with current unfavorable macro-economic conditions within the home furnishings industry.

Right of Use Assets

As of ~~January~~August 263, 2025, right of use assets increased ~~compared~~by ~~with~~$681,000 ~~January~~or 2846.1%, ~~2024,~~as ~~and~~compared ~~April~~with July 28, 2024~~, respectively~~. This increase represents the renewal of certain lease agreements associated with our operations located in China ~~totaling $1.9 million~~, partially offset by rent ~~expense~~expenses incurred over the terms of the existing respective lease agreements.

~~The~~As ~~$2.6 million as~~ of ~~January~~August 263, 2025, ~~represents~~ right of use assets ofdecreased ~~$1.9~~by ~~million and~~ $~~764~~519,000, ~~located~~or ~~in China and U~~19.S.4%, ~~respectively. The $2.3 million~~ as ofcompared ~~January~~with ~~28,~~April ~~2024~~27, ~~represents right of use assets of $944,000 and $1~~2025.4 ~~million~~This ~~located~~decrease inmostly ~~China~~represents ~~and~~rent ~~U.S.,~~expense ~~respectively.~~incurred ~~The~~over ~~$2.0~~the ~~million~~terms as of ~~April 28, 2024, represents right of use assets of $1.3 million and $709,000 located in~~ the ~~U.S.~~existing ~~and~~respective ~~China,~~lease ~~respectively~~agreements.

~~Consolidated~~The ~~Other~~$2.2 ~~Income~~million ~~Statement~~as ~~Categories~~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 $1.5 million as of July 28, 2024, represents right of use assets of $1.1 million and $393,000 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.

	Three Months Ended
(dollars in thousands)	January 26, 2025			January 28, 2024		% Change
SG&A expenses	$	8,579		$	9,493		(9.6	)%
Interest expense		(63	)		—		100.0	%
Interest income		255			284		(10.2	)%
Other (income) expense		(15	)		705	N.M.

Consolidated - Other Income Statement Categories

	Nine Months Ended
	Three Months Ended
(dollars in thousands)	~~January~~August 263, 2025			~~January~~July 28, 2024			% Change
SG&A expenses	$	279,~~235~~119		$	299,~~366~~296			(71.39	)%
Interest expense		(121	)		—			100.0	%
Restructuring credit (expense)		3,508			(2,631	)	N.M.
Interest income		761			911			(16.5	)%
Interest expense		(183	)		(28	)		553.6	%
Other expense		898			560			60.4	%
Interest income		235			262			(10.3	)%
Other expense		531			404			31.4	%

Selling, General, and Administrative Expenses ("SG&A")

The slight decrease in selling, general, and administrative expenses during the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~2025~~2026, as compared to the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2024~~2025, iswas primarily due to: (i) ~~lower~~a ~~incentive~~decrease ~~compensation~~in ~~that~~net ~~mostly~~sales ~~relates~~of to10.3% ~~annual~~during ~~bonuses~~the ~~reflecting~~first ~~unfavorable~~quarter ~~financial~~of ~~results~~fiscal in2026 ~~relation~~compared towith ~~pre-established~~the ~~performance~~first ~~targets~~quarter of fiscal 2025; (ii) lower ~~employee~~professional ~~compensation~~fees; ~~due~~and to(iii) ~~the~~cost ~~company's~~reduction initiatives in connection with our restructuring and integration activities ~~described~~announced inon ~~the~~May ~~section~~1, ~~titled~~2024, "-and ~~Segment~~April ~~Analysis-Mattress~~24, ~~Fabrics~~2025 ~~Segment-Restructuring~~(see ~~Activities";~~Note 10 of the consolidated financial statements for further details and ~~(iii~~descriptions of our restructuring initiatives); ~~lower~~partially ~~professional~~offset ~~and~~by ~~consulting~~additional ~~fees.~~ SG&A expenses

I-40

incurred during the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025, as the first quarters of fiscal 2026 and 2025 represented 14-week and 13-week periods, respectively.

Restructuring Credit (Expense)

Restructuring Activities Announced May 1, 2024

On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to: (i) consolidate the company's North American mattress fabrics 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.

As of the end of the first quarter of fiscal 2026, all of the above restructuring activities related to this announcement have been completed, including the sale of the Property and certain equipment located at Quebec, Canada. Accordingly, we recorded a gain from the sale of the Property and equipment totaling $4.0 million that was classified within restructuring credit in the Consolidated Statement of Net Loss for the period ending 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 fair value regarding the Property and equipment.

During the three months ended August 3, 2025, we recorded a restructuring credit of $3.9 million that was mostly related to the gain on sale of the Property noted above and was solely related to the bedding segment. Since the inception of this restructuring initiative, we incurred cumulative restructuring and restructuring related charges totaling $4.8 million, most of which related to the bedding segment.

Restructuring Activities Announced April 24, 2025

On April 24, 2025 (fourth quarter of fiscal 2025), the company announced a strategic transformation of its operating model that will combine certain activities within the bedding and upholstery business segments and create one integrated Culp-branded business. As part of this strategic transformation, we will close our leased facilities operated by our upholstery segment located in Burlington, North Carolina, and Knoxville, Tennessee, and will transition their production and distribution activities utilizing a shared management model within our owned facility located in Stokesdale, North Carolina. Our Stokesdale, North Carolina facility has historically been solely operated by our bedding segment.

During the three months ended August 3, 2025, we incurred restructuring expense of $349,000 related to this strategic transformation, of which $256,000 and $93,000 related to the bedding and upholstery segments, respectively. The estimated cumulative restructuring and restructuring related charges for this initiative are expected to be $2.2 million, of which $674,000 is expected to be cash expenditures. The $2.2 million of estimated cumulative restructuring and restructuring related charges associated with this initiative represents: (i) a non-cash charge for impairment of Read's tradename totaling $540,000 (see Note 6 located in the notes to the consolidated financial statements for further details); (ii) a non-cash charge of $450,000 associated with the disposal and markdowns of inventory; (iii) non-cash lease termination costs of $125,000; (iv) non-cash accelerated depreciation expense, along with impairments and losses on disposal of fixed assets totaling $424,000; (v) cash charges for employee termination benefits of $207,000; (vi) cash charges for facility consolidation and relocation expenses of $432,000; and (vii) cash charges for other associated costs of $35,000. We expect the initiatives associated with this strategic transformation to be substantially completed by December 31, 2025.

The following summarizes restructuring (credit) expense associated with the above announcements for the three month periods ended August 3, 2025, and July 28, 2024:

I-41


	Three Months Ended			Three Months Ended
(dollars in thousands)	August 3, 2025			July 28, 2024
Additional depreciation expense for shortened useful lives	$	22		$	875
Employee termination benefits		(4	)		689
Lease Termination Costs		62			670
Facility consolidation and relocation expenses		52			251
Net (gain) loss on sale and impairment of property, plant, and equipment		(3,747	)		95
Other Associated Costs		107			51
Loss on disposal and markdowns of inventory		—			116
Restructuring (credit) expense and restructuring related charge (1) (2)	$	(3,508	)	$	2,747

(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. The $3.5 million restructuring credit mostly related to the bedding segment.

Interest Expense

~~Interest~~The ~~expense~~increase ~~mostly~~in ~~represents~~interest ~~our~~expense ~~borrowings~~reflects ~~totaling~~increased ~~$5.4~~borrowings ~~million~~ under ~~our~~line ~~lines~~ of credit ~~agreement~~agreements associated with our operations located in the U.S. and China.

Interest Income

The ~~decreases~~decrease in interest income ~~are~~is due to lower average cash balances during the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2025~~2026, compared with the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2024~~2025.

~~I-43~~Other Expense

Other (Income) Expense

Management is required to assess certain economic factors to determine the currency of the primary economic environment in which our foreign subsidiaries operate. Based on our assessments, the U.S. dollar was determined to be the functional currency of our operations located in China, Canada, and Vietnam.

The change in other ~~income (~~expense) during the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2025~~2026, compared with ~~prior-year~~the ~~periods~~first quarter of fiscal 2025, ~~were~~was due ~~mostly~~primarily to ~~changes~~less infavorable ~~the~~ foreign currency exchange rates applied against our balance sheet accounts denominated in Chinese Renminbi to determine the corresponding U.S. dollar financial reporting amounts. During the ~~third~~first quarter of fiscal ~~2025~~2026, we ~~reported~~incurred a foreign currency exchange ~~gain~~rate ~~associated with our operations located in China totaling $305,000, compared with a foreign currency exchange~~ loss ~~of $(290,000) during the third quarter of fiscal 2024. During the first nine months of fiscal 2025, we reported a foreign currency exchange gain~~ associated with our operations located in China totaling $74189,000, compared with a foreign currency exchange ~~gain~~rate loss of $~~389~~45,000 incurred during the first ~~nine~~quarter ~~months~~ of fiscal ~~2024~~2025.

The $74189,000 foreign currency exchange ~~gain~~rate ~~related~~loss todescribed ~~our~~above ~~operations in China~~ was mostly non-cash and ~~was partially~~ offset by ~~$23,000~~an of income tax ~~expense,~~benefit ~~which~~of ~~will increase our income tax payments and withholding tax payments associated with future earnings and profits repatriated from our operations located in China to the company's U~~$119,000.S. ~~parent.~~ The income tax ~~expense~~benefit of $23119,000 was associated with ~~taxable~~tax deductible foreign currency exchange ~~gains~~rate losses based on ~~more~~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 ~~gains~~loss ~~(losses)~~derived ~~related~~from ~~to our~~ U.S. dollar denominated balance sheet accounts ~~associated~~is ~~with our operations located in China are~~ considered ~~taxable income or~~ tax deductible, as we incur income tax expense ~~(benefit)~~ and pay income taxes in China's local currency.

Income Taxes

Effective Income Tax Rate

Our effective income tax rates for the ~~nine~~three-month periods ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, 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~~three-month periods ended ~~January~~August 263, 2025, and ~~January~~July 28, 2024, we were subject to loss limitation rules. These loss limitation rules require any taxable 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 affected 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.

The following schedule summarizes 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 for the nineI-~~month periods ended January 26, 2025, and January 28, 2024:~~42

	January 26,			January 28,
	2025			2024
U.S. federal income tax rate		21.0	%		21.0	%
U.S. valuation allowance		(26.2	)		(42.0	)
Tax effects of local currency foreign exchange gain		0.7			3.8
Uncertain income tax positions		4.3			(0.1	)
Withholding taxes associated with foreign jurisdictions		(1.5	)		(8.1	)
Captial expenditure deduction - Quebec Canada		(1.1	)		—
Foreign income tax rate differential		(0.8	)		(5.2	)
Stock-based compensation		(0.4	)		(2.9	)
Other		0.1			0.1
	(3.9)%			(33.4)%

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.

~~Our~~The ~~consolidated~~following ~~effective~~schedule ~~income~~summarizes ~~tax rates for~~ the ~~first~~principal ~~nine~~differences ~~months~~between ofincome ~~fiscal~~tax ~~2025~~expense ~~and~~at ~~2024 were both adversely affected by~~ the ~~mix of earnings between our~~ U.S. ~~operations~~federal ~~and foreign subsidiaries, as our taxable~~ income ~~stems~~tax ~~mostly~~rate ~~from~~and ~~our~~the ~~operations~~effective ~~located in China, which has a higher~~ income tax rate ~~than~~reflected in the ~~U.S.~~consolidated Infinancial ~~addition,~~statements ~~during~~for the ~~first~~three-month ~~nine~~periods ~~months~~ended ofAugust ~~fiscal~~3, 2025, and ~~the~~July 28, 2024:

I-44


	August 3,			July 28,
	2025			2024
U.S. federal income tax rate		21.0	%		21.0	%
U.S. valuation allowance		60.4			(23.5	)
Withholding taxes associated with foreign jurisdictions		13.4			(1.0	)
Foreign income tax rate differential		12.7			0.7
global intangible low tax income tax (GILTI)		12.6			—
Tax effects of local currency foreign exchange loss		(1.0	)		(0.4	)
Uncertain income tax positions		0.6			1.2
Stock-based compensation		0.6			(0.9	)
Other (1)		—			(0.5	)
Consolidated effective income tax rate (2) (3)		120.3	%	(3.4)%

(1)

~~first~~"Other" ~~nine months of 2024, we incurred pre-tax losses associated with our U.S. operations,~~ for ~~which~~all anperiods ~~income~~presented ~~tax~~represents ~~benefit~~miscellaneous ~~was~~adjustments ~~not~~that ~~recorded~~pertain ~~due~~ to ~~a full valuation allowance applied against our~~ U.S. ~~net~~permanent ~~deferred~~differences ~~income~~such ~~tax~~as ~~assets.~~meals ~~The~~and ~~income~~entertainment, ~~tax charge associated with the full valuation allowance applied against our U.S. net deferred~~ income tax ~~assets~~provision ~~was~~to ~~higher~~return ~~during the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024~~adjustments, asand ~~our~~other ~~$(16.8)~~and ~~million~~miscellaneous Uitems.~~S. pre-tax loss incurred during the first nine months of fiscal 2025 was greater than the $(11.3) million U.S. pre-tax loss incurred during the first nine months of fiscal 2024.~~

(2)

(3)

One Big Beautiful Bill Act ("OBBBA")

On July 4, 2025, OBBBA was signed into law, making several provisions of the 2017 Tax Cuts and Jobs Act ("TCJA" permanent. Such provisions include: (i) no change to the standard corporate tax rate of 21.0%; (ii) increased depreciation allowances for certain property acquired after January 19, 2025; (iii) deduction of certain U.S. research and development expenditures; (iv) limitations on the deductibility of business interest expense; and (v) modifications to GILTI and foreign-derived intangible income. Topic 740 Income Taxes, requires the income tax effects of changes in tax laws or rates to be recognized at the date of enactment. Accordingly, as of August 3, 2025, we evaluated the provisions of OBBBA and determined OBBBA did not impact our consolidated effective income tax rate, income tax expense, or our U.S. net deferred income tax assets during the three-months ended August 3, 2025,

I-43

due to the application of a full valuation allowance applied against our U.S. net deferred income tax assets described in the below section titled - U.S. Valuation Allowance.

U.S. Valuation Allowance

We evaluate the realizability of our U.S. net deferred income tax assets to determine if a valuation allowance is required. We assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not” standard, with significant weight being given to evidence that can be objectively verified. Since the company operates in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering the effects of local tax law.

As of ~~January~~August 263, 2025, we evaluated the realizability of our U.S. net deferred income tax assets to determine if a full valuation allowance was required. Based on our assessment, we determined we still have a recent history of significant cumulative U.S. pre-tax losses in that we experienced U.S. pre-tax losses during each of the last three fiscal years from ~~2022~~2023 through ~~2024~~2025, and we currently expect significant U.S. pre-tax losses to continue during fiscal ~~2025~~2026. As a result of the significant weight of this negative evidence, we believe it is more -likely -than -not that our U.S. net deferred income tax assets will not be fully realizable, and therefore we provided for a full valuation allowance against our U.S. net deferred income tax assets.

Based on our assessments as of ~~January~~August 263, 2025, ~~January~~July 28, 2024, and April 2827, ~~2024~~2025, valuation allowances against our net deferred income tax assets pertain to the following:

(dollars in thousands)	~~January~~August 263, 2025		~~January~~July 28, 2024		April 2827, ~~2024~~2025
U.S. federal and state net deferred income tax assets	$	2324,~~962~~661	$	1921,~~162~~326	$	1923,~~674~~973
U.S. capital loss carryforward		2,330		2,330		2,330
	$	26,~~292~~991	$	2123,~~492~~656	$	2226,~~004~~303

Undistributed Earnings

Uncertain Income Tax Positions

IAs of August 3, 2025, July 28, 2024, and April 27, 2025, we had $841,000, $1.3 million, and $790,000 of total gross unrecognized income tax benefits, of which the entire amount was classified as income taxes payable – long-45term in the accompanying Consolidated Balance Sheets. These unrecognized income tax benefits would favorably affect income tax expense in future periods by $841,000, $1.3 million, and $790,000 as of August 3, 2025, July 28, 2024, and April 27, 2025, respectively.

AsOur ofgross ~~January~~unrecognized ~~26,~~income ~~2025,~~tax ~~January~~benefit ~~28, 2024, and April 28, 2024, we had a total~~ of $~~1.4 million~~841,000 ~~$1.2~~as ~~million,~~of ~~and~~August ~~$1.~~3 ~~million~~, ~~respectively~~2025, ofrelates ~~gross~~to ~~unrecognized~~an income tax ~~benefits,~~position offor which ~~the~~significant ~~entire~~change ~~amount~~is ~~was~~currently ~~classified~~not asexpected ~~income~~within ~~taxes payable – long-term in~~ the ~~accompanying~~next ~~Consolidated Balance Sheets~~year. ~~As of January 26, 2025, the unrecognized tax benefit would favorably affect income tax expense in future periods by $1.4 million.~~

Our gross unrecognized income tax benefit of $1.4 million as of January 26, 2025, relates to income tax positions for which significant change could occur within the next year if the statute of limitations for relevant taxing authorities to examine and challenge the tax position expires.I-44

Income Taxes Paid

The following table sets forth taxes paid by jurisdiction:

	Nine Months			Nine Months
	Three Months			Three Months
	Ended			Ended
	January 26,			January 28,
	August 3,			July 28,
(dollars in thousands)	2025			2024
United States Transition Tax Payment		665			499
China Income Taxes, Net of Refunds		46			561
China Income Taxes, Net of Refunds		1,566			1,803
Canada - Income Taxes, Net of Refunds		—			—
Canada - Income Taxes, Net of Refunds		(219	)		468
	$	46		$	561
	$	2,012		$	2,770

Future Liquidity

Based on the restructuring plan approved by our board of directors on April 29, 2024, the timing and success of the closure of our Canadian operation, along with the sale of associated real estate, could have a significant effect on (i) the amount and timing of when and if fiscal 2025 income tax payments will be required; (ii) the amount and timing of withholding tax payments to the Canadian government associated with the repatriation of earnings and profits to the U.S. parent; and (iii) the respective tax rates that will be applied on the sale of equipment. Accordingly, we believe we cannot provide a reasonable estimate of our fiscal 2025 income tax payments associated with our Canadian operation at this time.

Currently, we are projecting annual cash income tax payments of approximately $1.8 million associated with our operations located in China. This estimate is management's current projection only and can be affected by actual earnings versus annual projections, changes in the foreign exchange rates in relation to the U.S. dollar, and the timing of when we will repatriate earnings and profits from China to our U.S. parent.

Currently, we do not expect to incur any income taxes in the U.S. on a cash basis during fiscal 2025 due to (i) the accelerated expensing of U.S. capital expenditures and our existing U.S. federal net operating loss carryforwards totaling $69.0 million as of April 28, 2024. As of January 26, 2025, we will be required to pay a U.S. federal transition tax payment, in accordance with the 2017 Tax Cuts and Jobs Act, of $831,000 by August 15, 2025.

Liquidity and Capital Resources

Liquidity

Overall

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 ~~January~~August 263, 2025, we believe: (i) our cash of $511.31 million; ~~and~~(ii) improvements in cash flow from operations stemming from expected cash savings from our recent restructuring activities, (iii) the current availability under our ~~revolving~~U.S. ~~credit~~line ~~lines~~of credit totaling $2317.26 million ~~will~~(refer beto ~~sufficient~~Note to11 ~~fund~~of ~~our~~the ~~foreseeable~~consolidated ~~business~~financial ~~needs,~~statements ~~restructuring~~for ~~activities,~~further ~~capital~~details ~~expenditures,~~regarding ~~commitments~~our financing arrangements), and ~~contractual~~(iv) ~~obligations~~proceeds totaling $4.8 ~~Refer~~million tofrom the collection of a note receivable associated with the sale of Property located in Quebec, Canada (see Note 117 of the consolidated financial statements for further ~~information~~details) ~~regarding~~will be sufficient to fund our: ~~revolving~~(i) ~~credit~~foreseeable ~~lines~~business needs; (ii) restructuring activities; (iii) capital expenditures; (iv) commitments; (v) contractual obligations; and (vi) income tax payments.

As of ~~January~~August 263, 2025, our cash ~~totaled~~of $511.31 million, ~~which~~ represents aan ~~decrease~~increase of $45.75 million compared with cash of $105.06 million as of April 2827, ~~2024~~2025. This ~~decrease~~increase was ~~mostly~~ due mostly to: (i) net ~~cash~~borrowings ~~used~~on inour ~~operating~~lines ~~activities~~of ~~totaling~~credit of $95.43 million, ~~and~~an ~~(ii)~~increase ~~capital~~of ~~expenditures totaling~~ $21.43 million, ~~partially~~compared ~~offset~~to bythe comparable quarter, and (~~iii~~ii) ~~net~~proceeds ~~borrowings~~ from ~~our~~the ~~lines~~sale of ~~credit~~property, plant, and equipment totaling $~~5.4~~966,000, ~~million~~partially ~~and~~offset ~~(iv)~~by ~~proceeds~~net ~~from~~cash ~~the~~used ~~sale~~in ofoperating ~~equipment~~activities of $1(695,000).~~5 million.~~

Our net cash used in operating activities ~~was~~of $~~9.4~~(695,000) ~~million~~increased during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026, ~~an increase of $3.4 million~~ compared with net cash used in operating activities of $~~6.0~~(206,000) ~~million~~ during the first ~~nine~~quarter ~~months~~ of fiscal ~~2024~~2025. This trend mostly reflects: (i) an increase in inventory related to strategically sourcing certain fabrics that have longer lead times to acquire, rising prices, and tariffs imposed by U.S. trade policy; (ii) a ~~significant~~decrease in accounts payable due to a decrease in consumer demand along with timing of vendor payments as the first quarter of fiscal 2026 represented a 14-week period compared with a 13-week period for the first quarter of fiscal 2025; partially offset by (i) a decrease in cash ~~earnings,~~losses; and (ii) ana ~~increase~~decrease in ~~inventory~~accounts ~~purchases~~receivable due to ~~maintain~~a andecrease ~~appropriate~~in ~~level~~net sales for the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025, that was partially offset by longer payment trends during the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025.

IWe had outstanding borrowings totaling $18.1 million under our line of credit agreements, of which $11.1 million and $7.0 million were reported in lines of credit -46 current and lines of credit - long term, respectively, on the August 3, 2025, Consolidated Balance Sheet.

~~the~~Our ~~company's~~cash ~~restructuring~~balance ~~activities,~~may asbe ~~described~~adversely ~~above~~affected inby ~~the~~factors ~~section~~beyond ~~titled~~our ~~“—Segment Analysis—Mattress Fabrics Segment—Restructuring Activities~~control,” ~~and~~such as: (~~iii~~i) anrecent ~~increase~~customer indemand ~~accounts~~trends ~~receivable~~affecting ~~primarily~~net ~~due~~sales; to(ii) ~~longer~~increased ~~payment~~tariffs ~~trends~~or ~~related~~other tochanges ain ~~higher~~U.S. ~~sales~~trade ~~mix~~policy ~~with~~related ~~customers~~to ~~with~~imported ~~longer~~products; ~~credit~~(iii) ~~terms,~~supply ~~partially~~chain ~~offset~~disruptions; by(iv) anrising ~~increase~~interest inrates ~~accounts~~and ~~payable~~inflation; ~~due~~and to(v) angeopolitical ~~increase~~events in(including ~~inventory~~conflicts ~~purchases~~in ~~with~~Ukraine ~~significant~~and ~~vendors~~the ~~who~~Middle ~~extended~~East). ~~their~~These ~~terms~~factors ~~during~~could ~~the~~cause ~~first~~delays ~~nine~~in ~~months~~receipt of ~~fiscal~~payment ~~2025~~on ~~compared~~accounts ~~with~~receivable ~~the~~and ~~first~~could ~~nine~~increase ~~months~~cash ~~fiscal~~disbursements ~~2024~~due to rising prices.

~~As of January 26, 2025, we had outstanding borrowings totaling $5.4 million under lines of credit associated with our operations located in China.~~I-45

The income taxes we pay also affect our liquidity. See the above section titled “Income Taxes Paid” for further detail.

Our cash balance may be adversely affected by factors beyond our control, such as (i) recent customer demand trends affecting net sales, (ii) supply chain disruptions, (iii) higher interest rates and inflation, (iv) the imposition of tariffs and other trade restrictions, and (v) geopolitical events (including conflicts in Ukraine and the Middle East). These factors could cause delays in receipt of payment on accounts receivable and could increase cash disbursements due to rising prices.

By Geographic Area

A summary of our cash by geographic area follows:

January 26,

January 28,

April 28,

August 3,

July 28,

April 27,

(dollars in thousands)

2025

2024

~~2024~~2025

United States

~~1,037~~510

2,~~816~~472

~~2,912~~151

China

49,~~032~~229

910,~~138~~462

64,~~554~~723

Canada

641,316

~~259~~326

~~371~~701

Haiti

~~125~~17

~~363~~141

8638

Vietnam

1315

—62

818

Cayman Islands

511,~~279~~094

1213,~~585~~472

105,~~012~~629

Common Stock Repurchase Program

We did not repurchase any shares of common stock during the ~~nine~~three-month periods ended ~~January~~August 263, 2025, or ~~January~~July 28, 2024, respectively.

As of ~~January~~August 263, 2025, $3.2 million is available for additional repurchases of our common stock.

Dividends

On June 29, 2022, our board of directors announced the decision to suspend the company’s quarterly cash dividend,. ~~believing~~We believed that preserving capital and managing our liquidity were in the company’s best interest to support future growth and the long-term interests of our shareholders. Accordingly, we did not make any dividend payments during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026, fiscal 2025, 2024, ~~and~~or ~~fiscal~~ 2023.

Consolidated Basis - Working Capital

Operating Working Capital

Operating working capital (the total of accounts receivable and inventories, less accounts payable-trade, less accounts payable-capital expenditures, and less deferred revenue) was $3743.97 million as of ~~January~~August 263, 2025, compared with $3935.01 million as of ~~January~~July 28, 2024, and $3843.54 million as of April 2827, ~~2024~~2025. Operating working capital turnover was 5.84 during the ~~third~~first quarter of fiscal ~~2025~~2026, compared with 5.9 during the ~~third~~first quarter of fiscal ~~2024~~2025 and 5.87 during the fourth quarter of fiscal ~~2024~~2025.

I-47

Accounts Receivable

Accounts receivable was $2318.24 million as of ~~January~~August 263, 2025, a decrease of $~~527~~3.2 million,~~000,~~ or 214.28%, compared with $2321.76 million as of ~~January~~July 28, 2024. This ~~decrease~~trend inreflects ~~accounts receivable represents~~ a ~~decline~~decrease in net sales offor ~~13.5% during~~ the ~~third~~first quarter of fiscal ~~2025~~2026 compared with the ~~third~~first quarter of fiscal ~~2024~~2025, aswhich ~~described~~mostly inrelated to the ~~section~~upholstery ~~titled~~segment. ~~"Executive Summary-~~Net ~~Sales".~~sales ~~The~~of ~~decrease~~$50.7 inmillion ~~accounts~~during ~~receivable~~the ~~due~~first toquarter ~~the~~of ~~decline~~fiscal ~~net~~2026, ~~sales~~which ~~was~~were ~~mostly~~based ~~offset~~on bya ~~longer~~14-week ~~payment~~period, ~~trends~~were ~~during~~much ~~the~~lower ~~third~~based ~~quarter~~on ofa ~~fiscal~~weekly ~~2025~~average, as compared with net sales of $56.5 million during the ~~third~~first quarter of fiscal ~~2024~~2025, aswhich wewere ~~experienced~~based on a ~~higher~~13-week ~~sales~~period. ~~mix~~The ~~with~~decrease ~~customers~~in ~~with~~accounts ~~longer~~receivable ~~credit~~due ~~terms~~to asthe ~~well~~decrease asin anet ~~timing~~sales ~~difference~~noted inabove ~~cash~~was ~~receipts~~partially ~~from~~offset ~~certain~~by ~~significant~~longer ~~customers~~payment trends associated with ~~upholstery~~the ~~fabrics~~bedding segment during the ~~last~~first ~~week~~quarter of fiscal 2026, as a significant customer utilized more cash discounts during the ~~third~~first quarter of fiscal ~~2024~~2025 ~~relative~~and tosuch utilization of cash ~~receipts~~discounts did not recur during the ~~third~~first quarter of fiscal ~~2025~~2026. Accordingly, days’ sales outstanding increased to 3935 days for the ~~third~~first quarter of fiscal ~~2025~~2026, ~~compared~~from ~~with~~32 33 days for the ~~third~~first quarter of fiscal ~~2024~~2025.

Accounts receivable was $2318.14 million as of ~~January~~August 263, 2025, ana ~~increase~~decrease of $23.05 million, or 915.68%, compared with $21.19 million as of April 2827, ~~2024~~2025. ~~This~~The ~~trend~~decrease ~~was due to an increase~~ in ~~net~~accounts ~~sales~~receivable ~~during~~is ~~the~~mostly ~~third~~due ~~quarter~~to ofshorter ~~fiscal~~payments ~~2025,~~trends asassociated ~~compared~~with to the ~~fourth~~upholstery ~~quarter~~segment ofduring ~~fiscal 2024. Net sales for~~ the ~~third~~first quarter of fiscal ~~2025 were $52.3 million~~2026, anas ~~increase~~we ofexperienced ~~$2.7~~a ~~million,~~higher orsales ~~5.5%,~~mix ~~compared~~ with ~~$49.5~~customers ~~million~~who ~~for~~had ~~the fourth quarter of fiscal 2024. In addition, the increase in accounts receivable was due to~~ longer ~~payment~~credit ~~trends~~terms during the ~~third~~fourth quarter of fiscal 2025, as compared with the ~~fourth~~first quarter of fiscal ~~2024, as we experienced a higher sales mix with customers with longer credit terms in both the mattress and upholstery fabrics segments~~2026. Accordingly, days’ sales outstanding ~~increased~~decreased to 3935 days for the ~~third~~first quarter of fiscal ~~2025~~2026, ~~compared~~from ~~with~~40 36 days for the fourth quarter of fiscal ~~2024~~2025.

I-46

Inventory

Inventory was $4850.61 million as of ~~January~~August 263, 2025, ~~compared~~an ~~with~~increase of $468.94 million, ~~and~~or 20.3%, compared with $4441.87 million as of ~~January~~July 28, 2024,. ~~and~~In ~~April~~connection 28with the restructuring activity announced on May 1, 2024, ~~respectively.~~which ~~This~~mostly ~~increase~~related ~~primarily~~to ~~represents~~the ~~purchases~~bedding segment (see Note 10 of the consolidated financial statements for further details), the increase in inventory ~~needed~~reflects ~~maintain~~a antransition ~~appropriate~~to ~~level~~strategically source certain mattress fabrics with long-standing supply partners. As a result of this increased sourcing, more finished goods inventory ~~during~~is required to be on hand due to longer lead times to acquire products and accommodate our customers. The increase in inventory due to the ~~company's~~above ~~Fiscal~~restructuring initiative was partially offset by a decrease in net sales for the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025, ~~Restructuring~~which ~~Plan~~mostly related to the upholstery segment. Net sales of $50.7 million during the first quarter of fiscal 2026, which were based on a 14-week period, were much lower based on a weekly average, as ~~described~~compared ~~above~~with innet sales of $56.5 million during the ~~section~~first ~~titled~~quarter ~~“—Segment~~of ~~Analysis~~fiscal —2025, ~~Mattress~~which ~~Fabrics~~were ~~Segment~~based —on ~~Restructuring~~a ~~Activities"~~13-week period. Also, both the bedding and the upholstery segments were affected by rising costs to produce and source inventory, along with tariffs imposed by U.S. trade policies related to imported products.

Inventory ~~turns~~was ~~were 3~~$50.81 ~~for~~million ~~the~~as ~~third quarter~~ of ~~fiscal~~August 3, 2025, asan increase of $800,000, or 1.6%, compared with 4$49.53 ~~for~~million ~~the~~as ~~third~~of ~~quarter~~April of27, ~~fiscal~~2025. This ~~2024~~increase in inventory was mostly due to rising costs to produce and 3source inventory, along with tariffs imposed by U.9S. ~~for~~trade policies related to imported products, which such costs affected both the ~~fourth~~bedding ~~quarter~~and ofthe ~~fiscal~~upholstery ~~2024~~segments.

Inventory turns were 3.5 for the first quarter of fiscal 2026, as compared with 4.8 for the first quarter of fiscal 2025 and 3.3 for the fourth quarter of fiscal 2025.

Accounts Payable - Trade

AsAccounts ~~of January 26, 2025, accounts~~ payable - trade was $3224.73 million, ~~which~~as ~~represents~~of anAugust ~~increase~~3, 2025, compared with $2926.75 million as of July 28, 2024 and $2527.63 million as of ~~January~~April 27, 2025. This decrease in accounts payable as of August 3, 2025, compared with July 28, 2024, and April 2827, ~~2024~~2025, ~~respectively.~~is ~~This~~primarily ~~trend~~due ~~mostly~~to ~~represents~~a andecrease ~~increase~~ in ~~inventory~~consumer ~~purchases~~demand ~~from~~along ~~significant~~with ~~vendors~~timing ~~who~~of ~~extended~~vendor ~~credit~~payments, ~~terms~~as ~~during~~the first quarter of fiscal ~~2025,~~2026 asrepresented a 14-week period, compared with 13-week periods for the first and fourth quarters of fiscal ~~2024~~2025.

Financing Arrangements

Currently, we have ~~revolving~~line of credit agreements with banks for our U.S parent company and our operations located in China. As of ~~January~~August 263, 2025, we had outstanding ~~borrowings~~borrowing associated with our line of credit agreements totaling $518.41 million, ~~under~~of ~~our~~which $11.1 million and $7.0 million were reported in lines of credit-current ~~related~~and tolines ~~our~~of ~~operations~~credit- ~~located~~long ~~in China~~term. Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. As of ~~January~~August 263, 2025, we were in compliance with these financial covenants.

Refer to Note 11 of the consolidated financial statements for further disclosure regarding our ~~revolving~~line of credit agreements, which includes a Third Amendment to our U.S. revolving credit agreement effective June 12, 2025.

Leases

Refer to Note 17 of the consolidated financial statements for further disclosures regarding our lease obligations, which includes a five-year maturity schedule.

Capital Expenditures and Depreciation

Overall

Capital expenditures on a cash basis ~~during the first nine months of fiscal 2025~~ totaled $~~2.4 million~~179,000 ~~compared~~and ~~with~~ $~~3.2~~501,000 ~~million~~for ~~during~~ the first ~~nine~~quarters ~~months~~ of fiscal ~~2024~~2026 and 2025, respectively. These reduced levels of capital spending reflect reduced capital spending during the current unfavorable macro-economic conditions within the home furnishings and bedding industries.

~~Depreciation~~We reported depreciation expense ~~was~~of $51.1 million and $1.6 million for the first ~~nine~~quarters ~~months~~ of fiscal 2026 and 2025, ~~compared~~respectively, ~~with~~which $4was mostly related to our bedding segment for both periods.9 ~~million~~We reported accelerated depreciation of $22,000 that was classified within restructuring credit in the Consolidated Statement of Net loss for the ~~same~~three-month period aended ~~year~~August ~~ago~~3, ~~and~~2025. ~~was~~The ~~mostly~~$22,000 of accelerated depreciation related to ~~our~~the ~~mattress~~shortening ~~fabrics~~of ~~segment~~useful ~~for~~lives ~~both~~of ~~periods.~~equipment Inrelated ~~addition~~to the consolidation of distribution activities from our Burlington, ~~for~~North Carolina facility to the ~~first~~manufacturing ~~nine~~and ~~months~~distribution ofcenter ~~fiscal~~located ~~2025~~in Stokesdale, North Carolina. We reported accelerated depreciation of $875,000 that was classified within restructuring expense in the Consolidated Statement of Net Loss for the ~~mattress~~three-month ~~fabrics~~period ~~segment~~ended ~~included~~July $128, 2024.3 ~~million~~The $875,000 of ~~additional~~accelerated depreciation ~~expense~~ related to the shortening of useful lives of equipment associated with the closure of our ~~manufacturing~~operations ~~facility~~ located in Quebec, Canada. ~~This~~See

I-4847

~~$1.3~~Note ~~million~~10 of ~~additional~~the ~~depreciation~~consolidated ~~expense~~financial ~~was~~statements ~~classified~~for asfurther ~~restructuring~~details ~~expense~~and indescriptions ~~the~~of ~~Consolidated~~our ~~Statement~~restructuring ofactivities ~~Net~~announced ~~Loss~~on ~~for~~May ~~the~~1, ~~nine-month~~2024 ~~period~~and ~~ended~~April ~~January 26~~24, 2025.

~~For~~Based ~~the~~on ~~remainder~~current ~~of fiscal 2025~~expectations, ~~our~~ capital spending ~~will~~for fiscal 2026 is projected to be ~~centered~~comparable to fiscal 2025 and will center on capital projects that will increase efficiencies, ~~and~~ improve the quality of our products, and facilitate future growth. Funding for capital expenditures is expected to be from cash provided by operating activities.

Accounts Payable – Capital Expenditures

As of January 26, 2025, we had amounts due regarding capital expenditures totaling $439,000 that pertained to outstanding vendor invoices, none of which were financed. The total amount outstanding of $439,000 is required to be paid based on normal credit terms.

Purchase Commitments – Capital Expenditures

As of January 26, 2025, we had open purchase commitments to acquire equipment for our mattress fabrics segment totaling $600,000.

Critical Accounting Policies and Recent Accounting Developments

As of ~~January~~August 263, 2025, there were no changes in our significant accounting policies or the application of those policies from those reported in our Annual Report on Form 10-K for the year ended April 2827, ~~2024~~2025.

Refer to Note 2 of the consolidated financial statements for recently adopted and issued accounting pronouncements, if any, since the filing of our Form 10-K for the year ended April 2827, ~~2024~~2025.

Contractual Obligations

There were no significant or new contractual obligations since those reported in our Annual Report on Form 10-K for the year ended April 2827, ~~2024~~2025.

Inflation

~~Any~~A ~~significant~~meaningful ~~increase~~rise in ~~our~~ raw material ~~costs~~, utility/, energy or other costs, ~~and~~as ~~general~~well as broader economic inflation, could ~~have~~materially aand ~~material~~adversely ~~adverse~~affect ~~impact~~our onoperating ~~the~~results. ~~company~~Competitive ~~because~~market ~~competitive~~dynamics ~~conditions~~have ~~may~~traditionally ~~limit~~constrained our ability to ~~pass~~fully ~~significant~~offset ~~operating~~such cost increases onthrough price adjustments to customers.

~~During~~In fiscal 2023 and 2024, raw material prices declined, primarily due to lower oil prices and ~~continuing~~softening global demand. However, both years were marked by persistent challenges associated with elevated labor costs and limited labor availability. While raw material and labor costs stabilized through fiscal 2024 and the ~~third~~first ~~quarter~~half of fiscal 2025, recent developments such as global trade negotiations and the implementation of new tariffs and import restrictions beginning in the fourth quarter of fiscal 2025 have begun to influence industry pricing structures and supply chain patterns. These evolving conditions have placed upward pressure on our raw material costs, ~~started~~and tothis ~~decline~~trend ~~due~~is expected to ~~slowing~~continue. ~~global~~In ~~demand; however~~addition, ~~the~~energy ~~cost~~prices ofhave ~~labor~~demonstrated ~~remained~~substantial ~~challenging~~volatility ~~during~~in recent fiscal ~~2024~~years and ~~continuing~~continue ~~through~~to ~~the~~represent ~~third~~an ~~quarter~~unpredictable element of ~~fiscal~~our ~~2025~~cost structure.

~~Inflationary~~We ~~pressures~~recently ~~also~~initiated ~~affected~~price ~~consumer~~increases ~~spending~~designed ~~during~~to ~~fiscal~~mitigate ~~2024 and continuing through~~ the ~~third~~impacts ~~quarter~~ of ~~fiscal~~recent ~~2025,~~tariff ~~causing~~actions aaffecting ~~slowdown~~products inimported ~~business~~into inthe ~~both~~U.S., ~~the~~including ~~mattress~~those ~~industry~~imported ~~and~~from China. While the ~~residential~~majority ~~home~~of ~~furnishings~~these ~~industry.~~price ~~This~~increases ~~slowdown~~began ~~has~~to ~~caused~~phase ~~reduced~~in ~~demand~~and ~~from~~become ~~producers~~effective as of ~~home~~the ~~furnishings~~second ~~for~~quarter ~~our~~of ~~mattress~~fiscal ~~fabrics~~2026, ~~and~~the ~~residential~~above-referenced ~~upholstery~~dynamics ~~fabrics~~may ~~products~~ultimately ~~during~~lead ~~fiscal~~to ~~2024~~higher ~~and~~input ~~continuing~~costs, ~~through~~with ~~the~~potential ~~third~~adverse ~~quarter~~implications offor ~~fiscal~~our ~~2025.~~financial performance.

WeFurther, ~~are~~persistent ~~unable~~inflationary topressures ~~predict~~significantly ~~how~~curtailed ~~long~~consumer ~~these~~spending ~~trends~~during ~~will~~fiscal ~~last~~2023, orwith toeffects ~~what~~extending ~~extent~~into ~~inflationary~~fiscal ~~pressures~~2024 ~~may~~and ~~affect~~2025. ~~the~~This economic ~~and~~environment ~~purchasing~~contributed ~~cycle~~to ~~for~~a ~~home~~broader ~~furnishing~~slowdown ~~products~~in (both the mattress and ~~therefore~~residential ~~affect~~home furnishings markets, leading to lower demand from home furnishings manufacturers for our mattress fabrics and residential upholstery fabrics across this period. The duration and future impact of these trends remain uncertain, and it is difficult to predict how inflationary conditions may continue to influence consumer behavior and the broader economic cycle for home furnishings products) over the ~~short~~near and long term.

I-4948

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rates

We are exposed to market risk from changes in interest rates onregarding our ~~revolving~~ credit agreements.

~~Effective~~Revolving ~~January~~Credit ~~19,~~Agreements ~~2023, we entered into a second amended and restated U.S. revolving credit agreement (the "Amended Agreement") to establish an asset~~-~~based~~ ~~revolving~~United credit facility that required interest to be charged at a rate calculated using an applicable margin over the Federal Reserve Bank of New York's secured overnight fund rate (SOFR), as defined in the Amended Agreement. The interest rate under the Amended Agreement as of January 26, 2025, was 5.8%. As of January 26, 2025, there were no outstanding borrowings under the Amended Agreement.States

~~Effective~~Our ~~March~~U.S. ~~20,~~revolving ~~2024,~~credit weagreement ~~entered~~("Credit ~~into~~Agreement") anwith ~~unsecured~~Wells ~~credit~~Fargo ~~agreement~~Bank, ~~with~~N.A., apermits ~~financial~~both ~~institution~~base inrate ~~China~~borrowings ~~denominated~~and inborrowings ~~RMB~~ that ~~requires~~require interest to be be charged at a variable rate ~~based~~calculated onusing an applicable margin over SOFR (the ~~Loan~~secured ~~Prime~~overnight ~~Rate~~financing rate administered by the Federal Reserve Bank of New York (~~"LPR"~~or its successor)), as defined in ~~China~~the ~~minus~~Credit 50Agreement. ~~basis~~The ~~points~~interest atrate under the ~~time~~Credit Agreement as of ~~borrowing~~August 3, ~~which~~2025, ~~represents~~was 26.9511%. ~~There~~As ~~were~~of August 3, 2025, outstanding borrowings under ~~this~~the ~~agreement~~Credit ~~totaling~~Agreement totaled $47.0 million ~~as of January 26, 2025~~.

OnCredit ~~November~~Agreement 5,- ~~2024, we entered into an unsecured credit agreement with another financial institution in~~ China denominated in RMB that requires interest to be charged at a rate based on the Loan Prime Rate ("LPR") in China minus 50 basis points at the time of borrowing, which represents 2.60%. There were outstanding borrowings under this agreement totaling $1.4 million as of January 26, 2025.Operations

On November 5, 2024, we entered into an unsecured credit agreement with the Bank in China that provides for a 10.0 million RMB ($1.4 million as of August 3, 2025) working capital loan. Interest is charged at a variable rate under the agreement based on the China Loan Prime Rate ("China LPR") minus 50 basis points, which repre

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

Emerging Growth Company

Filing Compare · CULP INC