Segment Information

3 Months Ended

Jul. 30, 2023

Segment Reporting [Abstract]

Segment Information

13. Segment Information

Overall

Our operations are classified into two business segments: mattress fabrics and upholstery fabrics. The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. The upholstery fabrics segment develops, manufactures, sources, and sells fabrics primarily to residential and commercial furniture manufacturers. In addition, this segment includes Read, which provides window treatments and sourcing of upholstery fabrics and other products, as well as measuring and installation services for Read’s products, to customers in the hospitality and commercial industries. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows.

Financial Information

We evaluate the operating performance of our business segments based upon (loss) income from operations before certain unallocated corporate expenses and other items that are not expected to occur on a regular basis. Cost of sales for each segment includes costs to develop, manufacture, or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead, and incoming freight charges. Unallocated corporate expenses primarily represent compensation and benefits for certain executives and their support staff, all costs associated with being a public company, amortization of intangible assets, and other miscellaneous expenses. Segment assets include assets used in the operations of each segment and consist of accounts receivable, inventories, property, plant, and equipment, and right of use assets. Intangible assets are not included in segment assets as these assets are not used by the Chief Operating Decision Maker to evaluate the respective segment’s operating performance, allocate resources to individual segments, or determine executive compensation.

Statements of operations for our operating segments are as follows:

	Three months ended
	July 30, 2023			July 31, 2022
net sales by segment:
mattress fabrics	$	29,222		$	29,371
upholstery fabrics		27,440			33,233
net sales	$	56,662		$	62,604
gross profit:
mattress fabrics	$	1,994		$	(37	)
upholstery fabrics		5,270			4,165
segment gross profit:		7,264			4,128
restructuring related charge (1)		(179	)		—
gross profit	$	7,085		$	4,128
selling, general, and administrative expenses by segment:
mattress fabrics	$	3,393		$	2,885
upholstery fabrics		3,941			3,622
unallocated corporate expenses		2,495			2,359
selling, general, and administrative expenses	$	9,829		$	8,866
(loss) income from operations by segment:
mattress fabrics	$	(1,398	)	$	(2,921	)
upholstery fabrics		1,328			542
unallocated corporate expenses		(2,495	)		(2,359	)
total segment loss from operations	$	(2,565	)	$	(4,738	)
restructuring related charge (1)		(179	)		—
restructuring expense (2)		(338	)		—
loss from operations	$	(3,082	)	$	(4,738	)
interest income		345			17
other income (expense)		96			(82	)
loss before income taxes	$	(2,641	)	$	(4,803	)

(1) Gross profit for the three months ending July 30, 2023, includes restructuring related charges totaling $179,000 for markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits in Ouanaminthe, Haiti.

(2) Restructuring expense of $338,000 for the three months ended July 30, 2023, represents a $237,000 impairment charge related mostly to certain machinery and equipment and $101,000 of employee termination benefits related to the discontinuation of production of cut and sewn upholstery kits in Ouanaminthe, Haiti.

Balance sheet information for our operating segments follows:

(dollars in thousands)	July 30, 2023		July 31, 2022		April 30, 2023
Segment assets:
Mattress Fabrics:
Accounts receivable	$	11,058	$	12,382	$	12,396
Inventory		24,579		36,471		25,674
Property, plant and equipment (3)		32,792		37,354		33,749
Right of use assets (4)		2,139		3,232		2,308
Total mattress fabrics assets		70,568		89,439		74,127
Upholstery Fabrics:
Accounts receivable		11,554		12,430		12,382
Inventory		19,238		27,278		19,406
Property, plant and equipment (5)		1,491		2,271		1,671
Right of use assets (6)		2,237		7,520		2,618
Total upholstery fabrics assets		34,520		49,499		36,077
Total segment assets		105,088		138,938		110,204
Non-segment assets:
Cash and cash equivalents		16,812		18,874		20,964
Short-term investments - rabbi trust		791		—		1,404
Short-term note receivable		252		—		219
Current income taxes receivable		202		798		—
Other current assets		3,578		3,840		3,071
Long-term note receivable		1,661		—		1,726
Deferred income taxes		476		546		480
Property, plant and equipment (7)		646		865		691
Right of use assets (8)		3,090		3,804		3,265
Intangible assets		2,158		2,534		2,252
Long-term investments - rabbi trust		7,204		9,567		7,067
Other assets		944		724		840
Total assets	$	142,902	$	180,490	$	152,183

(3)The $32.8 million as of July 30, 2023, represents property, plant, and equipment of $22.1 million, $10.1 million, and $594,000 located in the U.S., Canada, and Haiti, respectively. The $37.4 million as of July 31, 2022, represents property, plant, and equipment of $24.7 million, $11.9 million, and $718,000 located in the U.S., Canada, and Haiti, respectively. The $33.7 million as of April 30, 2023, represents property, plant, and equipment of $22.7 million, $10.4 million, and $608,000 located in the U.S., Canada, and Haiti, respectively.

(4)The $2.1 million as of July 30, 2023, represents right of use assets of $1.4 million and $720,000 located in Haiti and Canada, respectively. The $3.2 million as of July 31, 2022, represents right of use assets of $1.9 million, $1.1 million, and $228,000 located in Haiti, the U.S., and Canada, respectively. The $2.3 million as of April 30, 2023, represents right of use assets of $1.5 million and $776,000 located in Haiti and Canada, respectively.

(5)The $1.5 million as of July 30, 2023, represents property, plant, and equipment of $1.0 million, $327,000, and $159,000 located in the U.S., Haiti, and China, respectively. The $2.3 million as of July 31, 2022, represents property, plant, and equipment of $1.1 million, $988,000, and $232,000 located in the U.S., Haiti, and China, respectively. The $1.7 million as of April 30, 2023, represents property, plant, and equipment of $974,000, $592,000, and $105,000 located in the U.S., Haiti, and China, respectively.

(6)The $2.2 million as of July 30, 2023, represents right of use assets of $1.2 million and $977,000 located in China and the U.S., respectively. The $7.5 million as of July 31, 2022, represents right of use assets of $3.4 million, $2.5 million, and $1.6 million located in China, Haiti, and the U.S., respectively. The $2.6 million as of April 30, 2023, represents right of use assets of $1.5 million and $1.1 million located in China and the U.S., respectively.

(7)The $646,000, $865,000, and $691,000 as of July 30, 2023, July 31, 2022, and April 30, 2023, respectively, represent property, plant, and equipment associated with unallocated corporate department and corporate departments shared by our mattress

fabrics and upholstery fabrics segments. Property, plant, and equipment associated with our corporate departments reside in the U.S.

(8)The $3.1 million, $3.8 million, and $3.3 million as of July 30, 2023, July 31, 2022, and April 30, 2023, respectively, represent right of use assets located in the U.S.

Information about capital expenditures and depreciation expense for our operating segments follows:

	Three months ended
(dollars in thousands)	July 30, 2023		July 31, 2022
Capital expenditures (9):
Mattress Fabrics	$	523	$	197
Upholstery Fabrics		158		360
Unallocated Corporate		33		26
Total capital expenditures	$	714	$	583
Depreciation expense:
Mattress Fabrics	$	1,455	$	1,568
Upholstery Fabrics		180		202
Total depreciation expense	$	1,635	$	1,770

(9)Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.