Hooker Furniture(US:HOFT)2024-12-06 19:41Financial Performance - Consolidated net sales for the third quarter were $104.4 million, a decrease of $12.5 million, or 10.7%, compared to the same quarter of the previous year[113]. - For the nine-month period of fiscal 2025, consolidated net sales were $293.0 million, a decrease of $43.4 million or 12.9% compared to the same period of the previous year[114]. - The company reported a consolidated operating loss of $7.3 million and a net loss of $4.1 million, or ($0.39) per diluted share[113]. - The consolidated operating loss for the nine-month period was $15.4 million, with a net loss of $10.2 million, or ($0.97) per diluted share[114]. - Consolidated net loss for the third quarter was $4,131 million, a 158.7% decrease from a profit of $7,038 million in the same quarter last year[137]. Sales and Orders - The consolidated order backlog decreased by 5.3% compared to the end of the previous year's third quarter and 8.4% compared to the fiscal 2024 year-end[109]. - Hooker Branded incoming orders decreased by 13.3% year-over-year, with a quarter-end order backlog 30% lower than the prior year's third quarter[110]. - Home Meridian incoming orders increased by 8.1% compared to the previous year's third quarter, with a quarter-end backlog 32.2% higher than the prior year's third quarter[110]. - Domestic Upholstery incoming orders decreased by 4.8% during the quarter, with a quarter-end backlog 29.9% lower than the prior year's third quarter[111]. - The Home Meridian segment's net sales increased to $9,316 million, representing a 23.4% growth compared to $7,550 million in the prior year[128]. - Hooker Branded segment reported net sales of $12,098 million for the third quarter of fiscal 2025, a 14.8% increase from $10,535 million in the same period last year[128]. Cost and Expenses - The company incurred $3.1 million in costs related to its cost reduction plan during the third quarter[113]. - Consolidated selling and administrative (S&A) expenses rose by $4,400 million, or 18.3%, due to restructuring costs and bad debt expenses[128]. - The company incurred $3.1 million in restructuring costs and $2.4 million in bad debt during the third quarter, contributing to operating losses[135]. - The Domestic Upholstery segment's S&A expenses increased by $1.8 million, primarily due to bad debt expenses from a major customer's bankruptcy[130]. Profitability and Margins - Consolidated gross profit margin decreased to 23.0% in the third quarter, down from 28.9% in the prior year[122]. - The Home Meridian segment achieved a gross margin of 20.5%, its highest level since the acquisition in 2016[124]. - The Domestic Upholstery segment's gross margin decreased by 300 bps in the nine-month period of fiscal 2025[125]. Economic Conditions - The company is experiencing macro-economic headwinds and challenging conditions impacting the home furnishings industry[113]. - Positive economic indicators suggest a potential 10% increase in home sales for 2025, which may benefit the company's sales outlook[138]. Other Notable Events - The company recorded $2.4 million in bad debt expense due to a large customer's bankruptcy, triggering a tradename impairment of $2.0 million[113]. - Approximately 40% of the Home Meridian segment's sales decrease was due to the loss of a significant customer following its bankruptcy[120]. - All Other recorded approximately $470,000 in restructuring costs due to inventory write-downs and warehouse closure expenses[126]. - The effective tax rate for the third quarter of fiscal 2025 was 40.7%, significantly higher than 22.4% in the prior year, due to the annualization method[136]. - Cash used in operating activities for the nine-month period was $12,334 million, compared to $48,770 million in the previous year[140]. - The backlog for the Home Meridian segment was primarily driven by increased orders from the hospitality business[110].