Hooker Furniture(HOFT) - 2026 Q1 - Quarterly Results

Fiscal 2026 First Quarter Financial & Operational Highlights Overall Performance The company reported lower sales but narrowed its operating and net losses through effective cost management and improved gross margins Q1 FY2026 Key Financial Results vs. Q1 FY2025 | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Consolidated Net Sales | $85.3M | $93.6M | -8.8% | | Gross Margin | 22.3% | 20.5% | +180 bps | | Operating Loss | ($3.6M) | ($5.2M) | +31% | | Net Loss | ($3.1M) | ($4.1M) | +25.4% | | Diluted EPS | ($0.29) | ($0.39) | +$0.10 | - The company reduced its operating loss by $1.6 million (31%) and operating expenses by $2.2 million year-over-year, despite a sales decline and incurring $523,000 in restructuring costs[4] - The overall sales decrease was primarily driven by a double-digit decline at the Home Meridian (HMI) segment, while legacy brands remained relatively stable[4] Management Commentary Management highlighted steady progress with market share gains and a successful High Point Market despite a challenging industry environment - The company delivered its eighth consecutive quarter of market share gains within its legacy brands (Hooker Branded and Domestic Upholstery)[3] - Management attributes industry challenges to a soft housing market, higher mortgage rates, and declining consumer sentiment, with existing home sales well below pre-pandemic levels[3][5] - The company's new "Living Your Way" modular upholstery program and new case goods collections were well-received at the Spring High Point Market[3] Strategic Initiatives Multiphase Cost Reduction Plan The company is executing a multi-phase cost reduction strategy targeting approximately $25 million in annualized savings by fiscal 2027 - The total cost reduction initiative aims to eliminate approximately $25 million, or 25% of fixed costs, by fiscal 2027[6][8] - Phase 1 (FY2025) reduced fixed costs by over $10 million through downsizing and workforce reductions[7][11] - Phase 2 (FY2026) involves exiting the Savannah warehouse and opening a new Vietnam warehouse, expected to generate net savings of $3.4 million in FY2026 and over $14 million annually from FY2027[7][11] - The new Vietnam warehouse, opened in May 2025, is expected to reduce lead times from approximately 6 months to 4-6 weeks[11] Adjusting to Import Tariffs The company is navigating tariff uncertainty on Vietnamese imports by collaborating with factories and implementing a price increase - The company sources over 80% of its products from Vietnam and is awaiting a final decision on tariffs, which was paused until July[15][16] - To offset the current 10% tariff, the company has secured participation from its source factories and implemented a 5% price increase[16] Segment Performance Hooker Branded The segment achieved stable sales and positive order momentum, though profitability was flat due to increased promotional activity Hooker Branded Q1 Performance | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $37.1M | $36.8M | +0.8% | | Gross Profit | $11.1M | $11.5M | -3.4% | | Operating Income | $27k | $179k | -84.9% | - Incoming orders grew by 2.4% year-over-year, but the quarter-end backlog was 21.3% lower than the prior year due to faster shipments from improved inventory positions[18] Home Meridian (HMI) The segment saw a sharp sales decline due to a major customer bankruptcy but narrowed its operating loss through cost controls Home Meridian Q1 Performance | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $18.8M | $26.4M | -28.8% | | Gross Profit | $2.7M | $3.3M | -17.2% | | Operating Loss | ($2.8M) | ($3.4M) | +17.0% | - Approximately 30% of the sales decrease was attributed to the loss of a major customer due to bankruptcy in the prior year[18] - The sales decline was partially offset by a $1.7 million increase in sales from the hospitality business[18] Domestic Upholstery The segment significantly narrowed its operating loss despite a modest sales dip, driven by cost reductions and growth in outdoor furnishings Domestic Upholstery Q1 Performance | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $28.9M | $30.0M | -3.7% | | Gross Profit | $5.3M | $4.7M | +12.8% | | Operating Loss | ($0.6M) | ($1.3M) | +54.5% | - The segment's operating loss was significantly reduced by $713,000 (55%) year-over-year[18] - The sales decrease was partially offset by a 12.7% sales increase in the outdoor furnishings business, Sunset West, following its bicoastal expansion[18] Financial Position and Capital Allocation Cash, Debt and Inventory The company strengthened its liquidity by increasing cash, reducing inventory, and paying down all revolving credit facility borrowings Balance Sheet Highlights (vs. FY2025 Year-End) | Metric | Q1 FY2026 End | FY2025 End | Change | | :--- | :--- | :--- | :--- | | Cash & Cash Equivalents | $18.0M | $6.3M | +$11.7M | | Inventories | $64.3M | $70.8M | -$6.5M | | Trade Accounts Receivable | $39.6M | $58.2M | -$18.6M | - Subsequent to the quarter-end, the company paid down all outstanding borrowings on its revolving credit facility[19] - As of June 11, 2025, the company had approximately $3 million in cash and $63.3 million in available borrowing capacity[19] Capital Allocation The company maintained its shareholder return commitment, extending its 50-year dividend track record while focusing on strategic growth - The company announced its regular quarterly dividend, continuing an over 50-year track record of uninterrupted dividend payments[20] - During the first quarter, the company paid $2.5 million in cash dividends to shareholders[17] - Capital allocation priorities include enhancing long-term value through a combination of cost savings initiatives and strategic growth priorities[20] Business Outlook Market Environment and Recent Trends The market remains challenged by a soft housing market, but the company saw a significant year-over-year uptick in legacy brand orders in May - Existing home sales remain subdued, operating at approximately 75% of typical pre-pandemic levels for the third consecutive year[21] - Fiscal May orders for Hooker Legacy brands were the highest since February 2022, showing a nearly 33% increase compared to the prior year's May[24] Fiscal May 2025 Year-over-Year Order Growth | Segment | YoY Order Growth | | :--- | :--- | | Hooker Legacy (Total) | +33% | | Hooker Branded | +40% | | Domestic Upholstery | +25% | Key Growth Initiatives Future growth will be driven by a new licensing program, a redesigned website, and customizable product strategies to capture market recovery - Launch of a new Margaritaville licensing program[23] - A redesigned corporate website is set to launch in October to enhance digital experience, lead generation, and e-commerce[24][26] - The new "Live Your Way" strategy in Domestic Upholstery will offer customizable, modular, and lifestyle-oriented solutions to meet evolving consumer preferences[24][26] Consolidated Financial Statements (Unaudited) Consolidated Statements of Operations The company reported a net loss of $3.1 million on $85.3 million in sales, an improvement from the prior-year period's net loss of $4.1 million Consolidated Statements of Operations (in thousands) | | 13 Weeks Ended May 4, 2025 | 13 Weeks Ended April 28, 2024 | | :--- | :--- | :--- | | Net sales | $85,316 | $93,571 | | Gross profit | $19,002 | $19,221 | | Operating (loss) | $(3,564) | $(5,170) | | Net (loss) | $(3,052) | $(4,091) | | Diluted (Loss) per share | $(0.29) | $(0.39) | Consolidated Balance Sheets Total assets stood at $299.7 million, down from $313.9 million at fiscal year-end, reflecting lower receivables and inventory levels Key Balance Sheet Items (in thousands) | As of | May 4, 2025 (Unaudited) | February 2, 2025 | | :--- | :--- | :--- | | Total current assets | $128,068 | $141,124 | | Total assets | $299,685 | $313,942 | | Total current liabilities | $32,508 | $39,974 | | Total liabilities | $100,528 | $109,559 | | Total shareholders' equity | $199,157 | $204,383 | Consolidated Statements of Cash Flows The company generated $14.7 million in net cash from operations, a significant improvement driven by strong accounts receivable collections Consolidated Cash Flow Summary (in thousands) | | 13 Weeks Ended May 4, 2025 | 13 Weeks Ended April 28, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,663 | $1,477 | | Net cash used in investing activities | $(967) | $(959) | | Net cash used in financing activities | $(1,980) | $(2,802) | | Net increase / (decrease) in cash | $11,716 | $(2,284) | | Cash and cash equivalents - end of quarter | $18,011 | $40,875 | Order Backlog The consolidated order backlog decreased to $51.2 million from $85.8 million a year ago, primarily due to a decline in the HMI segment Order Backlog by Segment (in thousands) | Reporting Segment | May 4, 2025 | April 28, 2024 | | :--- | :--- | :--- | | Hooker Branded | $13,479 | $17,129 | | Home Meridian | $18,069 | $49,396 | | Domestic Upholstery | $19,401 | $19,236 | | Consolidated | $51,203 | $85,761 |