Stonegate Updates Coverage on Hooker Furniture Corporation (HOFT) Q2 FY26

Core Insights - Hooker Furniture Corporation (NASDAQ: HOFT) reported Q2 FY26 results with revenue of $82.1 million, operating income of ($4.4) million, and adjusted EPS of ($0.31), falling short of consensus estimates [1] - Revenue declined 13.6% year-over-year, primarily due to a 44.5% decline at HMI driven by weak demand, tariff-related buying hesitancy, and a major customer bankruptcy [1] - Despite the sales decline, consolidated gross margin remained stable at 20.5%, supported by cost savings and improved labor efficiency [1] Financial Performance - HOFT's revenue of $82.1 million was below the expected $93.7 million and consensus of $91.2 million [1] - Operating income was reported at ($4.4) million, compared to estimates of ($0.8) million and ($1.5) million [1] - Adjusted EPS of ($0.31) was worse than the expected ($0.08) and consensus of ($0.16) [1] Sales and Market Dynamics - HMI experienced a significant 44.5% year-over-year decline in sales, indicating weak demand and external pressures [1] - In contrast, Hooker Branded net sales grew by 1.3% year-over-year, while Domestic Upholstery sales remained flat, showing resilience in legacy brands [1] Cost Management and Profitability - The company achieved $3.7 million in expense savings in the first half of FY26, moving towards an annualized savings goal of $25 million by FY27 [8] - Management is focused on navigating macroeconomic challenges, including housing market weakness and high mortgage rates, while aiming to return to profitability [1] Debt and Liquidity - HOFT repaid $16.5 million of debt year-to-date and reduced inventory to $58.5 million, enhancing liquidity during the transition to a new warehouse in Vietnam [8]