Hooker Furniture(US:HOFT)2025-09-11 14:02Financial Data and Key Metrics Changes - Consolidated net sales for Q2 2026 were $82.1 million, down $13 million, or 13.6% year-over-year, primarily driven by declines at Home Meridian [4][5] - Consolidated operating loss was $4.4 million compared to $3.1 million in the prior year quarter, reflecting lower sales volume and unfavorable customer mix [4] - Consolidated net loss was $3.3 million, or $0.31 per share, with a six-month net loss of $6.3 million, or $0.60 per diluted share [4][5] Business Line Data and Key Metrics Changes - Hooker branded net sales increased by 1.3% year-over-year, reaching breakeven compared to a $329,000 loss last year, despite $655,000 in restructuring costs [3][15] - Home Meridian's net sales decreased by 44.5%, with a significant portion attributed to the loss of a major customer and macroeconomic pressures [4][16] - Domestic upholstery's net sales were flat, with a 1.7% decline over six months, but operating losses were reduced by 68% in Q2 [17][18] Market Data and Key Metrics Changes - The home furnishings industry is facing challenges from low existing home sales, elevated mortgage rates, and persistent inflation, impacting consumer confidence and demand [21] - Incoming orders for Hooker branded and domestic upholstery increased by 24% year-over-year in July, indicating some positive momentum [21] Company Strategy and Development Direction - The company is focused on cost reduction efforts, aiming to eliminate approximately $25 million, or 25% of fixed costs, with significant savings expected by the end of Q3 2026 [13][14] - A new Margaritaville product line is set to launch in October, which is anticipated to create growth opportunities [10][21] - The company is adapting to tariff impacts by evaluating pricing on a SKU-level basis and implementing mitigation strategies [11][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to profitability through cost structure scaling and strategic growth initiatives [7][21] - The company expects HMI's performance to improve significantly by the end of the fiscal year, barring additional tariffs or disruptive events [8][21] Other Important Information - The company reported $1.9 million in cash on hand and no outstanding amounts under its credit facility, with $67.9 million in available borrowing capacity [19] - Restructuring costs for the quarter totaled $2 million, with two-thirds attributed to cost of goods sold and one-third to selling and administrative expenses [30] Q&A Session Summary Question: What is driving the increased orders at Hooker branded and domestic upholstery? - Management noted subtle macro improvements at the retail level, with positive feedback from partners regarding Labor Day sales [26][27] Question: How does the company plan to return HMI to profitability? - Management indicated that achieving a 25% reduction in overhead costs by the end of Q3 is crucial for short-term profitability [28][29] Question: What is the breakdown of restructuring costs for the quarter? - Approximately two-thirds of the restructuring costs were in cost of goods sold, and one-third in selling and administrative expenses [30] Question: Can you provide updates on the Margaritaville launch? - The launch is seen as a significant opportunity, with positive early indicators from partners and a substantial number of SKUs planned [37][38] Question: What are the expectations for price increases? - Management is evaluating pricing on a SKU-by-SKU basis and believes they have a clear understanding of the impact of the 20% tariff [39][41] Question: Will the additional $2 million in charges coincide with the Savannah warehouse exit? - Yes, the additional charges are expected to be related to the closing of the Savannah warehouse [42]