Hooker Furnishings Reports Third Quarter Fiscal Results

Furniture World News Desk on 12/6/2024

Hooker Furnishings Corporation has reported its fiscal 2025 third-quarter results, covering the period from July 29 to October 27, 2024. The company recorded consolidated net sales of $104.4 million, a 10.7% decrease compared to the same period last year, driven by ongoing macroeconomic pressures, industry-wide demand challenges, and the bankruptcy of a major customer.

The quarter’s operating loss totaled $7.3 million, with a consolidated net loss of $4.1 million, or $0.39 per diluted share. Results were also affected by $7.5 million in charges, including $3.1 million in restructuring costs, $2.4 million in bad debt expense related to the customer bankruptcy, and $2.0 million in non-cash trade-name impairment charges.

For the nine-month period ending October 27, consolidated net sales decreased by 12.9% to $293.0 million, reflecting lower demand and the absence of $11 million in liquidation sales from a product line exited last year. A consolidated operating loss of $15.4 million and a net loss of $10.2 million, or $0.97 per diluted share, were reported for the nine-month period.

Segment Performance

Hooker Branded

Net sales for the Hooker Branded segment declined by $4.2 million, or 10.7%, during the third quarter, largely due to increased discounting to manage inventory levels and lower average selling prices. Unit volume decreased slightly, though it showed improvement over the first two quarters of fiscal 2025.

The segment reported an operating loss of $1.7 million. Incoming orders decreased 13.3% year-over-year, and the order backlog was 30% lower than the same period last year but remained 18% higher than pre-pandemic levels.

Home Meridian (HMI)

The Home Meridian segment saw net sales decline by $5.1 million, or 11.8%, during the third quarter, primarily due to lower unit volumes and the loss of a significant customer. Hospitality sales increased by 8% for the quarter, marking the second consecutive quarter of growth in this channel.

The segment reported an operating loss of $3.7 million, driven by $4.6 million in charges, including bad debt and trade-name impairment expenses. Despite lower sales, HMI achieved a gross margin of 20.5%, the highest since its acquisition in 2016, reflecting progress in restructuring efforts.

Domestic Upholstery

The Domestic Upholstery segment experienced a 9.9% decline in net sales during the quarter, attributed to low demand across several divisions. However, sales at Sunset West, the outdoor furniture brand, grew by 9.1%, marking three consecutive quarters of growth.

The segment reported an operating loss of $281,000, an improvement from the losses reported in the first two quarters of fiscal 2025.

Financial Position

At the end of the third quarter, cash and cash equivalents were $20.4 million, a decrease of $22.7 million compared to year-end. Inventory levels increased by $4.7 million, primarily within the Hooker Branded segment, as part of efforts to meet anticipated demand and ensure availability of best-selling products.

The company plans to refinance its credit facility and pay off term debt in the near term. It also announced its quarterly dividend payment in December 2024.

Outlook

CEO Jeremy Hoff cited positive macroeconomic trends, including lower interest rates and cooling inflation, as indicators of a potential rebound in demand for home furnishings. He also highlighted strong customer reception to new product launches at the October High Point Market and emphasized the company’s ongoing cost reduction efforts and investments in strategic growth initiatives.

“While the macroeconomic outlook is improving, our team will continue to focus on the controllables and improvements already underway,” Hoff said.

About Hooker Furnishings
Headquartered in Martinsville, VA, Hooker Furnishings is ranked among the nation's largest publicly traded furniture sources and encompasses 12 operating businesses. These brands include: Hooker Furniture, Bradington-Young, HF Custom, Shenandoah Furniture, H Contract, M, BOBO Intriguing Objects, Pulaski Furniture, Samuel Lawrence Furniture, Prime Resource International, Samuel Lawrence Hospitality, and Sunset West. Hooker Furnishings Corporation's corporate offices and upholstery manufacturing facilities are located throughout Virginia and North Carolina, and the company has showrooms in High Point, North Carolina; Atlanta, Georgia; Las Vegas, Nevada; and Ho Chi Minh City, Vietnam. Hooker Furnishings operates distribution centers in the United States, China, and Vietnam. The company's stock is listed on the Nasdaq Global Select Market under the symbol HOFT.