by Move aims to enhance profitability, operational efficiency and long-term shareholder value
MARTINSVILLE, Va. — Hooker Furnishings announced a plan to cut costs by $25 million this fiscal year, representing about 25% of its fixed costs, including $11 million in warehousing and distribution expenses and $14 million in selling and administrative expenses.
The company announced the move as part of its fiscal first-quarter 2026 earnings release Thursday. It said it expects to achieve the net annualized savings by fiscal 2027, as part of a plan to enhance profitability, operational efficiency and long-term shareholder value.
The savings fall on the heels of initial cost-cutting measures this past year that included $10 million in facility downsizing, workforce reductions and other fixed-cost reductions. It also incurred $4.9 million in restructuring charges including $3.6 million in severance payments.
The company also said it began stocking inventory in a leased warehouse in Vietnam during its fiscal first quarter ended May 4, which it noted “allows retail customers to mix product collections in containers, improving product flow, inventory turns and margin potential.”
“We continue to take significant and deliberate actions to stabilize the company, drive improved sales and deliver strong gross margins as we execute on our significant cost-savings program without losing our focus on quality, service, our strategic vision and increasing shareholder value,” said Jeremy Hoff, chief executive officer. “We delivered the eighth consecutive quarter of consistent market share gains within Hooker’s legacy brands, which includes Hooker Branded and Domestic Upholstery.”
He described the spring High Point Market as “exceptional for the company, especially with two new case goods collections in our collected living format. In addition, we had significant placements on the debut of our “Living Your Way” modular upholstery program offered in both stationary and motion in multiple scale and cover options.”
Hoff added, “Our progress is steady, and we are executing within all aspects of the business that we are able to control. Notwithstanding our strategic progress, the home furnishings industry continues to navigate a challenging environment, driven by persistent softness in the housing market, higher mortgage rates and declining consumer sentiment. Existing home sales remain well below pre-pandemic levels, and the sharp rise in borrowing costs has dampened housing mobility, which traditionally fuels furniture demand. At the same time, consumer confidence has dropped to near historic lows, with many households pulling back on discretionary spending. These macroeconomic headwinds are weighing heavily on our industry, and we remain focused on adapting to the realities of today’s market.”
He noted that in the face of these challenges, the company continues “to achieve significant cost savings through our ongoing programs.”
“Our year-over-year operating and gross margin improvements during the first quarter were driven by the $2.2 million in cost savings from our initial round of cost reductions we announced a year ago,” he said. “Since the initial announcement, we have expanded our cost reduction initiatives through the exit of the Savannah warehouse and opening of a leased Vietnam warehouse. These moves, particularly our strategic shift to the Vietnam warehouse, will result in accelerated savings and improvements as the current fiscal year progresses.”
“In total, from the June 2024 start of our initiative, we anticipate reducing our total annual spend rate by approximately 25%,” Hoff noted. “These savings alone will substantially improve profitability — and as conditions improve, our position for growth strengthens accordingly, as will our ability to drive value for shareholders through disciplined execution and capital stewardship. Importantly, our cost reductions should not impact our strategic growth priorities, including our collected living merchandising platform, the Vietnam warehouse advantage and our upcoming Margaritaville licensed collection.”
For the fiscal first quarter, the company reported $85.3 million in net sales, down 8.8% from $95.6 million last year. It reported a net loss of $3.05 million, or 29 cents per share, compared with a net loss of $4.1 million, or 39 cents per share, the same period a year earlier.
It reported an operating loss of $3.6 million, down from $5.2 million last year, and gross profit of $19 million, compared with $19.2 million last year.
Relating to tariffs, Hoff said, “We believe we’ve successfully mitigated the across-the-board 10% tariff through participation by our source factories and through a 5% price increase effective last month. Like everyone else, we are waiting to hear in July what the final tariff may be for Vietnam, where we source over 80% of our products. We will act responsibly, not reactively, and are positioned with a solid financial foundation and balance sheet that are built to navigate challenging times.”
Other highlights of the quarterly report were as follows:
+ The company said that cash and cash equivalents totaled $18 million, up $11.7 million from the year end, “due primarily to accounts receivable collections.”
+ It also said that inventory levels decreased from $70.8 million at year end to $64.3 million at quarter end.
+ The company said it utilized its cash reserves for several key expenditures during fiscal 2026 first quarter, including $2.5 million cash dividends to shareholders and $851,000 capital expenditures.
+ Despite these outflows, the company said it maintained its financial flexibility with $40.7 million in available borrowing capacity under its new Amended and Restated Loan Agreement as of quarter end.
“Subsequent to the end of our fiscal first quarter, we paid down all outstanding borrowings on our revolving credit facility,” said Earl Armstrong, chief financial officer. “As of yesterday, we had approximately $3 million in cash on hand, with $63.3 million in available borrowing capacity, net of standby letters of credit.”
