by Q2 sales decline 13.6% for the quarter ended Aug. 3, while company’s net loss rises to $3.3 million
MARTINSVILLE, Va. — Full line furniture resource Hooker Furnishings reported a drop in second quarter sales, amid a still challenging market for home furnishings resulting from tariffs and high interest rates.
For the quarter ended Aug. 3, the company reported net sales of $82.2 million, down 13.6% from $95.1 million the same period last year.
It reported a net loss of $3.3 million, or 31 cents per share, compared with a net loss of $1.95 million, or 19 cents per share the same period last year.
It also reported an operating loss of $4.4 million, compared with an operating loss of $3.2 million the same period last year and gross profit of $16.8 million, compared with $20.9 million last year.
For the full first half, the company reported net sales of $167.5 million, down 11.2% from $188.7 million the same period last year. The company’s net loss for the period was $6.3 million, or 60 cents per share, compared with just over $6 million, or 57 cents per share last year.
CEO Jeremy Hoff said the company is taking decisive steps to return the company to profitability.
“Our cost-reduction initiatives and focus on growth initiatives have positioned the company to maintain resilience in today’s challenging environment, and to strategically capture growth when demand returns,” Hoff said. “We are confident that the actions we’ve taken, scaling fixed costs, reducing debt, and launching compelling new product lines, provide the foundation for long-term value creation. Importantly, we are on track to have our new expense structure largely in place by the end of the third quarter, supporting a path to profitability at even current revenue levels.”
This includes a “multi-phase cost reduction strategy” aimed at achieving about $25 million in annualized savings by fiscal year 2027, which represents nearly 25% of its fixed costs. The total includes $11 million in warehousing and distribution expenses and about $14 million selling and administrative expenses.
As previously reported, the company said it has identified $10 million in expense reductions in Fiscal 2025, achieving $3 million in savings in that fiscal year.
It noted that it identified an additional $15 million in expense reductions for Fiscal 2026 and in the first half, it achieved $3.7 million in expense reductions, “despite having recorded $1.7 million in restructuring charges. We expect to achieve additional savings in the second half of the year from both initiatives and believe we are on track to achieving approximately $25 million in annualized savings beginning in fiscal 2027.”
The company said these phased initiatives aim to “enhance profitability, improve operational efficiency, and drive long-term shareholder value. Importantly, our cost reduction efforts are not expected to impact our strategic growth priorities, which include advancing our Collected Living merchandising platform, leveraging the Vietnam warehouse advantage, and launching our upcoming Margaritaville licensed collection.”
By segment, the company reported the following results:
In Hooker Branded, the company said second quarter net sales totaled $36.3 million, up 1.3% from $35.8 million last year. It reported operating income of $10,000 compared with an operating loss of $329,000 last year.
For the first half, the segment reported net sales of $73.4 million, up from $72.6 million last year, a 1.05% increase. Operating income during the period totaled $37,000, compared with an operating loss of $150,000 the same period last year.
The Home Meridian segment reported second quarter net sales of $16.9 million, down 44.5% from $30.5 million the same period last year. Its operating loss was $3.9 million, compared with $896,000 last year.
For the first half, the segment reported $35.7 million in net sales, down 37.2% from $56.9 million last year. Its operating loss was $6.8 million, compared with $4.2 million last year.
The Domestic Upholstery segment reported $28.7 million in second quarter net sales, up slightly from $28.6 million last year. Its operating loss totaled $408,000, down from $1.3 million last year.
For the first half, the segment reported $57.6 million in net sales, level with $58.6 million last year. It also reported an operating loss of $1 million, down from a loss of $2.6 million the same period last year.
“Hooker Branded broke even in the quarter despite weak demand and $655,000 in restructuring charges, and Domestic Upholstery reduced its operating loss nearly 70% even including $152,000 of restructuring costs,” Hoff said. “At HMI, we have de-risked it significantly over the last several years and continue to further that effort. These actions have been obscured by weak demand in the home furnishings industry due to an extremely weak housing environment, and tariff buying hesitancy in the market segment in which HMI competes. By the end of our fiscal 2026 third quarter, HMI’s fixed cost structure will be aligned to support what we believe to be a sustainable business and one in which its sales can be significantly scaled from current levels when demand returns. Barring additional tariffs or other significant, disruptive events, we expect HMI’s performance to be significantly enhanced by the end of the current fiscal year.”
He added that the company’s multi-phase plan “to scale our fixed cost structure for sustained profitability in a downturn is on track and beginning to yield significant results. While HMI results were challenged by tariff concerns and unfavorable customer mix, we had a $1.2 million improvement in operational results at Hooker Branded and Domestic Upholstery during the second quarter, despite the inclusion of about $800,000 in restructuring costs in their results. We are becoming leaner and more efficient, underscored by efforts within Domestic Upholstery, where our focus on improving labor-to-revenue ratios is showing early progress and already reflected in stronger factory performance metrics.”
He said that the company is on target to achieve its new expense structure, which will largely be in place by the end of the third quarter.
“We believe our enhanced operating discipline will support a path back to profitability in future periods, even as macroeconomic challenges and uncertainties persist,” he said. “Critically, the thoughtful and deliberate way in which we are implementing this restructuring will not limit our ability to grow or fulfill orders and serve customers as market conditions improve.
“While our significant restructuring efforts continue across all three segments, we continue to adapt to the changing industry and invest in the highest growth opportunities. Our upcoming Margaritaville launch at the October High Point market positions us well for the second half of fiscal 2027. Ahead of the launch and expected benefit, our new Vietnam fulfillment warehouse is already delivering on its promise of shortening container lead times from six months to roughly four to six weeks and creating new mixability opportunities for customers. Additionally, these efficiencies lower our overall inventory requirement by decreasing our reliance on safety stock and minimum order requirements needed at U.S. warehousing.”
