by Company moves forward with cost-reduction plan, including its recent reduction in headcount through early retirement offers and cutting positions
MARTINSVILLE, Va. — Hooker Furnishings reported a decrease in sales for its fiscal 2025 second quarter ended July 28, although the company said the decrease was a solid sequential improvement from its prior-quarter reduction.
The company also said its losses were down from its operating and net losses in the first quarter.
Still, the company is moving forward with its cost-reduction plan announced last quarter in which it expects to achieve 10% savings, for a total of $10 million in fixed-cost reductions starting in the second half. About half of the savings is expected to occur by the end of the fiscal year, split between the third and fourth quarters, the company said.
Recently, the company said it completed a reduction in its workforce, which includes staff reductions and some early retirement offers to qualifying employees, a move that will result in about $3 million in severance expenses in the fiscal 2025 third quarter.
This includes 24 early retirements and 20 staff reductions. Sixteen of the staff reductions were in Martinsville, Virginia, and High Point and four were in the company’s Sam Moore and Bradington-Young upholstery operations in Virginia and North Carolina, respectively. The 44 positions represent about 4% of the company’s total workforce.
“Workforce reduction decisions like this are rare for our company and were incredibly difficult for us, as we’re acutely aware of the impact it will have on affected employees,” said CEO Jeremy Hoff. “We are committed to providing as much transition support as possible and are grateful for the contributions each of these individuals has made to Hooker.”
As part of the overall cost-reduction plan, the company also is reducing the size of its Savannah, Georgia, warehouse by half and also is restructuring its Bobo Intriguing Objects business into its Hooker Branded business, a move that will eliminate Bobo’s retail store and separate warehouse.
For the second quarter, the company reported consolidated net sales of $95.1 million, down 2.8% from $97.8 million the same period last year. This is a significant improvement from the 23.2% decline in net sales for the fiscal first quarter ended April 28.
Its net loss was $2 million, or 19 cents per share, compared to net earnings of $785,000 or 7 cents per share the same period last year. Its consolidated operating loss was $3.1 million, which the company said was driven by low sales volume and under-absorbed expenses. The company said the operating loss and net loss were an improvement from its first-quarter operating and net losses of $5.2 million and $4.1 million respectively.
For the first half, its consolidated net sales totaled $188.7 million, down 14.1% from $219.6 million the same period last year. It had a net loss of $6 million, or 57 cents per share during the first half, compared to $2.2 million in net earnings, or 20 cents per share gain in the first half of last year. Its operating loss was $8.2 million.
The company attributed the decrease in sales to persistent low demand for home furnishings driven by high interest rates and subdued housing activity. It added that an absence of $11 million in revenue from the Accentrics Home line, which the company exited last fiscal year, accounted for about 35% of the sales decrease.
“Challenges in the macroeconomic and furniture retail environment have extended well beyond our expectations,” Hoff said. “The combination of high interest rates, a housing shortage and elevated home prices have created a sustained housing downturn for over two years.
“While retail sales are doing well overall, most furniture retail is not,” he added. “In response, we continue to focus on the things we can control to ensure we’re in the best possible position to grow when the macroenvironment improves.”
By segment, the company’s financial performance is as follows:
In the Hooker Branded segment, the company reported $34.8 million in sales for the second quarter, down 4.5% from $36.4 million reported last year. The segment had an operating loss of $406,000 for the quarter, compared to income of $3.9 million a year earlier. For the first half, the segment had sales of $70.1 million, down 12.2% from $79.8 million reported last year. It reported an operating loss of $399,000, compared to operating income of $6.6 million the first half of last fiscal year.
Home Meridian reported sales of $30.5 million during the second quarter, up 5.6% from $28.9 million the same period last year. Its operating loss totaled $896,000, down from a loss of $3.3 million the same period last year. For the first half, it reported sales of $56.9 million, down 19.6% from $70.8 million the same period last year. Its operating loss totaled $4.2 million, down from $5.5 million last year.
Domestic upholstery reported $28.6 million in sales for the second quarter, down 7.6% from $30.9 million the same period last year. It also reported an operating loss of $1.3 million during the quarter compared to operating income of $724,000 the same period last year. For the first half, it reported $58.6 million in sales, down 11.2% from $66 million last year. It also reported an operating loss of $2.6 million in the first half, compared to operating income of $2.1 million the same period last year.
The company also reported cash and cash equivalents of $42.1 million at the end of the second quarter, down $1.1 million from the end of fiscal 2024 but up $1.2 million from the first quarter ended in April. Inventory levels decreased by $4.7 million from year end.
During the six-month period, the company said that it used existing cash and $5.3 million in cash generated from operating activities to fund $4.9 million in cash dividends to shareholders, $2.4 million for further development of its cloud-based ERP system, and $1.4 million in capital expenditures.
The company also said that it had an aggregate of $28.3 million available under its existing revolver at the end of the quarter to fund working capital needs as well as $29.4 million in cash surrender value of company-owned life insurance.
“With focused inventory management and capital expenditures, as well as diligent expense management, we believe we have sufficient financial resources to support our business operations for the foreseeable future,” said Paul Huckfeldt, senior vice president and chief financial officer, adding that the company is in the process of refinancing its credit facility and expects to have that completed in the near future. He said it also plans to pay off $22 million in term debt during the third quarter, “demonstrating our confidence in the company’s future success.”
