by Company reported 10.7% decline in Q3 revenue and a 12.9% decline in revenue for the first 9 months
MARTINSVILLE, Va. — Citing ongoing challenges in the home furnishings segment, including the loss of sales because of a customer bankruptcy, Hooker Furnishings reported a 10.7% decline in consolidated net sales for its third fiscal quarter ended Oct. 27.
Consolidated net sales totaled $104.4 million, compared with $168.8 million reported the same period last year. In addition to the aforementioned factors, the company attributed the decline to higher discounting to adjust its inventory mix and levels.
It also reported a net loss of $4.1 million, or 39 cents per share, compared with net income of $7 million, or 66 cents per share, the same period last year.
For the full nine-month period, it reported sales of $293 million, down 12.9% from $336.4 million the same period last year. It reported a net loss of $10.2 million, or 97 cents per share, compared with net income of $9.3 million, or 85 cents per share the same period last year.
For the quarter, it reported gross profit of $24 million, compared with $33.7 million last year and for the first nine months reported a gross profit of $64.3 million, compared with $85 million the same period last year. For the first quarter, it had an operating loss of $7.3 million, compared with operating income of $8.8 million last year and for the full first nine months reported an operating loss of $15.4 million, compared with operating income of $12 million the same period last year.
The company said its results for the third quarter were driven by continued macro-economic and industrywide headwinds, which it said resulted in low demand and $7.5 million in charges including $4.4 million net of tax based on the effective tax rate in the third quarter.
There were also restructuring costs related to the company’s previously announced cost savings plan, including $3.1 million in severance, and the bankruptcy of a significant customer, which added $2.4 million of bad debt expense. It also reported non-cash, trade-name impairment charges, including $2 million related to licensing in the Home Meridian segment.
However, it said it continued to see improved efficiencies from previously announced cost reductions and because of this, it expects to realize and exceed its goal of 10% or $10 million in annualized cost savings in fiscal 2026.
“Despite the charges recorded in Q3 and the sustained macro-economic and furniture retail challenges, we’re encouraged by the sequential quarterly improvement in our core business profitability and by the progress of our cost-reduction efforts, which will be more fully realized beginning in the fourth quarter,” said Jeremy Hoff, chief executive officer. “This progress is a reflection of our team’s focus on managing our controllables and reducing non-strategic costs in a very challenging environment, while investing in impactful initiatives, including our recently announced global licensing agreement with Margaritaville, all of which we expect will benefit us when demand normalizes.”
He added that there also are positive developments in the macro-economic environment, including cooling inflation and recent interest rate cuts in September and November, which he said “should begin to increase demand for furnishings as lower mortgage rates boost the housing market.”
Activity in each of its business segments was as follows:
+ In its Hooker Branded segment, the company reported net sales of $34.9 million, down 10.7% from $39.1 million the same period last year. The segment also reported an operating loss of $1.7 million compared with operating income of $7.4 million last year. The company said the sales decline was related to lower average selling prices and noted that while gross revenue decreased by 6.7% compared with the prior-year quarter, its discounts decreased by 390 basis points because of higher discounting on excess inventories to rebalance its inventory mix and levels. Incoming orders meanwhile decreased 13.3% year over year and the quarter-end order backlog was 30% lower than the same period last year, but was 18% higher than pre-pandemic levels at the end of the fiscal 2020 third quarter. For the full nine months, it reported net sales of $105 million, down 11.7% from $118.9 million the same period last year. Its operating loss was $2.1 million, compared with operating income of $14 million last year.
+ Its Home Meridian segment reported net sales of $38.6 million, down 11.8% from $43.7 million last year. It had an operating loss of $3.7 million compared with operating income of $923,000 last year. The company said the decline in sales was because of reduced unit volume, adding that more than 40% of the decrease was related to the loss of a major customer following a bankruptcy. It also said sales through major furniture chains and independent furniture stores decreased, but also said that the decreases were partly offset by an 8% increase in sales within the hospitality segment. This marked two consecutive quarters of higher revenues in that segment. Incoming orders also increased 8.1% and decreased 2.9% for the nine-month period despite the absence of the Accentrics Home product line and the loss of the aforementioned customer. For the full nine months, Home Meridian sales totaled $95.5 million, compared with $114.5 million, down 16.6%, which it said largely was because of the absence of $11 million in Accentrics Home liquidation sales. The company said this accounted for 60% of the sales decrease and 75% of the unit volume decrease. The segment reported an operating loss of $7.8 million compared with an operating loss of $4.5 million last year.
+ The company’s domestic upholstery segment reported $29.3 million in sales, down 9.9% from $32.6 million the same period last year, which the company said was because of decreased sales at Shenandoah, Bradington-Young and HF Custom. The decrease, it said, was partly offset by a 9.1% increase at Sunset West, which the company said has had year-over-year quarterly sales growth for three consecutive quarters this fiscal year. The Domestic Upholstery segment also reported an operating loss of $281,000 for the quarter, compared with operating income of $688,000 the same period last year. It said the operating loss included about $560,000 in severance charges related to the company’s previously announced cost-reduction plan. It also said incoming orders decreased by 4.8% during the quarter and also that the quarter end backlog was nearly 30% lower than the same period last year. Excluding the Sunset West division, it noted that the order backlog remained consistent with pre-pandemic levels at the end of the fiscal 2020 third quarter.
For the full nine months, the segment reported sales of $87.9 million, compared with $98.6 million the same period last year, a 10.8% decrease. The company attributed this to decreased sales at Shenandoah, Bradington-Young and HF Custom, noting that it was partly offset by a 10.1% increase in sales at Sunset West. For the first nine months, the segment reported an operating loss of $2.9 million compared with operating income of $2.7 million last year.
Other highlights were as follows:
+ The company reported cash and cash equivalents of $20.4 million at the end of the third quarter, down $22.7 million for the year end in January.
+ Inventory levels rose by $4.7 million at the end of the quarter, which the company said was driven by a $6.2 million increase in Hooker Branded inventories.
