by Despite initial net charges, company expects estimated annual savings of up to $4.5 million starting in FY 2027
MARTINSVILLE, Va. — Hooker Furnishings expects to record net charges estimated between $1.6 million and $2 million this fiscal year and between $3 million and $4 million in fiscal 2026 as it closes its Savannah, Georgia, distribution center and consolidates operations into its existing distribution facilities.
However, it also expects the shift to result in estimated annual savings between $750,000 and $1 million in net operating expenses in fiscal 2026 and annual savings between $4 million and $4.5 million starting in fiscal 2027.
The company released these estimates as part of a recent statement associated with the closing of the facility and said it will provide additional information as part of its April 17 year-end report and subsequent earnings call.
The company is looking to exit the facility around June and noted in its statement that “these costs and benefits are largely dependent on the timing of the completion of the exit and and could differ from these preliminary estimates.”
“Our decision to exit our Savannah, Georgia, distribution facility was not taken lightly,” said Jeremy R. Hoff, chief executive officer. “We deeply appreciate the hospitality and support received from the state of Georgia, the Georgia Ports Authority and from the Liberty County Development Authority, in particular.”
When the company first began operating out of the facility in the fall of 2021, it was one of the company’s largest warehouse operations, estimated around 800,000 square feet. It primarily housed products in its Accentrics Home line by Home Meridian.
However, after opening the facility, the company said the division faced container costs from Asia that rose from $4,000 to as high as $25,000, which significantly reduced margins and profitability.
For example, while net sales in the Home Meridian segment rose slightly for its full fiscal year ended Jan. 30, 2022, the division reported an operating loss of $21.3 million for the year. It also reported an operating loss of $12 million for the fourth quarter, compared to operating income of $683,000 the same period a year earlier, which drove the parent company’s overall operating loss to $5.3 million for the quarter.
Contributing factors included the unavailability of inventory because of Asian factory shutdowns, combined with higher freight costs and a decline in e-commerce and hospitality furniture sales.
“The sharp rise in container freight rates made ACH’s once-thriving line of high-volume, lower-priced, low-margin accent items unsustainable,” Hoff said, adding that it “became obvious ACH’s business model would continue to be high risk and low reward.”
He noted that in 2024, the company liquidated the inventory and closed ACH, which was “part of a larger plan to exit unprofitable businesses at HMI. We began reducing our footprint in Savannah shortly after that through a series of sub-leases and lease amendments with our landlord, continued to utilize remaining space for other brands in our Home Meridian segment and for the Sunset West division of our Domestic Upholstery segment.”
According to its 2024 annual report, the company was leasing just over 590,000 square feet in the facility as of early last April.
Hoff added that the company is working with current distribution center employees, its landlord and new tenants of the building to help ensure a smooth transition as it exits the facility.
“One of the most difficult aspects of this decision is the impact on our dedicated employees in Liberty County,” Hoff said. “We take immense pride in the team we’ve built, and our priority is to support them during this transition. We are collaborating with the incoming tenant and other potential employers to help our employees secure positions, ideally within the same facility. Additionally, we have provided exit benefits to affected employees, with the goal of easing their transition, regardless of the path they choose.”
The company still maintains a 1.2-million-square-foot warehouse in Martinsville, Virginia, which handles Hooker Furnishings products and also its Sunset West outdoor line, both of which can be shipped on mixed truckloads.
According to its latest 2024 annual report, the company also operated warehouse space in Mount Airy and Valdese, North Carolina, and Atlanta as of last April.
