by As various initiatives materialize, the company believes it is poised to achieve success in the year ahead and beyond
MARTINSVILLE, Va. — As Hooker Furnishings continues the realignment of its business, including the sale of two key brands expected to close Dec. 12, the company is looking ahead to growth opportunities in the year ahead and beyond.
That was a core theme of its latest earnings report and conference call for its third quarter ended Nov. 2.
Granted, it was still a tough quarter despite moves up to this point to shore up its bottom line. This includes some $25 million in savings over the past 18 months, with measures planned to further reduce costs in FY 2027.
First, here’s a quick overview of the company’s latest results:
Net sales for the quarter totaled $70.7 million, down 14.4% from $82.7 million the same period last year. It reported a net loss of $21.2 million, or $1.99 per share, compared with a net loss of $4.1 million, or 39 cents per share, the same period last year.
For the nine-month period, it reported $211.2 million in sales, down 9.4% from $233.1 million the same period last year. It reported a net loss of $27.5 million, or $2.59 per share, compared with $10.2 million, or 97 cents per share, last year.
Gross profit for the quarter totaled $18.1 million, or 25.6% of sales, compared with $20.5 million, or 24.8% of sales, last year. For the full nine months, it totaled $52.7 million, or 25% of sales, compared with $55.7 million, or 23.9% of sales, the same period a year earlier.
Its operating loss for the quarter was $16.3 million, compared with a loss of $5.1 million the same period last year. For the nine months, it reported an operating loss of $17.4 million, compared with a loss of $9.6 million in the year-earlier period.
Contributing to the results were a significant drop in net sales for Pulaski Furniture and Samuel Lawrence Furniture, which fell by 52.3%, or $11.3 million, in Q3 and 37.6%, or $22.5 million, for the first nine months.
The company said these decreases “were driven by macroeconomic pressures and tariff-related hesitancy among value-oriented customers, especially major furniture chains. Profitability was further impacted by a $2.4 million fixed-asset write-off tied to the Savannah warehouse exit, elevated freight costs and low sales volumes that caused under-absorption of warehouse and international operating expenses.”
It added that “persistently low sales, an unfavorable product and customer mix, restructuring costs, $3.9 million impairment charges associated with the sale of discontinued operations, and $2.6 million trade name impairment contributed to significant operating losses in both periods.”
Performance in its Hooker Branded (imported case goods and upholstery) and Hooker Domestic Upholstery segments fared better, hinting at the growth opportunities that lie ahead. For Q3, Hooker Branded sales totaled $36.5 million, up 1.1% from $36.1 million the same period last year, while domestic upholstery sales rose to $30.2 million from $29.3 million, a 3% increase.
In his comments in the earnings release, company CEO Jeremy Hoff noted that headwinds remain, including elevated housing prices, inflation, low consumer confidence and ongoing tariffs. “These challenges were most acute in our higher-volume, lower-margin discontinued businesses,” he said.
With the sale of Pulaski and SLF (not including SLF Hospitality, which the company is keeping in its portfolio), the company is thus shifting its focus to its largely successful imported case goods and upholstery and its domestic upholstery segments.
Hoff shed further light on the company’s growth opportunities during the conference call, pointing to specific silver linings in the company’s business.
+ The company is placing some hopes on its newly launched Margaritaville licensed collection, for example. In addition to wood product, it also includes a wide mix of upholstery and accent pieces. During the call, Hoff said the company is encouraged by commitments to the collection. “Margaritaville represents a significant organic growth opportunity supported by the immersive 14,000-square-foot showroom experience we debuted at High Point Market and the 55 committed retail galleries across the U.S. The excitement for this launch and the initial purchase commitments we’ve received are beyond historic levels for any Hooker product line the company has launched by about three to four times.” He added that the company believes Margaritaville “will drive meaningful incremental revenue across the business, especially moving into the second half of next year when the collection is shipped and placed at retail. We also believe that Margaritaville’s growth will be truly incremental, not cannibalizing existing product placements, and will be a profitability driver as well.”
+ Domestically produced goods also present an opportunity, particularly in an environment largely dominated by tariffs. For example, Hoff noted, more than 40% of its net sales are from product that is produced domestically, “significantly reducing our tariff exposure.” He added that the company also believes the tariff environment “has largely stabilized with a 20% tariff on case goods imports from Vietnam and a 30% lumber tariff on all imported upholstered furniture implemented November 1st. In addition, since tariffs disproportionately affect the more value-priced HMI lines that are held for sale, the divestiture will be beneficial in mitigating current or future tariffs. Coupled with targeted pricing actions and strong vendor partnerships, we have largely mitigated the tariff impact.”
+ Continuing on the domestic upholstery part of its business, Hoff told Home News Now that the lines have become more closely aligned with its Hooker Collective Living business, which creates lifestyle presentations across its product line. In addition, the company is launching a new website next month that offers configurability and draping capabilities for custom upholstery, a signature element of the domestic business. “This will be amazing for our customers,” he said, adding that the site will let customers see inventory levels in real time.
+ The company’s Sunset West division rounds out its portfolio with an outdoor furniture line that offers retailers another category to sell throughout the year, particularly in areas with warmer climates. Hoff noted that the company also has quadrupled the size of the division’s sales force from about 10 to 40, with representation around the country. It also has expanded the division’s distribution and cut-and-sew operations to include not only the West Coast but also the East Coast. This provides a model that — along with its expanded sales force — supports customers in both regions of the country and other points in between.
+ As of Dec. 9, the company’s cash position remains low at about $2 million. However, company Chief Financial Officer Earl Armstrong said that it has $63.7 million in available borrowing capacity, net of standby letters of credit. He added that the company’s board also has authorized a new share repurchase program under which it can repurchase up to $5 million of outstanding common shares. Armstrong also noted that in connection with the repurchase authorization, the board is recalibrating the annual dividend, which will result in a 50% reduction to $0.46 per share annually, beginning with an expected Dec. 31 dividend payment of $0.115 per share. “We believe these actions appropriately balance capital return and liquidity needs, and we will enhance long-term shareholder value.”
Hoff himself voiced some cautious optimism for the near future, noting that the company is well poised to weather whatever challenges lie ahead. Even with tariff exposure, he added, the company is able to better serve customers through a mixed container program that delivers imported product to the customer in six to 10 weeks.
“We are more confident that Hooker now has the potential to shift from a cost-reduction story to an organic growth story, and we see a clear path to profitable growth by focusing on our core expertise of better-to-best home furnishings,” he said.
