Hooker Furnishings Reports First Quarter 2024 Fiscal Year Results

June 8, 2023  by HFBusiness Staff in Business Strategy, Industry   

Fiscal 2024 First Quarter overview:

~  Consolidated net sales for the quarter were $121.8 million, a $25.5 million, or 17.3%, decrease compared to a year ago. An expected revenue reduction was driven by a 32.5% sales decrease in the Home Meridian (HMI) segment and, to a lesser extent, a 14.8% decrease in first quarter year-over-year Domestic Upholstery sales.

~  Consolidated net income was $1.5 million, or $0.13 per diluted share for the quarter, compared to $3.2 million, or $0.26 per diluted share, in the prior year period. Consolidated operating income for the quarter was $2 million compared to $3.9 million in the same quarter a year ago.

~  The Company strengthened its financial position during the quarter by generating $22.4 million in cash from operating activities and funded $4.5 million in capital expenditures and the continued development of our ERP system, $4.3 million in share repurchases, and $2.4 million in cash dividends.

~  Inventory levels decreased by $23 million during the quarter, well on the way toward a goal of reducing inventories by $30 million before fiscal year-end.

~  The Hooker Branded and Domestic Upholstery segments and All Other were profitable for the quarter. Home Meridian’s operating loss of $2.1 million, resulting from lower sales volume, improved by $1 million compared to the same period a year ago.

~  The grand opening of a nearly 120,000-square-foot new Hooker Legacy Showroom in the Showplace Building at the Spring High Point Market generated a 93% increase in year-over-year retailer traffic, with successful product launches across all brands.

“Considering the softer retail environment, economic uncertainties and our recent exit from the Accentrics Home (ACH) line, we’re pleased to have exceeded internal and external expectations for sales and earnings this quarter,” said Jeremy Hoff, chief executive officer and director of Hooker Furnishings.

“Our liquidation of ACH inventories and other obsolete inventories at HMI is about 80% complete as of May end, which is helping us reduce our domestic warehousing footprint and make progress towards getting profitability back on track at HMI.”

“We generated $22.4 million in cash during the quarter, and we are continuing to build cash currently as we further reduce inventories. Recent cash levels have increased by about $15 million since the end of our first quarter.”

“Our new Hooker Legacy Showroom Grand Opening at the April High Point Market achieved what we intended, as we nearly doubled our attendance from a year ago and attracted new customers,” Hoff said.

“Many of our strategic organic growth initiatives that will enable us to broaden our total addressable market and visibility are tied to the new showroom and the Hooker Legacy Brands,” he added.

One of those strategic growth initiatives, the High Point Market launch of the ‘M’ domestically produced upholstery and imported occasional furniture brand, “surpassed our expectations,” Hoff said. “This new brand, combining the unique capabilities of HF Custom, Shenandoah, Bradington-Young and Hooker Casegoods, will enable us to compete in a modern lifestyle aesthetic without disrupting any of those core businesses.”

“Retailers affirmed to us that the new M brand is very much on-point with the up-and-coming casual modern lifestyle that today’s younger consumer is gravitating towards.”

Cash and cash equivalents stood at $31 million at fiscal 2024 first quarter-end, an increase of $12 million from the prior year-end. During the first quarter, the Company used a portion of the $22.4 million cash generated from operating activities to fund $4.3 million of share repurchases, $3.2 million in capital expenditures including investments in its new showroom, $2.4 million in cash dividends to shareholders, and $1.3 million for development of its cloud-based ERP system.

“In addition to our cash balance, we have an aggregate of $27.2 million available under our existing revolver at quarter-end to fund working capital needs. We believe that our liquidity and capital requirements will be further improved through the liquidation sales of remaining excess inventories at HMI,” said Huckfeldt.

“While retail conditions remain mixed along with some economic uncertainties, we saw increases in consolidated incoming orders in May ,” said Hoff, adding that “We believe the industry is getting through some of the elevated inventory challenges and we may be seeing some breakthrough in that area.”

Following its successful new showroom grand opening at the Spring High Point Market, Hooker Furnishings will continue initiatives to enhance visibility and addressable market reach this summer, debuting a new showroom at the Atlanta Market for Hooker Legacy brands.

“In addition to opening the new showroom for Legacy brands, Sunset West will also debut a new showroom at the Atlanta Market, which is the new sponsor of the Casual Market for outdoor furniture, relocating from Chicago,” Hoff said.

“Hooker Legacy brands will show at its fourth Las Vegas Market this summer as well. At HMI, we expect the previously announced inventory liquidations to be substantially completed by the end of the fiscal 2024 second quarter. While we expect some short-term volatility in sales and earnings at HMI, we continue to expect the segment to achieve profitability by the end of the 2024 fiscal year. The HMI team has rallied around the new level of focus on our core competencies, as we direct our support and resources behind our key businesses while reducing costs.”

“The Hooker Furnishings team continues to focus on organic growth opportunities through expanded visibility, strategic product development, operational improvements and cost reductions,” Hoff said. “By focusing on these controllables, we will be in the strongest possible position when the demand environment improves,” he concluded.