Hooker Furnishings Reports Third Quarter Results

December 7, 2023  by HFBusiness Staff in Business Strategy, Industry   

Fiscal 2024 Third Quarter overview:

Consolidated net income for the quarter increased 45.4% to $7 million or $0.65 per diluted share, compared to $4.8 million or $0.42 per diluted share a year ago. Consolidated operating income increased 36.6% compared to the prior year quarter.

Operating income and margin were $8.8 million and 7.5% as compared to $6.4 million and 4.2% in the prior-year third quarter, due to improved profitability in the Hooker Branded and Home Meridian (HMI) segments.

Consolidated net sales for the fiscal 2024 third quarter decreased by $34.7 million, or 22.9%, compared to a year ago, driven by continued soft demand for home furnishings, as well as the Company's exit from the Accentrics Home product line.

Net sales declined in each of the three segments versus the prior year period. However, HMI segment’s sales increased compared to the first and second quarters of the current fiscal year, sparked by a large volume of shipments for new product placements. Hooker Branded sales also increased compared to the previous quarter in the current fiscal year.

The Company’s strategy to reposition the Home Meridian Segment from a volatile, high-risk model with unpredictable profitability to a lower risk, more sustainable revenue and profit model is beginning to yield tangible results. As the Company forecasted; the Home Meridian segment achieved a quarterly operating income for the first time since calendar year 2021. The segment contributed $0.9 million to income in the current-year third quarter compared to a $3.2 million loss in the prior-year third quarter.

For the fiscal 2024 nine-month period, consolidated net sales decreased by $115.4 million, or 25.5%, as compared to the same period last year. The nine-month results were driven by decreased net sales in all three segments, attributable to industry-wide soft demand, as well as the exit from the Accentrics Home product line which accounted for about $10 million of the decrease.

Consolidated operating income and margin were $12 million, or 3.6%, as compared to $17.6 million and 3.9% in the prior-year nine-month period. Consolidated net income was $9.3 million or $0.85 per diluted share, as compared to $13.6 million or $1.14 per diluted share in the prior-year nine-month period.

HOOKER CEO COMMENTARY

“Despite a challenging macroeconomic environment for the home furnishings industry, we’re proud of our team for persevering through some difficult decisions and short-term pain to create a more sustainable and profitable business model for Hooker Furnishings,” said Jeremy Hoff, chief executive officer.

“After spending considerable time repositioning HMI to focus on its core products and businesses, it is encouraging to see HMI report a quarterly profit for the first time in two years and contribute to our overall profitability. Liquidating excess inventories, rightsizing our overhead and exiting unprofitable businesses have put us in a much stronger overall position,” Hoff said. “Ongoing execution of our strategic growth initiatives is our main focus,’ he continued.

“While the housing market slowdown driven by high interest rates, and a shift in consumer discretionary spending away from home furnishings continue to challenge, we’re encouraged by positive indicators like the normalization of ocean freight rates, eased supply chain constraints, more stable raw material costs and increased labor availability.

“Demand is improving, with consolidated orders up $12.7 million, or 15.7%, for the third quarter versus the prior year period. For the first nine months, consolidated orders increased by $75.8 million or 33.5%,” he said. “Most of the consolidated increase is driven by Home Meridian segment orders which were unusually low in both prior year periods.”

“The recent Fall High Point Market was positive by all measurables across the company,” Hoff added. “Increased visibility is one of our major strategic objectives. Adding two smaller showrooms in Las Vegas and Atlanta, while moving to our largest High Point showroom, has created an exponentially larger audience for our products on the Legacy side of our business, including Sunset West.”

“HMI also had a good market as they focused on strengthening the product assortment for Pulaski (PFC), Samuel Lawrence Furniture (SLF) and Prime Resources International (PRI). The efforts by our team at HMI have reenergized and repositioned the product offerings for growth and have received a lot of positive retail feedback along with new placements,” he said.

“As reported previously, the collective impact of our new showrooms in High Point, Atlanta and Las Vegas has increased our customer contacts from about 3,000 to around 14,000 annually, more than quadrupling the number of existing and potential customers. In the first half of the fiscal year, we opened 1,000 new accounts as visibility and engagement increased. This quarter that pace continued as we added 150 new customers on average per month,” Hoff concluded.