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From Home Furnishing Business

Hooker Furnishings Reports Fourth Quarter and Full Year Results

April 11, 2024  by HFBusiness Staff in Business Strategy, Industry   

Fiscal 2024 and the fourth quarter overview:
•  Despite difficult business conditions for the home furnishings industry and a 25.7% consolidated sales decrease, the Company reported operating income of $12.4 million and net income of $9.9 million, or $0.91 per diluted share for the fiscal year. Operating profitability improved by $18.4 million compared to an operating loss of $6 million last year, and net income improved by $14.2 million from a net loss of $4.3 million or ($0.37) per diluted share in the prior fiscal year. The profitability gains are attributed primarily to the absence of a $24.4 million inventory write-down at HMI recorded in last year’s fourth quarter.

•   Fiscal 2024 consolidated net sales were $433.2 million, a decrease of $149.9 million or 25.7%, compared to the previous fiscal year. This decline was driven by industry-wide weak demand and the exit of unprofitable product lines in the Home Meridian Segment, the latter of which resulted in an approximate $21 million reduction in revenue.

•   During the year, the Company’s financial position and balance sheet were strengthened, increasing cash by $24.2 million to over $43 million at year-end and adjusted our inventory levels to align with demand, resulting in a $35 million or 36% reduction, including the successful liquidation of all of HMI’s obsolete inventories.

•   For the fiscal 2024 fourth quarter, consolidated net sales decreased by $34.5 million or 26.3%, compared to the prior year fourth quarter, also due to soft demand for home furnishings. The Company recorded operating income of $340,000 and net income of $593,000 or $0.06 per diluted share, compared to operating loss of $23.7 million and net loss of $17.9 million or ($1.60) per diluted share in the prior year quarter, driven by the $24.4 million inventory valuation charge recorded in the fourth quarter of fiscal 2023.

•   While taking comprehensive steps this year to reposition HMI for sustainable profitability, an array of strategic, targeted long-term growth initiatives including the launch of the new “M” modern lifestyle brand, new showroom openings, a new Enterprise Resource Planning operating system and the acquisition of BOBO to enhance HFC’s ability to be a whole home furnishings resource were implemented.

•   Despite the current demand environment, many current economic indicators support an optimistic outlook for the medium-to-long term. Consequently, the Company continues to invest in initiatives that it believes will ideally position it for when demand improves. It recently consolidated merchandising for its legacy brands under a Chief Creative Officer, designed to drive creative excellence and deliver a more integrated and aspirational presentation in its approach to the market. This move is expected to position Hooker as a whole-home, consumer centric resource to its customers, drive synergies among its brands and ultimately drive increased sales and earnings when demand returns.

Management Commentary

“We’re proud of our team’s accomplishments and discipline during a challenging year, as we successfully restructured our HMI business model, improved profitability and strengthened our balance sheet,” said Jeremy Hoff, chief executive officer. “At the same time, we reinforced belief in our strategic growth initiatives by continuing to make the necessary investments to fuel long-term growth and sustainability.”

“Fiscal 2024 marked the third full fiscal year since the initial COVID crisis and was a pivotal year for us,” Hoff said. “Since 2020, we have navigated through some of the most volatile macroeconomic conditions of our 100-year history: the severe initial downturn of the pandemic followed by a demand surge for home furnishings, supply chain disruptions, inventory unavailability, historically high ocean freight costs, significant inflation, higher interest rates, a sluggish housing market and a temporary shift in discretionary spending away from home furnishings.”

“Against the backdrop of these disruptions and recent weak industry-wide demand, we’ve strengthened our financial position, made strategic investments to expand our addressable market and continued our over 50-year history of dividend payments, including our eighth consecutive annual dividend increase,” Hoff said.

“As we celebrate our 100th year in business, the adaptability that’s been integral to our culture since 1924 continues to be vital to our success today and will drive us forward as we start our next century. As part of that adaptability, Hooker was pleased to welcome Caroline Hipple as Chief Creative Officer last week.”

“An industry veteran with more than 45 years of retail, sales, marketing, and creative merchandising experience, Caroline joins the company most recently from Norwalk Furniture, where she served eight years as president. Under her leadership, Norwalk experienced significant growth.”

“She’ll lead Hooker’s existing team of very talented merchandisers and designers in repositioning our legacy brands, including newly acquired Sunset West and BOBO Intriguing Objects, to deliver a more integrated and aspirational presentation in their approach to the market. We believe this move will position Hooker as a whole-home, consumer centric resource to its customers and ultimately drive increased sales and earnings when demand returns.”