Hooker Furnishings Reports Second Quarter Fiscal Results

September 11, 2025  by Karen Parrish in Business Strategy, Industry   

Executive Commentary

“Hooker Furnishings is taking decisive steps to return the business to profitability. Our cost-reduction initiatives and focus on growth initiatives have positioned the Company to maintain resilience in today’s challenging environment, and to strategically capture growth when demand returns,” said Jeremy Hoff, chief executive officer.

“Hooker Branded broke even in the quarter despite weak demand and $655,000 in restructuring charges, and Domestic Upholstery reduced its operating loss nearly 70% even including $152,000 of restructuring costs. At HMI, we have de-risked it significantly over the last several years and continue to further that effort. These actions have been obscured by weak demand in the home furnishings industry due to an extremely weak housing environment, and tariff buying hesitancy in the market segment in which HMI competes. By the end of our fiscal 2026 third quarter, HMI’s fixed cost structure will be aligned to support what we believe to be a sustainable business and one in which its sales can be significantly scaled from current levels when demand returns. Barring additional tariffs or other significant, disruptive events, we expect HMI’s performance to be significantly enhanced by the end of the current fiscal year.”

“We are confident that the actions we’ve taken, scaling fixed costs, reducing debt, and launching compelling new product lines, provide the foundation for long-term value creation. Importantly, we are on track to have our new expense structure largely in place by the end of the third quarter, supporting a path to profitability at even current revenue levels.”

Key Performance Drivers: Q2 & 1H FY26

— Legacy Brand Resilience: In Q2, Hooker Branded sales were up $465K (+1.3% YoY), and operating results were breakeven vs. $329K loss PY despite $655K in restructuring costs.

— Domestic Upholstery: In Q2, operating loss was reduced by nearly $900K YoY to a loss of $408K despite restructuring costs of $152K.

— Expense Savings: Reduced operating expenses by $3.7M in 1H despite $1.7M in severance and warehouse consolidation related restructuring costs.

— Order Momentum: Q2 orders +11% at Hooker Branded; +2% at Domestic Upholstery, backlog up 7% YoY.

— Debt reduction: Repaid $16.5M of debt YTD while maintaining $57.7M in borrowing capacity, net of $6.7M standby letters of credit.

— Consolidated Results: Q2 net sales of $82.1M (–13.6% YoY); operating loss of $4.4M vs. $3.1M PY, including restructuring costs of approximately $2.0 million; net loss of $3.3M, primarily driven by HMI headwinds as its net sales down 44.5% YoY, including customer bankruptcy impact, tariff mitigation preserved supply and relationships.

Additional Management Commentary

“Our multi-phase plan to scale our fixed cost structure for sustained profitability in a downturn is on track and beginning to yield significant results,” said Jeremy Hoff, chief executive officer. “While HMI results were challenged by tariff concerns and unfavorable customer mix, we had a $1.2 million improvement in operational results at Hooker Branded and Domestic Upholstery during the second quarter, despite the inclusion of about $800,000 in restructuring costs in their results. We are becoming leaner and more efficient, underscored by efforts within Domestic Upholstery, where our focus on improving labor-to-revenue ratios is showing early progress and already reflected in stronger factory performance metrics.”

Hoff continued, “We are on target for our new expense structure, which reduces our fixed costs by approximately 25%, largely to be in place by the end of the third quarter. We believe our enhanced operating discipline will support a path back to profitability in future periods, even as macroeconomic challenges and uncertainties persist. Critically, the thoughtful and deliberate way in which we are implementing this restructuring will not limit our ability to grow or fulfill orders and serve customers as market conditions improve.”

“While our significant restructuring efforts continue across all three segments, we continue to adapt to the changing industry and invest in the highest growth opportunities. Our upcoming Margaritaville launch at the October High Point market positions us well for the second half of fiscal 2027. Ahead of the launch and expected benefit, our new Vietnam fulfillment warehouse is already delivering on its promise of shortening container lead times from six months to roughly four to six weeks and creating new mixability opportunities for customers. Additionally, these efficiencies lower our overall inventory requirement by decreasing our reliance on safety stock and minimum order requirements needed at U.S. warehousing.”

Adjusting to Import Tariff Increases and Uncertainties

In late July, the US Government announced a 20% tariff rate on imports from Vietnam, the main source country for Hooker and the home furnishings industry, effective August 1, 2025.

“Each of our segments is taking a different approach to mitigating the Vietnam tariffs,” Hoff said. “For Domestic Upholstery, the impact is on component parts and fabrics, and we are able to mitigate through incremental measures such as new fabric sourcing. For Hooker Branded, we remerchandised the line to manage the impact of the 20% tariff, evaluating pricing on a SKU-by-SKU basis rather than a blanket price increase. At HMI, we believe we have implemented near-term mitigation efforts to balance the value equation in this more price-sensitive and competitive segment and are pursuing additional measures which are expected to take effect over the next several quarters to help maintain product flow on existing collections.”

Hoff continued, “As we await guidance on the possible lumber tariffs, we are assessing potential impacts across our business with a focus on minimizing disruption and continuing to deliver the quality and value our customers expect.”

Outlook

“At the beginning and end of the quarter, we saw an encouraging momentum in Hooker Legacy orders, with July orders up 24% year-over-year at both Hooker Branded and Domestic Upholstery,” Hoff said. “For the quarter, Hooker Branded orders were up nearly 11% and Domestic Upholstery were up 1.6%. That said, the home furnishings industry continues to face headwinds from low existing home sales, elevated mortgage rates and persistent inflation, all of which are weighing on consumer confidence and demand.”

Hoff continued, “We remain focused on factors within our control – scaling our cost structure for profitability, preparing for the October debut of Margaritaville collection and pursuing growth in hospitality, contract and outdoor channels, supported by the new Vietnam warehouse. These initiatives position us well to navigate near-term challenges and capitalize on opportunities when the market recovers, creating long-term value for our

shareholders.”

Conference Call Details

Hooker Furnishings will present its fiscal 2026 second quarter financial results via teleconference and live internet webcast on Thursday morning, September 11th, 2025, at 9:00 AM Eastern Time.

A live webcast of the call will be available on the Investor Relations page of the Company’s website at https://investors.hookerfurnishings.com/events and archived for replay.