Hooker Furnishings Corporation Reports Third Quarter Results

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

As previously disclosed on December 1, 2025, the Company announced a strategic divestiture of value-priced home furnishings brands Pulaski Furniture (PFC) and Samuel Lawrence Furniture (SLF), within the Home Meridian (HMI) segment. These brands are being reported for the fiscal 2026 third quarter as “discontinued operations” and “held for sale.” The remaining former HMI division, Samuel Lawrence Hospitality (SLH), will be re-designated to the “All Other” category. The Company expects to close the sale this week.

The consolidated Hooker Furnishings Corporation now includes two reportable segments, Hooker Branded and Domestic Upholstery, and an “All Other” category, which is comprised of SLH and intercompany eliminations and other operating segments that are not individually reportable.

Executive Commentary

“Over the past two years, we’ve executed bold, disciplined actions to reposition Hooker Furnishings as a focused, higher-margin, design-led company by exiting low-margin, tariff-sensitive categories and doubling down on our strongest brands,” said Jeremy Hoff, CEO. “Amid one of the most persistent industry downturns, we’ve implemented a multi-phase cost-reduction program that achieved approximately $25–$26.5 million in annualized savings, putting us on a track toward profitability even as industry challenges continue. With our strengthened balance sheet and $63.8 million available borrowing capacity at quarter-end, we’re enhancing shareholder returns through a new share repurchase authorization and a recalibrated dividend that preserves near-term flexibility while driving long-term shareholder value. This decision also considers direct feedback from shareholders on the dividend and our broader capital allocation approach.”

“We delivered modest sales and margin improvements this quarter in Hooker Branded and Domestic Upholstery and are encouraged by commitments to our new Margaritaville licensed collection at the recent Fall High Point Market,” said Hoff. “Margaritaville represents a significant organic growth opportunity, supported by the immersive 14,000-square-foot showroom experience we debuted at Market and the 55 committed retail galleries across the U.S., which reflect retailer and dealer commitments to build dedicated Margaritaville spaces in their stores. The excitement for this launch and the initial purchase commitments we have received are beyond historic levels for any Hooker product line. We believe this will drive meaningful incremental revenue across the business, especially moving into the second half of next year when we are fully in market without cannibalizing existing placements.”

Hoff continued, “We believe the launch of Margaritaville, together with the recently announced sale of Pulaski and Samuel Lawrence Furniture enables us to realign our portfolio around our strongest brands and position Hooker Furnishings to consistently drive future revenue growth. Additionally, we have reduced our overall cost structure by 25%, or $25 million over the past 18 months and are positioned to provide continued savings in fiscal 2027. Together with the major shift in our warehousing strategy, we have also been able to combat tariff exposure and better serve customers by allowing collections from our various suppliers to be mixable in single containers and providing 6–10-week fulfillment to our customers’ door. 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.”

“Similar to the volatility experienced in 2020, today’s macroeconomic backdrop is creating unusual pressure across the home furnishings and consumer discretionary sectors. That environment has weighed heavily on our near-term results and contributed to a sustained decline in our share price during the third quarter. These factors triggered an interim asset impairment analysis under U.S. GAAP,” said Earl Armstrong, Chief Financial Officer. “Current conditions adversely affected market-based valuation inputs, such as trading multiples and discount rates, used in the analysis. As a result of the required testing, we recorded non-cash impairments to certain goodwill and indefinite-lived intangible assets. Importantly, these are non-cash accounting charges and do not change our strategic view of these brands or businesses, nor affect liquidity or ongoing operations.”

Key Performance Drivers: Q3 & 9M FY26

—Hooker Branded and Domestic Upholstery experienced sales growth, but an $11 million year-over-year reduction in SLH shipments due to large-project timing drove a consolidated net sales decrease of 14.4% in Q3. Also driven by a sharp drop in hospitality shipments, sales were down 9.4% for the nine-month period.

—Hooker Branded gross margin improved in the quarter and remained steady over 9 months, while Domestic Upholstery gross margin stayed steady in the quarter and improved over the 9-month period.

—S&A expenses fell significantly, down $5.9 million in Q3 and $9.7 million year-to-date, reflecting the absence of prior-year bad debt from a major customer bankruptcy and the related exit of the PRI business. The decline also reflects lower restructuring costs and broad cost-reduction efforts.

—As a result of a multi-phase cost reduction initiative, the company has a new expense structure that will reduce fixed costs by $25 to $26.5 million by FY 2027.

—Restructuring costs totaled $597,000 in Q3 and $1.7 million year-to-date, tied primarily to severance and warehouse consolidation initiatives. Expenses of $2.6 million in Q3 and $4.1 million year-to-date were incurred related to the exit of HMI’s Savannah warehouse, which primarily supported the discontinued PFC and SLF businesses, including fixed-asset write-offs, inventory liquidation, severance, and moving costs.

—Consolidated non-cash impairment charges totaling $22.1 million ($16.7 million, net of tax) were recorded in Q3. These charges included $14.5 million for Sunset West goodwill, $3.2 million for certain Home Meridian trade names, of which $2.6 million related to discontinued businesses and $558,000 to the remaining business, and $556,000 for the Bradington-Young trade name. The non-cash impairment charges also included $3.9 million associated with the sale of discontinued operations. 

—Q3 operating loss was $16.3 million, driven primarily by a $15.6 million in non-cash intangible impairment charges and $597,000 in restructuring costs. The nine-month operating loss of $17.4 million likewise reflects the impact of the $15.6 million impairment charges and $1.7 million in restructuring charges.

—Loss from discontinued operations, net of tax, was $8.6 million for Q3 and $13.9 million year-to-date.

—Order backlog declined 10.3% from fiscal year-end and 23.8% from the prior-year Q3, due to an unusually large hospitality project in the prior year.

Multi-Phased Cost Reduction Initiatives
“Our multi-phased cost reduction initiatives were initially projected to reduce our fixed costs by approximately $25 million by the end of the fiscal 2026 third quarter,” said Hoff. “We are pleased to have exceeded our goal and are moving ahead from a position of strength with our new cost structure in place.”

Adjusting to Import Tariff Increases and Uncertainties
“More than 40% of our net sales come from products produced or assembled domestically, which meaningfully reduces our exposure. In addition, the tariff environment has largely stabilized, with a 20% tariff on casegoods imports from Vietnam and a 30% lumber tariff on all imported upholstered furniture taking effect on November 1,” Hoff said. “In addition, since tariffs disproportionately affected 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, and we believe our imported upholstery now benefits from a competitive advantage over those importing from other regions.”

Segment Reporting Versus the Prior Year Periods

Hooker Branded

—Hooker Branded net sales increased 1.1% in both the third quarter and nine-month period, driven by higher average selling prices despite lower unit volume. Gross revenue was essentially flat, but reduced discounts and lower returns and allowances slightly lifted net sales.

—Gross profit rose $1.2 million in the quarter, with a 300-bps margin improvement supported by price increases and reduced discounts. Warehousing costs increased modestly due to higher rent and labor tied to consolidation. For the nine-month period, gross profit increased $652,000, while gross margin stayed flat as price increases and lower returns were offset by reduced margins on discounted inventory-balancing products and slightly higher warehousing and medical costs.

—S&A expenses decreased $990,000 in the quarter, or 310 bps, with current-year restructuring costs of $390,000 compared to $950,000 last year. Over nine months, S&A fell by $1.7 million, with lower compensation and spending partly offset by higher professional fees.

—The segment reported GAAP operating income of $711,000 for the third quarter, compared to a loss of $1.5 million in the comparable prior period.

—Hooker Branded backlog grew 17.2% from fiscal year-end and 7.9% from the prior-year quarter, supported by a 4.1% increase in incoming orders.

Domestic Upholstery

—Domestic Upholstery net sales rose $870,000, or 3.0%, in the third quarter and were essentially flat for the nine-month period. Performance varied across divisions, with Shenandoah and Sam Moore posting strong quarterly growth, while Sunset West remained flat and Bradington-Young declined slightly. Nine-month results were mixed, with Shenandoah up, Sam Moore down, and Sunset West flat.

—Gross profit increased $261,000 in the third quarter, with gross margin remaining consistent year over year as major cost components held steady. For the nine-month period, gross profit rose $1.5 million and gross margin improved 170 bps due to lower direct material and labor costs and improved production efficiency at Sam Moore.

—S&A expenses decreased $263,000 in the third quarter, with restructuring costs significantly lower than last year. Excluding commissions and restructuring, expenses increased due to higher rent, compensation, medical claims, and bonus accruals, partially offset by reduced discretionary spending. Over nine months, S&A expenses declined $560,000, though underlying costs rose in areas such as compensation, rent, product development, and banking fees.

—The segment reported GAAP operating loss of $14.7 million for the third quarter, driven entirely by the $15 million in non-cash intangible impairment.

Domestic Upholstery backlog fell 10.9% from year-end but rose 7.5% year-over-year on a 3.5% increase in orders.

Discontinued Operations
Combined net sales for PFC and SLF declined sharply, falling $11.3 million (52.3%) in the third quarter and $22.5 million (37.6%) over the nine-month period. 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.

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.

Cash, Debt and Inventory

Cash and cash equivalents stood at $1.4 million, a decrease of $4.9 million from year-end, as cash generated from operations was used to repay $17.9 million of the term loan, distribute $7.5 million in cash dividends, and fund $2.4 million capital expenditures. Inventory levels decreased from $66.2 million at year-end to $52.1 million at quarter-end. The cash provided by discontinued operations was $406,000.

Despite these outflows, the Company maintained its financial flexibility with $63.8 million in available borrowing capacity under its Amended and Restated Loan Agreement as of quarter-end, net of standby letters of credit. As of December 9, 2025, the Company had approximately $2.0 million in cash on hand, with $63.7 million in available borrowing capacity, net of standby letters of credit.

Capital Allocation

Hooker also announced today that its Board of Directors has authorized a new share repurchase program under which the Company may repurchase up to $5 million of its outstanding common shares. 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 its expected December 31, 2025 dividend payment.

“We believe these actions appropriately balance capital return and liquidity needs and will enhance long-term shareholder value. As Hooker transitions to being a leaner, growth-oriented company, the new repurchase program coupled with the reduced dividend allows us to continue returning capital to shareholders while providing greater balance sheet flexibility to continue appropriately investing in the Company,” said Armstrong.

The repurchase authorization does not obligate the Company to acquire a specific number of shares during any period and does not have an expiration date, but it may be modified, suspended, or discontinued at any time at the discretion of the Board. Repurchases may be made from time to time in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, and subject to the Company’s cash requirements for other purposes, compliance with the covenants under the Amended and Restated Loan Agreement and other factors it deems relevant.

Dividend
On December 9, 2025, its board of directors declared a quarterly cash dividend of $0.115 per share, payable on December 31, 2025, to shareholders of record on December 21, 2025.

Outlook
“Incoming orders for branded segments have increased year-over-year for two consecutive quarters,” Hoff noted. “While macroeconomic headwinds, including elevated housing prices, inflation, low consumer confidence and ongoing tariffs, remain largely unchanged, these challenges were most acute in our higher-volume, lower-margin discontinued businesses.”

“With a more efficient cost structure and sharper portfolio, we believe we are better positioned to improve profitability even in a prolonged downturn,” Hoff said. “The advantage going forward is focus, and our team is now fully aligned around our core businesses, which we believe will allow us to drive organic growth and build sustainable profitability.”

Conference Call Details
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.