Hooker Furnishings Reports Second Quarter Results

September 13, 2026  by Karen Parrish in Business Strategy, Industry   

Key Results for the Fiscal 2027 Second Quarter and First Half:

- Significant adverse impact of tariffs in the prior year.  In February 2026, the U.S. Supreme Court (SCOTUS) ruled that certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized by statute. In March 2026, the U.S. Court of International Trade directed U.S. Customs and Border Protection to implement a refund process for previously collected duties. Prior to the U.S. Supreme Court’s February 2026 decision invalidating the IEEPA tariffs, the Company incurred an estimated $10.3 million of cumulative pre-tax costs related to tariffs in fiscal year 2026, which had a significant adverse impact on the fiscal 2026 results, and significantly exceeded the tariff recoveries the Company is reporting today.

- Factors contributing to the prior-year tariff impact. Following the imposition of IEEPA tariffs beginning in April 2025, the Company elected to honor pricing on its existing customer backlog and, for competitive and administrative reasons, did not immediately adjust pricing on certain other products.

- Net sales remained under pressure. Consolidated net sales decreased by $6.0 million, or 8.7%, in the second quarter and $7.7 million, or 5.5%, in the first six months.

- Tariff recoveries. The Company received $7.9 million in tariff recoveries during the quarter. Of this amount, continuing operations recognized approximately $4.3 million as a reduction of cost of sales and $0.2 million of related interest income, partially offset by approximately $0.5 million of customer credits recorded as a reduction of revenue. Discontinued operations recognized approximately $1.0 million of net pre-tax benefit. Approximately $1.8 million of the tariff recoveries had not yet impacted cost of sales and was recorded as a reduction in inventory carrying values at quarter end. The Company does not expect to receive material additional tariff recoveries.

- Hooker Branded sales reflected lower volume and higher promotional discounts. Hooker Branded net sales declined 4.5% in the second quarter and 4.6% in the first six months, as lower unit volume and higher promotional discounts more than offset higher average selling prices.

- Domestic Upholstery benefited from growth in private-label and outdoor furnishings. Gross margin increased by 450 basis points in the second quarter and 180 basis points in the first six months, supported by tariff recoveries on imported materials, lower imported-material costs, and improved overhead absorption.

- All Other results reflected softer hospitality industry demand and timing of  project activity. Despite a second-quarter operating loss driven by lower shipments, the business was profitable for the first six months, with approximately 80% of first-half shipments occurring in the first quarter.

- Maintaining S&A discipline. Second quarter and year-to-date S&A reflect the sustained benefit of more than $17.5 million in annualized cost reductions implemented across our continuing operations in prior fiscal years. Higher expenses in Hooker Branded were primarily driven by certain administrative costs retained following the Home Meridian segment divestiture, partially offset by benefits from previously implemented cost-reduction and consolidation actions in Domestic Upholstery and All Other.

- Continued operating profitability. Operating income was $1.3 million for the second quarter and $2.9 million for the first six months, compared with operating losses of $0.5 million and $1.0 million, respectively, in the prior-year periods.

- Backlog strengthened sequentially and year over year. Consolidated backlog increased by 6.2% from the prior-year second-quarter end and by 8.4% from the end of the first quarter, led by Hooker Branded and  Domestic Upholstery, reflecting improved order momentum across key businesses.

Executive Commentary

“The significant costs we incurred due to the IEEPA tariffs significantly and adversely affected our prior-year results, and we are grateful to have recovered some of those costs in our fiscal 2027 second quarter,” said Jeremy Hoff, Chief Executive Officer. “The substantial administrative burden these tariffs placed on our team over many months cannot be recovered. In addition to the tariffs paid, we incurred incremental costs associated with the IEEPA tariffs, including increased customs bond costs, legal and professional fees, financing and working-capital costs, and other administrative and supply-chain-related expenses.

Although we do not believe that the tariff recoveries make us whole for the significant costs incurred by us in fiscal 2026, I am grateful to the Hooker team for their persistence and extraordinary effort in navigating an unprecedented and highly complex environment and ultimately securing these recoveries for our shareholders. We are also deeply appreciative of the commitment and partnership of our suppliers and customers as we navigated this period of extraordinary uncertainty for our industry.”

“Our quarterly results benefited from tariff recoveries received during the quarter, as well as the sustained impact of approximately $17.5 million annualized fixed cost reductions implemented across our continuing operations in the prior year.”

“We are encouraged to report $1.7 million in consolidated net income for the quarter, marking our third consecutive quarter of profitability and a $4.9 million improvement over the prior-year second quarter,” he continued. “These results were achieved despite a challenging demand environment characterized by continued weakness in housing activity, low consumer confidence and lower seasonal demand we typically experience in the first half of our fiscal year.”

“In addition to tariff recoveries, Hooker Branded profitability was impacted by shifts in channel and sales mix dynamics during the quarter. Seasonally softer summer shipments to brick-and-mortar retailers resulted in a greater mix of e-commerce sales, along with targeted promotional activity designed to support consumer engagement. The combination of channel mix and elevated promotional activity pressured margins during the quarter. We expect promotional activity to normalize during the second half of the fiscal year. Domestic Upholstery’s performance was driven by tariff recoveries and operational efficiencies implemented last fiscal year,” he continued. “Looking forward, retailer commitments to Margaritaville products, galleries, and free-standing stores continue to exceed our expectations. Shipments began in late Q2 and are expected to scale over the second half of fiscal 2027 and into fiscal 2028. Importantly, our fiscal July results, absent any tariff recoveries, showed significant improvement over prior year. We believe that positive momentum will continue into the second half of the fiscal year,” Hoff concluded.

Outlook

“Consumer spending is selective and housing turnover and big-ticket discretionary demand remain weak. The Department of Commerce’s July advance monthly estimates showed retail sales for furniture and home furnishings stores were essentially flat sequentially from June and down 1.2% year-over-year. Existing home sales declined 1.7% month over month to a 4.1 million annualized rate, remaining at historically low levels. Additionally, consumer sentiment fell 6.3% in August and headline CPI remains elevated at 3.4%, although core inflation eased to 2.5%. All of these factors, not to mention increased financing costs, directly pressure discretionary purchasing power. Additionally, we continue to monitor tariff developments.”

“Looking to the second half of fiscal 2027, we do not expect meaningful near-term improvement in market conditions. At the same time, the changes we have made to our cost structure and portfolio are delivering tangible benefits, and we believe they position us to deliver improved results compared with the prior-year period, even if current conditions persist,” he continued.

“With the cost cutting efforts behind us, our focus is on disciplined execution across our core businesses and converting improving order momentum into sales. The actions taken over the past 18 to 24 months have created a leaner, more disciplined operating model that we believe can deliver stronger and more consistent earnings over time.”

“We are also encouraged by the continued retailer response to Margaritaville, with commitments to approximately 100 in-store galleries and 10 free-standing retail stores to date, roughly double the level reported in December. Shipments began in the second quarter and are expected to build through the second half of fiscal 2027 and into fiscal 2028. Combined with continued momentum in incoming orders across our core businesses, we believe we are well positioned to capitalize on opportunities as demand recovers,” Hoff concluded.

Conference Call Details

Hooker Furnishings will present its fiscal 2027 second quarter financial results via teleconference and live internet webcast on Friday morning, Sept 11 at 9am.

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.