Core Insights - Hooker Furnishings Corporation reported a consolidated net loss of $2.3 million for the fourth quarter of fiscal 2025, compared to a net income of $593,000 in the prior year quarter, reflecting ongoing challenges in the home furnishings market [5][6][20] - For the full fiscal year 2025, the company experienced a consolidated net sales decrease of $397.5 million, down 8.3% from the previous year, driven by weak demand and macroeconomic uncertainties [5][6][20] - The company announced additional planned cost savings of $8 to $10 million, which, combined with previously announced savings, are expected to total between $18 million to $20 million once fully implemented by fiscal 2027 [5][6][20] Fiscal 2025 Fourth Quarter Results - Net sales for the fourth quarter were $104.5 million, an increase of 8% compared to $96.8 million in the prior year quarter, with the additional week contributing approximately $7.7 million [5][6] - Consolidated operating loss was $2.7 million, or (2.5%) of net sales, compared to operating income of $340,000, or 0.4% of net sales, in the prior year quarter [5][6] - Charges recorded in the fourth quarter totaled $3.1 million, including $1.3 million in inventory write-downs and $718,000 in bad debt expense due to a large customer bankruptcy [5][6] Fiscal 2025 Full-Year Results - Consolidated net sales for the full year were $397.5 million, reflecting a decrease of $35.8 million, or 8.3%, compared to the previous fiscal year [5][6] - Consolidated operating loss for the year was $18.1 million, or (4.6%) of net sales, compared to operating income of $12.4 million, or 2.9% of net sales, in the prior year [5][6] - Significant charges for the year totaled $10.8 million, including $4.9 million in restructuring costs and $3.1 million in bad debt expense [5][6] Segment Performance - Hooker Branded segment saw fourth quarter net sales rise by $3.8 million, or 10%, driven by a 14% increase in unit volume, although full-year sales decreased by 6.5% [7][8] - Home Meridian segment reported a fourth quarter net sales increase of $6.3 million, or 21.7%, with gross margin reaching 22.9%, the highest since 2016 [8] - Domestic Upholstery segment experienced a fourth quarter net sales decrease of $2.0 million, or 7%, with a full-year decrease of 9.9% [9] Cash, Debt, and Inventory - Cash and cash equivalents decreased to $6.3 million, down $36.9 million from the previous year-end, largely due to increased accounts receivable and planned inventory increases [11][12] - The company maintained financial flexibility with $41 million in available borrowing capacity under its new loan agreement as of the end of fiscal 2025 [11][12] - Inventory levels increased to support new product collections and mitigate supply disruptions [12] Management Commentary - The CEO highlighted that despite macroeconomic headwinds, the company gained market share in its Legacy divisions throughout fiscal 2025 [6] - The company is focused on cost reduction initiatives to improve operating income and cash flow, including the planned exit of the Savannah warehouse [6] - The management remains optimistic about future market share growth and revenue maximization through merchandising efforts and improved product availability [6]

Core Viewpoint - Hooker Furnishings Corporation has decided to exit its Savannah, Georgia distribution center and consolidate operations in existing facilities due to unsustainable business conditions caused by rising freight costs and a shift in competitive positioning for its Home Meridian segment's Accentrics Home brand [1][2]. Company Operations - The Savannah distribution facility commenced operations in October 2021 but faced challenges shortly after due to a significant increase in post-COVID container freight rates, which rose from approximately $4,000 to over $25,000 per container [2]. - The company liquidated inventory and closed the Accentrics Home brand in 2024 as part of a broader strategy to exit unprofitable businesses within the Home Meridian segment [2][3]. - Hooker Furnishings Corporation is a designer, marketer, and importer of various home furnishings, including casegoods, upholstered furniture, and outdoor furniture, serving residential, hospitality, and contract markets [4][5]. Financial Implications - The company anticipates recording net charges of between $1.6 million and $2.0 million in fiscal 2025 and between $3.0 million and $4.0 million in fiscal 2026 related to the Savannah exit [3]. - Preliminary estimates suggest potential savings of between $750,000 and $1.0 million in net operating expenses in fiscal 2026, with annualized savings expected to be between $4.0 million and $4.5 million starting in fiscal 2027 [3].

Company Overview - Hooker Furnishings (NASDAQ: HOFT) has a business model heavily reliant on imports from Asia, particularly China, which raises concerns regarding its cost structure and exposure to geopolitical risks [2]. Investment Insights - The Value Lab, an investment group, focuses on long-only value ideas and aims to identify mispriced international equities, targeting a portfolio yield of approximately 4% [2]. - The Valkyrie Trading Society consists of analysts who share high conviction investment ideas that are expected to generate non-correlated and outsized returns in the current economic environment [5]. Services Offered - The Value Lab provides members with a portfolio that includes real-time updates, 24/7 chat support, regular global market news reports, feedback on stock ideas, monthly new trades, quarterly earnings write-ups, and daily macroeconomic opinions [3].

Financial Performance - Consolidated net sales for the third quarter were $104.4 million, a decrease of $12.5 million, or 10.7%, compared to the same quarter of the previous year[113]. - For the nine-month period of fiscal 2025, consolidated net sales were $293.0 million, a decrease of $43.4 million or 12.9% compared to the same period of the previous year[114]. - The company reported a consolidated operating loss of $7.3 million and a net loss of $4.1 million, or ($0.39) per diluted share[113]. - The consolidated operating loss for the nine-month period was $15.4 million, with a net loss of $10.2 million, or ($0.97) per diluted share[114]. - Consolidated net loss for the third quarter was $4,131 million, a 158.7% decrease from a profit of $7,038 million in the same quarter last year[137]. Sales and Orders - The consolidated order backlog decreased by 5.3% compared to the end of the previous year's third quarter and 8.4% compared to the fiscal 2024 year-end[109]. - Hooker Branded incoming orders decreased by 13.3% year-over-year, with a quarter-end order backlog 30% lower than the prior year's third quarter[110]. - Home Meridian incoming orders increased by 8.1% compared to the previous year's third quarter, with a quarter-end backlog 32.2% higher than the prior year's third quarter[110]. - Domestic Upholstery incoming orders decreased by 4.8% during the quarter, with a quarter-end backlog 29.9% lower than the prior year's third quarter[111]. - The Home Meridian segment's net sales increased to $9,316 million, representing a 23.4% growth compared to $7,550 million in the prior year[128]. - Hooker Branded segment reported net sales of $12,098 million for the third quarter of fiscal 2025, a 14.8% increase from $10,535 million in the same period last year[128]. Cost and Expenses - The company incurred $3.1 million in costs related to its cost reduction plan during the third quarter[113]. - Consolidated selling and administrative (S&A) expenses rose by $4,400 million, or 18.3%, due to restructuring costs and bad debt expenses[128]. - The company incurred $3.1 million in restructuring costs and $2.4 million in bad debt during the third quarter, contributing to operating losses[135]. - The Domestic Upholstery segment's S&A expenses increased by $1.8 million, primarily due to bad debt expenses from a major customer's bankruptcy[130]. Profitability and Margins - Consolidated gross profit margin decreased to 23.0% in the third quarter, down from 28.9% in the prior year[122]. - The Home Meridian segment achieved a gross margin of 20.5%, its highest level since the acquisition in 2016[124]. - The Domestic Upholstery segment's gross margin decreased by 300 bps in the nine-month period of fiscal 2025[125]. Economic Conditions - The company is experiencing macro-economic headwinds and challenging conditions impacting the home furnishings industry[113]. - Positive economic indicators suggest a potential 10% increase in home sales for 2025, which may benefit the company's sales outlook[138]. Other Notable Events - The company recorded $2.4 million in bad debt expense due to a large customer's bankruptcy, triggering a tradename impairment of $2.0 million[113]. - Approximately 40% of the Home Meridian segment's sales decrease was due to the loss of a significant customer following its bankruptcy[120]. - All Other recorded approximately $470,000 in restructuring costs due to inventory write-downs and warehouse closure expenses[126]. - The effective tax rate for the third quarter of fiscal 2025 was 40.7%, significantly higher than 22.4% in the prior year, due to the annualization method[136]. - Cash used in operating activities for the nine-month period was $12,334 million, compared to $48,770 million in the previous year[140]. - The backlog for the Home Meridian segment was primarily driven by increased orders from the hospitality business[110].

Financial Data and Key Metrics Changes - The company reported a consolidated net loss of $4.1 million or $0.39 per diluted share in Q3 2025, compared to a consolidated net sales of $104 million, a decrease of 10.7% year-over-year [6][7] - For the nine-month period, consolidated net sales were $293 million, a decrease of 12.9% compared to the same period last year [6] Business Line Data and Key Metrics Changes - **Hooker Branded Segment**: Net sales decreased by $4 million or 10.7% in Q3 2025, primarily due to lower average selling prices. The segment reported an operating loss of $1.7 million [14][15] - **Home Meridian Segment**: Net sales decreased by $5.1 million or 11.8% in Q3 2025, with over 40% of the sales decrease attributed to the loss of a major customer due to bankruptcy. The segment reported an operating loss of $3.7 million [17][20] - **Domestic Upholstery Segment**: Net sales decreased by $3.2 million or 10% in Q3 2025, with a slight improvement in operating loss to $281,000 compared to previous quarters [22][23] Market Data and Key Metrics Changes - Incoming orders for Hooker Branded decreased by 13% year-over-year, while the quarter-end backlog was 30% lower than the prior year's third quarter [16] - Home Meridian's incoming orders increased by 8% compared to the previous year's third quarter, with a quarter-end backlog 32% higher than the prior year [18][19] Company Strategy and Development Direction - The company is focusing on cost reduction efforts and managing controllables while investing in initiatives to expand its addressable market, including a global licensing agreement with Margaritaville [9][10] - The company anticipates increased demand and has built up Hooker Branded inventory by $11 million or 40% compared to the previous quarter end [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about macroeconomic improvements, such as cooling inflation and interest rate cuts, which are expected to increase demand for furnishings [10][29] - The management team is confident in the company's financial condition and plans to maximize efficiencies while investing in expansion strategies [30] Other Important Information - The company reported cash and cash equivalents of $20.4 million at the end of Q3 2025, a decrease of $22.7 million from the previous year-end [25] - The company plans to finalize the refinancing of its credit facility and pay off term debt shortly [26] Q&A Session Summary Question: Changes in demand since the election - Management noted a noticeable positive bump in order rates since the election [36] Question: Impact of new casegoods collections on Q4 - The new collections are expected to improve shipments and position the company for the next fiscal year [38] Question: Further improvement in gross margin at HMI - Management indicated there is potential for further improvement, primarily due to exiting low-margin businesses [40] Question: Current inventory position and quality - Management described the current inventory position as the best in two years, focusing on high-quality SKUs [43] Question: Impact of the Margaritaville licensing deal - The licensing deal is expected to be very impactful across multiple divisions, opening new opportunities [48] Question: Potential for continued discounting during the holiday season - Management does not anticipate more discounting than normal [60] Question: Bankruptcy concerns and customer risk - Management acknowledged the significant impact of a major customer's bankruptcy but did not see a notable increase in distressed receivables [63] Question: Logistics and next steps for the licensing deal - Management is focused on coordinating efforts across divisions to ensure a successful launch [66] Question: Expectations for severance costs in Q4 and next year - Management does not expect significant additional restructuring costs and anticipates most savings will be evenly spread throughout the next year [68]

Group 1: Earnings Performance - Hooker Furniture reported a quarterly loss of $0.20 per share, significantly worse than the Zacks Consensus Estimate of $0.02, marking an earnings surprise of -1,100% [1] - The company posted revenues of $104.35 million for the quarter ended October 2024, exceeding the Zacks Consensus Estimate by 4.46%, but down from $116.83 million a year ago [2] - Over the last four quarters, Hooker Furniture has not surpassed consensus EPS estimates, indicating ongoing challenges in meeting market expectations [2] Group 2: Stock Performance and Outlook - Hooker Furniture shares have declined approximately 31.3% since the beginning of the year, contrasting with the S&P 500's gain of 27.6% [3] - The current consensus EPS estimate for the upcoming quarter is $0.19 on revenues of $102.3 million, while for the current fiscal year, it is -$0.37 on revenues of $390.9 million [7] - The estimate revisions trend for Hooker Furniture is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), suggesting expected underperformance in the near future [6] Group 3: Industry Context - The Furniture industry, to which Hooker Furniture belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, which may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, highlighting the importance of monitoring these changes [5]

Financial Performance - Consolidated net sales for Q3 fiscal 2025 were $104.4 million, a decrease of $12.5 million or 10.7% year-over-year, primarily due to macro-economic challenges and customer bankruptcy[4]. - The company reported an operating loss of $7.3 million and a consolidated net loss of $4.1 million, or ($0.39) per diluted share for the third quarter[3]. - For the nine-month period, consolidated net sales were $293.0 million, a decrease of $43.4 million or 12.9% compared to the same period last year[7]. - Net sales for the thirteen weeks ended October 27, 2024, were $104.352 million, a decrease from $116.831 million for the same period in 2023, representing a decline of approximately 10.6%[32]. - Gross profit for the thirteen weeks ended October 27, 2024, was $24.025 million, down from $33.710 million in the prior year, indicating a decrease of about 28.9%[32]. - The company reported a net loss of $4.131 million for the thirteen weeks ended October 27, 2024, compared to a net income of $7.038 million for the same period in 2023[32]. - Basic loss per share for the thirteen weeks ended October 27, 2024, was $(0.39), compared to earnings per share of $0.66 in the same period last year[32]. - The operating loss for the consolidated segment was $(7,260) million, compared to an operating income of $8,770 million in the same quarter last year, indicating a significant decline[39]. - The Hooker Branded segment reported net sales of $34,940 million, down 10.4% from $39,122 million in the prior year[39]. - Home Meridian segment net sales decreased to $38,553 million, down from $43,692 million, reflecting a decline of 11.6%[39]. Cash and Liquidity - Cash and cash equivalents were $20.4 million at the end of Q3, a decrease of $22.7 million from year-end in January[20]. - Cash and cash equivalents decreased to $20.410 million as of October 27, 2024, from $43.159 million as of October 29, 2023, reflecting a decrease of approximately 52.7%[36]. - Cash dividends paid increased to $7,378 million from $7,228 million year-over-year[38]. - Net cash used in operating activities was $(12,334) million for the quarter ending October 27, 2024, compared to $48,770 million for the same period last year[38]. Inventory and Backlog - Inventory levels increased by $4.7 million from year-end, driven by a $6.2 million increase in Hooker Branded inventories[20]. - The order backlog for Hooker Branded as of October 27, 2024, was $13,049 million, down from $18,646 million a year earlier[40]. - The company is aggressively building inventory to support new major casegoods collections and best-selling SKUs, anticipating increased demand[22]. Cost Management and Restructuring - The company plans to realize over $10 million in annualized cost savings in fiscal 2026 as a result of ongoing restructuring efforts[5]. - The company plans to complete the restructuring of the HMI segment by fiscal 2025, aiming to return it to consistent profitability[31]. Market Conditions and Risks - The company anticipates a 10% increase in home sales for 2025, supported by recent interest rate cuts and improving consumer sentiment[25][26]. - The company is facing risks related to inflation and high interest rates, which may impact sales and operating costs[31]. Impairment and Provisions - Trade name impairment charges amounted to $1.953 million for the thirteen weeks ended October 27, 2024, with no charges reported in the same period last year[32]. - The company incurred a trade name impairment of $1,953 million during the quarter[38]. - The provision for doubtful accounts and sales allowances was $272 million, compared to $(270) million in the same quarter last year[38]. Assets and Liabilities - Total current liabilities increased to $68.319 million as of October 27, 2024, compared to $41.409 million as of October 29, 2023[36]. - The total assets of the company decreased to $326.864 million as of October 27, 2024, down from $343.586 million as of October 29, 2023[36].

Core Insights - Hooker Furnishings Corporation reported a consolidated net loss of $4.1 million or ($0.39) per diluted share for the third quarter of fiscal 2025, driven by macro-economic challenges and a significant customer bankruptcy [2][26] - Consolidated net sales decreased by $12.5 million, or 10.7%, to $104.4 million compared to the same quarter of the previous year, primarily due to low demand in the home furnishings industry [2][26] - The company anticipates achieving over $10 million in annualized cost savings by fiscal 2026 as it begins to see improved efficiencies from cost reduction efforts [2][3] Fiscal 2025 Third Quarter Overview - The third quarter operating results were impacted by $7.5 million in charges, including restructuring costs, bad debt expense from a customer bankruptcy, and non-cash trade-name impairment charges [2] - The operating loss for the quarter was $7.3 million, with a nine-month consolidated net sales total of $293.0 million, a decrease of $43.4 million or 12.9% compared to the same period last year [2][26] - Home Meridian achieved a gross margin of 20.5%, its highest since acquisition in 2016, despite a decrease in net sales [2][10] Management Commentary - The CEO expressed optimism about sequential quarterly improvement in core business profitability and the effectiveness of cost reduction efforts, which are expected to be more fully realized in the fourth quarter [3] - The company is investing in initiatives such as a global licensing agreement with Margaritaville, which is anticipated to benefit the company when demand normalizes [3] Market Conditions - Positive macro-economic developments include cooling inflation and recent interest rate cuts, which are expected to boost demand for furnishings as mortgage rates decrease [4][20] - Consumer sentiment rose to 71.8 in November, the highest since April, indicating potential for increased consumer spending [20] Segment Reporting - The Hooker Branded segment reported a net sales decrease of $4.2 million, or 10.7%, primarily due to lower average selling prices and increased discounting [6][8] - Home Meridian's net sales decreased by $5.1 million, or 11.8%, with over 40% of the decline attributed to the loss of a major customer due to bankruptcy [9][11] - Domestic Upholstery segment net sales decreased by $3.2 million, or 9.9%, with a modest increase in sales at Sunset West partially offsetting the decline [12][14] Cash, Debt, and Inventory - Cash and cash equivalents were $20.4 million at the end of the third quarter, a decrease of $22.7 million from the year-end in January [15] - Inventory levels increased by $4.7 million, driven by a $6.2 million increase in Hooker Branded inventories [15][17] Capital Allocation - The company is building inventory to support new major casegoods collections and best-selling SKUs, anticipating a longer than typical lunar new year holiday in Vietnam [17] - Plans to refinance the credit facility and pay off term debt are underway, alongside the announcement of regular quarterly dividends [18] Outlook - Key economic indicators impacting furniture sales are trending positively, with expectations of a 10% increase in home sales for 2025 as mortgage rates stabilize [20][21] - The company aims to maximize efficiencies while investing in expansion strategies to position itself for growth when demand returns [21]

Core Viewpoint - Hooker Furnishings Corporation (HOFT) is expected to report disappointing third-quarter fiscal 2025 earnings, with significant declines in both earnings per share and net sales compared to the previous year [1][3][4]. Financial Performance - In the last reported quarter, HOFT's earnings missed the Zacks Consensus Estimate by 46.2% and decreased by over 370% year-over-year [2] - The estimated earnings per share (EPS) for the upcoming quarter has dropped to 2 cents from 9 cents over the past 60 days, indicating a 96.9% decline from the year-ago EPS of 65 cents [3] - The consensus estimate for net sales is $99.9 million, reflecting a year-over-year decline of 14.5% [4] Factors Influencing Performance - HOFT's performance is expected to be negatively impacted by weak demand trends, higher product costs, and under-absorbed indirect costs, primarily due to high interest rates and subdued housing activity [5] - The company's Hooker Branded and Domestic Upholstery segments are likely to show soft performance, compounded by the absence of the Accentrics Home product line, which contributed approximately 35% of consolidated sales in fiscal 2024 [6] Strategic Initiatives - Despite the challenges, the company is making strategic investments in sales channels, personnel, systems, and products to partially support its performance [7] - HOFT is focusing on strengthening its balance sheet and variable cost business model to navigate current economic volatility until consumer confidence improves [7][8] - The company aims to manage its financial position through strategic inventory management, reasonable capital expenditures, and careful expense management [8] Earnings Prediction - The current model does not predict an earnings beat for HOFT, as it has an Earnings ESP of 0.00% and a Zacks Rank of 5 (Strong Sell) [9][10]

Company Overview - Hooker Furnishings Corporation is celebrating its 100th year in business and operates as a designer, marketer, and importer of various furniture types including casegoods, leather, and fabric-upholstered furniture, as well as lighting and home décor for residential, hospitality, and contract markets [4] - The company also manufactures premium residential custom leather and fabric-upholstered furniture domestically, along with outdoor furniture [4] - Major product categories include home entertainment, home office, accent, dining, and bedroom furniture sold under the Hooker Furniture brand, with a focus on upper-medium price points [4] Product Lines - Hooker's residential upholstered seating includes brands such as Bradington-Young, HF Custom, Hooker Upholstery, and Shenandoah Furniture, targeting various segments within the upper-medium price range [4] - The H Contract product line supplies upholstered seating and casegoods to upscale senior living facilities, while the Home Meridian division addresses more moderate price points with brands like Pulaski Furniture and Samuel Lawrence Furniture [4] - Sunset West division specializes in designing and manufacturing high-quality outdoor furniture [4] Financial Reporting - Hooker Furnishings Corporation will present its fiscal 2025 third quarter financial results on December 5, 2024, at 9:00 AM Eastern Time [1] - The fiscal 2025 third quarter period began on July 29, 2024, and ended on October 27, 2024 [3]