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HOOKER FURNISHINGS Corp (HOFT)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 revenue was $85.3M (down 8.8% YoY) with diluted EPS of ($0.29); operating loss narrowed 31% to ($3.6M) as cost actions reduced OpEx by $2.2M and expanded consolidated gross margin by ~180–190 bps to 22.3% .
  • Legacy brands were resilient: Hooker Branded slightly up (+0.8% net sales) and Domestic Upholstery down modestly (-3.7%) while HMI fell 28.8% on mid-price demand softness and a large customer bankruptcy; HMI’s gross margin improved by 200 bps amid restructuring .
  • Management reiterated a multi‑phase cost reduction program: ~$14M net savings expected in FY2026 and ~$25M annualized by FY2027; Savannah DC exit and the new Vietnam warehouse are key pillars for logistics efficiency and lead-time reduction to 4–6 weeks .
  • Dividend continuity remains a cornerstone capital allocation priority ($0.23/share declared June 3, paid June 30) alongside revolver paydown and ample borrowing capacity; subsequent liquidity strengthened to ~$63.3M available on the revolver .
  • Near-term stock catalysts: July tariff clarity (Vietnam exposure >80% of sourcing), strong May orders at Hooker Legacy (best since Feb FY2023) and execution on Q4-weighted cost savings ramp .

What Went Well and What Went Wrong

What Went Well

  • Consolidated gross margin expanded ~180–190 bps to 22.3%, maintaining gross profit despite lower sales; operating loss narrowed 31% YoY and OpEx fell by $2.2M even with $523k restructuring included .
  • HMI gross margin up ~200 bps with improved product margins and reduced allowances; Domestic Upholstery gross margin up 260 bps and operating loss cut by 55% as material and labor costs fell under the cost plan .
  • “We delivered the eighth consecutive quarter of consistent market share gains within Hooker’s legacy brands” and had significant placements for new casegoods and the Living Your Way modular program (CEO) .

What Went Wrong

  • Consolidated net sales declined 8.8% YoY to $85.3M; HMI net sales dropped 28.8% (~$7.6M) on unit volume declines, tariff-related buying hesitancy, and a prior-year customer bankruptcy .
  • Hooker Branded margins were pressured by discounting; backlog fell 21.3% YoY (though improved ~3% vs year-end) as faster shipments reduced backlogs .
  • Macro headwinds—higher mortgage rates, subdued existing home sales (~75% of pre‑pandemic levels), and weak consumer sentiment—continued to weigh on demand (CEO) .

Financial Results

Consolidated P&L vs prior quarters and YoY

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$104.35 $104.46 $85.32
Gross Profit ($USD Millions)$24.03 $24.33 $19.00
Gross Margin %23.0% 23.3% 22.3%
Operating Income ($USD Millions)($7.26) ($2.66) ($3.56)
Operating Margin %(7.0%) (2.5%) (4.2%)
Diluted EPS ($)($0.39) ($0.22) ($0.29)

Estimates vs Actual (Q1 FY2026 and prior-year Q1)

MetricQ1 2025 EstimateQ1 2025 ActualQ1 2026 EstimateQ1 2026 Actual
Revenue ($USD)$94.94M*$93.57M $88.87M*$85.32M
Primary EPS ($)($0.03)*($0.39) ($0.15)*($0.29)
Revenue – # of Estimates2*—2*—
EPS – # of Estimates2*—1*—

Values retrieved from S&P Global.*

Segment Breakdown (Q1 FY2026 vs Q1 FY2025)

SegmentNet Sales Q1 2025 ($M)Net Sales Q1 2026 ($M)YoY ChangeGross Margin Q1 2025Gross Margin Q1 2026Operating Income Q1 2025 ($M)Operating Income Q1 2026 ($M)
Hooker Branded$36.81 $37.11 +0.8% 31.1% 29.8% $0.18 $0.03
Home Meridian (HMI)$26.42 $18.81 -28.8% 12.5% 14.5% ($3.42) ($2.84)
Domestic Upholstery$30.03 $28.91 -3.7% 15.7% 18.3% ($1.31) ($0.60)
All Other$0.31 $0.48 +54.9% -77.6% -15.7% ($0.62) ($0.16)
Consolidated$93.57 $85.32 -8.8% 20.5% 22.3% ($5.17) ($3.56)

KPIs and Balance Sheet Highlights

KPIPrior Year Q1 (Apr 28, 2024)FY2025 Year-End (Feb 2, 2025)Q1 FY2026 (May 4, 2025)
Consolidated Order Backlog ($M)$85.76 $52.64 $51.20
Hooker Branded Backlog ($M)$17.13 $13.11 $13.48
HMI Backlog ($M)$49.40 $21.00 $18.07
Domestic Upholstery Backlog ($M)$19.24 $18.12 $19.40
Cash & Equivalents ($M)—$6.30 $18.01
Inventories ($M)—$70.76 $64.32
Revolver Availability ($M)—$41.0 $40.7 at quarter-end; ~$63.3 subsequent

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total fixed cost savings programFY2026–FY2027Prior plan: $10M annualized savings (FY2026) with additional $8–10M targeted by 2H FY2026; total $18–$20M (fully annualized FY2027) ~$14M net savings in FY2026; ~$25M annualized by FY2027 (25% of fixed costs) Raised total savings target; clarified net FY2026 savings and FY2027 run-rate
Savannah, GA DC exitFY2026–FY2027Net charges $3–4M (FY2026); annualized savings $4.0–$5.7M (FY2027) Proceeding to full closure by Oct 31, 2025; net charges $2–3M FY2026; net savings ~$3.4M FY2026; >$14M annually by FY2027 across phases Charges narrowed; savings phasing clarified and expanded in multi‑phase plan
Vietnam warehouse launchFY2026 onwardOpening May 2025; expected lead times cut to 4–6 weeks; working capital benefits Opened; enables container mix, shorter lead times, margin potential; mitigates tariffs via factory participation and 5% price increase Implemented; added pricing/tariff mitigation
TariffsNear-term10% across imports; potential higher reciprocal tariffs; evaluation ongoing 10% in place; higher tariffs paused until July (Vietnam potential 46% noted earlier); mitigation via supplier participation and 5% price increase Clarity on pause; mitigation actions implemented
DividendQ1 FY2026Regular quarterly dividend maintained historically $0.23/share declared June 3, payable June 30 Maintained

Earnings Call Themes & Trends

TopicQ3 FY2025 MentionsQ4 FY2025 MentionsQ1 FY2026 Current PeriodTrend
Cost reduction cadenceAnnounced $10M annualized; restructuring charges; HMI margin focus Additional $8–$10M targeted; Savannah exit to save $4–$5.7M; pace back to FY2022 spend ~$14M net FY2026 savings; ~$25M annualized by FY2027; Q4 FY2026 ramp expected (CFO) Improving
Supply chain/lead timesInventory build for new collections; manage Lunar New Year/port risks Vietnam warehouse opening May; speed-to-market enhanced Vietnam facility operational; lead times cut to 4–6 weeks; container mixing Improving
Tariffs/macroInflation cooling; rate cuts expected; tariff uncertainty flagged 50-year low existing home sales; evaluating tariff impact Tariff pause to July; 10% tariff mitigated via pricing/factory participation; demand remains soft Mixed
Product performance (legacy)Positive reception to October introductions; placements across Legacy/HMI Casegoods momentum; merchandising strategy accelerated; market share gains 8th consecutive quarter of share gains; Hooker Branded +0.8% net sales Improving
Domestic UpholsterySeasonal softness at Sunset West; sequential loss improvement Capacity to grow; product/programs aligned; Q4 orders +13% Gross margin +260 bps; operating loss down 55%; Sunset West +12.7% sales Improving
HMI segmentHighest gross margin since acquisition; charges/allowances reduced Profitability path; logistics footprint right‑sized HMI net sales -28.8% YoY; gross margin +200 bps; hospitality +$1.7M Mixed

Management Commentary

  • “We continue to take significant and deliberate actions to stabilize the Company, drive improved sales and deliver strong gross margins as we execute on our significant cost savings program…” (CEO Jeremy Hoff) .
  • “In total…we anticipate reducing our total annual spend rate by approximately 25%…In fiscal 2026, Hooker expects to realize about $14 million in cost savings…By fiscal 2027…$25 million in net annualized savings” (CFO Earl Armstrong) .
  • “We believe we’ve successfully mitigated the across-the-board 10% tariff…through a 5% price increase…we will act responsibly, not reactively” (CEO) .
  • Liquidity: “Subsequent to the end of our fiscal first quarter, we paid down all outstanding borrowings on our revolving credit facility…approximately $3 million in cash on hand, with $63.3 million in available borrowing capacity” (CFO) .

Q&A Highlights

  • Tariffs impact cadence and “mega” HMI customers most; clarity awaited in July; management mitigated 10% via supplier participation and 5% price increase .
  • Drivers of May order strength: broadened merchandising (“Collected Living”) and new programs; management cautious on momentum sustainability but expects typical 2H seasonal strength .
  • Cost savings phasing: ~$250k net benefit in Q2; reversal in Q3; ~+$3.5M impact expected in Q4 as phase two logistics savings hit (CFO) .
  • Capital allocation priorities: dividend continuity and balance sheet strengthening ahead of buybacks (CEO) .
  • Retail backdrop: Memorial Day was “relatively positive” across many retailers, per management checks .

Estimates Context

  • Q1 FY2026 results missed Wall Street consensus: Revenue $85.32M vs $88.87M estimate (miss); EPS ($0.29) vs ($0.15) estimate (miss). Estimate counts were thin (Rev: 2; EPS: 1), increasing volatility of consensus comparisons.*
MetricQ1 2026 EstimateQ1 2026 Actual
Revenue ($USD)$88.87M*$85.32M
Primary EPS ($)($0.15)*($0.29)
Revenue – # of Estimates2*—
EPS – # of Estimates1*—

Values retrieved from S&P Global.*

Where estimates may adjust:

  • HMI demand uncertainty tied to tariffs and customer bankruptcy may temper near-term revenue trajectories; conversely, the stronger May orders at Hooker Legacy and gross margin progress could support upward revisions to margin assumptions if sustained .

Key Takeaways for Investors

  • Cost savings are the core earnings lever: ~$14M net in FY2026 with a heavier Q4 impact; FY2027 run-rate savings ~$25M could materially reshape profitability even on modest top-line .
  • Legacy brands resilience and merchandising execution (Collected Living, Living Your Way) are offsetting macro softness; monitor order cadence through summer/fall markets .
  • HMI remains the swing factor: lower sales and tariff sensitivity vs improved gross margin and hospitality strength; tariff outcomes in July are a key risk/catalyst .
  • Vietnam warehouse is strategic: shorter lead times (4–6 weeks), container mixing, and working capital benefits help margins and inventory turns, supporting a structurally leaner model .
  • Balance sheet/FX flexibility: revolver availability expanded post-quarter ($63.3M), cash improved, inventory reduced; dividend continuity signals confidence while preserving liquidity .
  • Near-term trading setup: headline sensitivity around tariff announcements and any June/July order updates; Q4-weighted cost saves suggest improving operating metrics later in FY2026 .
  • Medium-term thesis: structurally lower fixed cost base, tighter logistics footprint, and merchandising improvements position HOFT to outperform when housing activity normalizes, with potential margin recapture across segments .
Sources: Company 8-K press release and exhibits for Q1 FY2026, earnings call transcript, dividend and logistics press releases, and prior quarter releases as cited.