Executive Summary

Q2 FY26 revenue declined 13.6% YoY to $82.1M and EPS was -$0.31; both missed S&P Global consensus as revenue came in below $91.2M* and EPS below -$0.16*, driven by steep weakness at Home Meridian (HMI) amid tariff-related hesitancy and a lost customer bankruptcy .
Legacy segments showed resilience: Hooker Branded reached breakeven despite $0.7M restructuring, Domestic Upholstery narrowed operating loss by ~68%; consolidated operating loss widened to -$4.4M as HMI margin mix deteriorated .
Management reaffirmed a restructuring path targeting ~25% fixed cost reduction and ~$25M annualized savings by FY27; FY26 savings raised to ~$15M (from ~$14M in Q1), with ~$2M additional H2 charges tied to Savannah exit; dividend maintained at $0.23 .
Catalysts ahead: October Margaritaville launch and Vietnam warehouse scale-up to shorten lead times to 4–6 weeks; management expects HMI performance to be “significantly enhanced” by year-end barring further tariff shocks .

What Went Well and What Went Wrong

What Went Well
- Hooker Branded achieved breakeven despite weak demand and $655K of restructuring; orders +10.6% and backlog roughly stable YoY, up ~20% from FY-end .
- Domestic Upholstery reduced Q2 operating loss by ~$877K (68%) with gross margin +220 bps; backlog +~7% YoY; operational improvements in labor-to-revenue ratios .
- Cost actions progressing: expense structure targeting ~25% fixed cost reduction largely in place by end of Q3; FY27 annualized savings of ~$25M reiterated .
- Quote: “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.” — CEO Jeremy Hoff .
What Went Wrong
- HMI net sales -44.5% YoY with sharp gross margin compression (-1,330 bps), driven by unfavorable mix, warehousing costs/severance, and below-cost inventory liquidation; operating loss -$3.9M .
- Consolidated gross margin fell to 20.5% (from 22.0% LY) and operating margin to -5.4% (from -3.3% LY), as HMI weakness outweighed legacy improvements .
- Tariff overhang: new 20% Vietnam tariff effective Aug 1 amplified buying hesitancy in value channels; management mitigating with SKU-level remerchandising and sourcing changes but near-term pressure persists .

Financial Results

Actuals by quarter (oldest → newest):

Metric	Q4 FY25	Q1 FY26	Q2 FY26
Revenue ($M)	$104.46	$85.32	$82.15
Diluted EPS ($)	-$0.22	-$0.29	-$0.31
Gross Margin %	23.3%	22.3%	20.5%
Operating Margin %	-2.5%	-4.2%	-5.4%

Versus S&P Global consensus (estimates marked with asterisk; values retrieved from S&P Global):

Metric	Q4 FY25	Q1 FY26	Q2 FY26
Revenue Actual ($M)	$104.46	$85.32	$82.15
Revenue Consensus* ($M)	$101.16*	$88.87*	$91.17*
Beat/Miss	Beat	Miss	Miss
EPS Actual ($)	-$0.22	-$0.29	-$0.31
EPS Consensus* ($)	$0.155*	-$0.15*	-$0.16*
Beat/Miss	Miss	Miss	Miss

Segment net sales ($M):

Segment	Q4 FY25	Q1 FY26	Q2 FY26
Hooker Branded	$41.42	$37.11	$36.25
Home Meridian (HMI)	$35.32	$18.81	$16.93
Domestic Upholstery	$26.31	$28.91	$28.68
All Other	$1.41	$0.48	$0.29
Total	$104.46	$85.32	$82.15

KPIs and operational indicators:

KPI	Q4 FY25	Q1 FY26	Q2 FY26
Consolidated Backlog ($M)	$52.64	$51.20	$51.15
Hooker Branded Backlog ($M)	$11.98	$13.48	$15.70
HMI Backlog ($M)	$21.00	$18.07	$16.14
Domestic Upholstery Backlog ($M)	$18.12	$19.40	$19.31
Hooker Branded Orders YoY	—	+2.4%	+10.6%
Domestic Upholstery Orders YoY	—	-2.6%	+1.6%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cost savings (net)	FY26	“About $14M” net savings in FY26	“Approximately $15M” net savings in FY26	Raised
Annualized savings run-rate	FY27	~$25M annualized by FY27	~$25M annualized by FY27	Maintained
Additional restructuring/exit charges	H2 FY26	$2–$3M net charges in FY26 (Phase 2)	~+$2M additional H2 charges for Savannah exit	Narrowed/timed to Savannah exit
Expense structure reset	By end Q3 FY26	Cost reductions underway	New expense structure largely in place by end of Q3 FY26	Timing specified
Dividend	Ongoing	Regular quarterly dividend historically	$0.23 per share declared Sept 9, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY25, Q1 FY26)	Current Period (Q2 FY26)	Trend
Tariffs/macro	Q4: Evaluating strategies amid 10% tariffs and weak housing ; Q1: Mitigated 10% tariff via supplier participation and 5% pricing; awaiting Vietnam tariff decision	20% Vietnam tariff effective Aug 1; SKU-level remerchandising; component sourcing changes; HMI most impacted	Headwind intensified
Cost reduction	Q4: Announced additional savings; Savannah exit planned	Plan for ~$25M annualized savings; FY26 net savings about $14M	Execution progressing; FY26 savings raised to ~$15M
Supply chain/Vietnam warehouse	Q4: Vietnam warehouse coming online	Opened May; lead times cut to 4–6 weeks; container mix benefits	Delivering benefits; scaling capacity
Orders/demand cadence	Q4: Legacy share gains; orders improving	May orders (legacy) strongest since Feb 2022	July orders +24% at legacy; Q2 orders +11% HB, +1.6% DU
Product initiatives	Q4: New collections and “Collected Living”	“Live Your Way” upholstery; Margaritaville license coming	Margaritaville to debut in Oct; significant SKU count
HMI restructuring	Q4: Restructuring ongoing	Q1: Loss narrowed	Target fixed cost reset by end Q3; expect improved HMI by FY end barring new tariffs

Management Commentary

“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.” — CEO Jeremy Hoff .
“At the beginning and end of the quarter, we saw encouraging momentum… July orders up 24% YoY at both Hooker Branded and Domestic Upholstery.” — CEO Jeremy Hoff .
“Over the past year, we reduced debt, strengthened liquidity and continued returning capital to shareholders through dividends…” — CFO Earl Armstrong .
“The Home Meridian segment’s net sales declined 44.5%… gross margin decreased by 1,330 bps… inventory liquidation at the Georgia warehouse.” — Company commentary .

Q&A Highlights

Order momentum drivers: Management cited subtle macro improvement and broad-based retail strength around Labor Day; momentum consistent across regions .
HMI turnaround/breakeven: Key lever is overhead reduction within HMI tied to 25% fixed cost cut by end of Q3; then focus on profitable customer programs to scale revenue .
Pricing/tariff pass-through: Took SKU-by-SKU remerchandising rather than blanket increases; backlog honoring and faster warehouse turns help implementation; minimal customer pushback observed .
Restructuring cost mix: Roughly two-thirds of Q2 restructuring in COGS and one-third in SG&A; expected ~$2M additional charges in H2 mainly tied to Savannah exit timing in October .
Margaritaville launch: Significant SKU count and showroom presence across Hooker Legacy and Sunset West; strong early partner interest .

Estimates Context

Q2 FY26: Actual revenue $82.15M vs consensus* $91.17M; EPS -$0.31 vs consensus* -$0.16 (misses) .
Q1 FY26: Actual revenue $85.32M vs consensus* $88.87M; EPS -$0.29 vs consensus* -$0.15 (misses) .
Q4 FY25: Actual revenue $104.46M vs consensus* $101.16M (beat); EPS -$0.22 vs consensus* $0.155 (miss, driven by charges) .
FY26 consensus EPS* approximately -$0.40, implying continued loss expectations as restructuring progresses. Values retrieved from S&P Global.

Estimates vs actuals:

Period	Revenue Actual ($M)	Revenue Consensus* ($M)	EPS Actual ($)	EPS Consensus* ($)
Q4 FY25	$104.46	$101.16*	-$0.22	$0.155*
Q1 FY26	$85.32	$88.87*	-$0.29	-$0.15*
Q2 FY26	$82.15	$91.17*	-$0.31	-$0.16*

Note: Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Near-term results remain pressured by HMI demand and mix; however, fixed cost reductions (~25%) are largely slated to be in place by end of Q3, providing a path to breakeven at current revenues as execution matures .
Legacy segments (Hooker Branded and Domestic Upholstery) show improving fundamentals (orders, margins, backlog), suggesting core health overshadowed by HMI weakness; monitor sustained order momentum into Q3 .
Tariffs are the primary external swing factor; the 20% Vietnam tariff is being mitigated via SKU-level pricing and sourcing changes, but HMI’s value channel remains sensitive—headlines here are key to estimate revisions and stock reaction .
The October Margaritaville launch and Vietnam warehouse efficiencies (4–6 week lead times) are catalysts for FY27 revenue/margin uplift and working capital turns .
FY26 net cost savings guidance increased to ~$15M with ~$2M additional H2 charges tied to Savannah exit; FY27 annualized savings target of ~$25M maintained—model expanding margins in FY27 as savings annualize .
Liquidity is adequate: $57.7M availability at Q2-end; subsequent day cash ~$1.9M and $67.9M availability; dividend maintained at $0.23, signaling confidence in balance sheet while restructuring completes .
Estimate direction: Following Q2 revenue/EPS misses, consensus may drift lower near term; focus on HMI restructuring milestones and tariff developments for potential estimate stabilization into Q4 .

Appendix: Additional Detail

Consolidated statement highlights: Q2 gross profit $16.8M; SG&A $20.4M; operating loss -$4.4M; net loss -$3.3M; dividends per share $0.23 .
Cash flow 1H FY26: Operating cash flow $18.1M, aided by working capital release (AR and inventory); used to repay $16.5M term loan and pay $5.0M dividends .
Segment margins Q2: Hooker Branded GP 29.1%; Domestic Upholstery GP 18.5%; HMI GP 6.2%; consolidated GP 20.5% .

HOOKER FURNISHINGS Corp (HOFT)·Q2 2026 Earnings Summary