Hooker Furnishings Q1 2027 Earnings Call Transcript

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June 11, 2026

Key Takeaways

  • Positive Sentiment: Hooker Furnishings reported net income of $1.1 million and operating income of $1.6 million, a meaningful improvement from the prior year, as gross margin expanded 440 basis points and cost cuts flowed through the P&L.
  • Neutral Sentiment: Quarterly sales were down 2.4% year over year, with weakness in Hooker Branded and Domestic Upholstery partly offset by strength in the hospitality business. Management said the demand backdrop remains pressured by soft housing activity and low consumer confidence.
  • Positive Sentiment: Hooker Branded delivered strong profitability despite lower sales, with gross margin improving 960 basis points and backlog rising nearly 30%. Management said retailer commitments for Margaritaville continue to exceed expectations, with meaningful shipments expected in the second half of fiscal 2027.
  • Neutral Sentiment: Domestic Upholstery continued to feel the impact of weak demand, posting a segment operating loss of $689,000. Management said the business benefited from efficiency actions, but near-term results remain tied to the broader residential furnishings slowdown.
  • Positive Sentiment: The company ended the quarter with no debt, $10.6 million in cash, and reduced inventory, while still having $54.2 million of borrowing capacity. Hooker also repurchased shares during the quarter and reiterated its new capital-return framework of a smaller dividend plus buybacks.
AI Generated. May Contain Errors.
Earnings Conference Call
Hooker Furnishings Q1 2027
00:00 / 00:00

Transcript Sections

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Operator

Good day and thank you for standing by. Welcome to the Hooker Furnishings first quarter 2027 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Earl Armstrong, Senior Vice President and Chief Financial Officer. Sir, please go ahead.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Thank you, Michelle. Good morning, everyone. Welcome to our quarterly conference call to review financial results for the fiscal 2027 first quarter. Our 2027 first quarter began on February 2nd, 2026, and ended on May 3rd, 2026. Joining me today is Jeremy Hoff, our Chief Executive Officer. We appreciate your participation. During our call, we may make forward-looking statements which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our press release and SEC filing announcing our fiscal 2027 first quarter results. Any forward-looking statement speaks only as of today. We undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Despite continued weakness in the housing market, soft retail demand for furniture and home furnishings, and persistent macroeconomic challenges, we delivered net income of $1.1 million for the quarter, reflecting the benefits of our cost reduction initiatives, improved gross margin performance, and ongoing progress toward a leaner, higher margin operating model. Consolidated net sales decreased $1.7 million or 2.4% compared to the prior year period. The decrease was primarily driven by lower sales in the Hooker Branded and Domestic Upholstery segments, partially offset by higher shipments in the all other components hospitality business. Despite the sales decrease, profitability improved significantly. The consolidated gross profit increased by $2.7 million, while gross margin improved 440 basis points compared to the prior year period. This improvement was primarily driven by stronger profitability in Hooker Branded.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

For the quarter, the company generated operating income of $1.6 million, compared to an operating loss of $498,000 in the prior year period, representing a $2.1 million improvement. Consolidated net income was $1.1 million or $0.10 per diluted share. These results reflect the benefit of improved gross margin, prior cost reduction initiatives, and our continued focus on building a more efficient and profitable business model. I'll turn the call over to Jeremy for his comments on our fiscal 2027 first quarter results.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Thank you, Earl, and good morning, everyone. We are encouraged to report $1.1 million in consolidated net income for the quarter, marking a $4.1 million improvement over the prior year first quarter. These results were achieved despite a challenging demand environment characterized by depressed housing activity and low consumer confidence. The improvement reflects the benefit of the $17.5 million reduction in fixed cost related to continuing operations that we achieved in the prior year, as well as continued progress toward a more efficient operating model. From a segment perspective, Hooker Branded performed exceptionally well despite lower sales compared to the prior year, supported by stronger gross margin performance. Domestic Upholstery's results continued to be impacted by lower sales volume, but were supported by operational efficiencies implemented late last year.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Looking forward, retailer commitments to Margaritaville products, galleries, and freestanding stores continue to exceed our expectations with meaningful shipments expected to begin in the second half of fiscal 2017. We are also encouraged by the positive retailer response and commitments to products debuted at the April 26 High Point Market. During market, we introduced Hooker Custom Upholstery, bringing together the Sam Moore and Bradington-Young brands under a unified platform. This updated market approach combines these upscale product lines under a unified premium Hooker Custom Upholstery identity, supported by a refreshed showroom presentation, enhanced marketing efforts, and a mix of new introductions and established products. The initiative is further supported by the capabilities of our new website launched in February 2016.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Once market conditions improve, we believe this strategy will ultimately drive higher sales by creating a more cohesive brand narrative and presenting all offerings under the Hooker name, which carries the strongest brand recognition across our portfolio. Now I want to turn the discussion back over to Earl, who will discuss highlights in each of our segments, along with our cash, debt, inventory, and capital allocation strategies.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Thank you, Jeremy. Starting with Hooker Branded, net sales decreased $1.8 million or 4.8% in the first quarter of fiscal 2027. 70% of that decrease was primarily due to lower volume in the imported upholstery part of that business. These headwinds were partially offset by higher average selling prices from price increases implemented to mitigate higher product costs. Despite the decrease in sales, Hooker Branded gross profit increased $2.9 million and gross margin improved 960 basis points. The segment contributed $1.2 million of the operating income to the company's consolidated operating income of $1.6 million for the quarter. Backlog increased nearly 30% compared to the prior year first quarter, reflecting retailer commitments to new products, including Margaritaville, with meaningful shipments expected to begin in the second half of the current fiscal year.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Turning to Domestic Upholstery, net sales decreased $558,000, or 1.9%, in the first quarter of fiscal 2027, primarily due to the continued soft demand environment. Gross profit decreased $315,000, and gross margin decreased 80 basis points, driven primarily by lower revenue and higher overhead. The segment recorded an operating loss of $689,000, primarily driven by its indoor residential furnishings businesses. Domestic Upholstery backlog increased modestly compared to both the prior year first quarter and fiscal 2026 year-end. In all other, performance was driven largely by increased sales and operating income in the hospitality division. Improved operating income reflected higher sales as well as lower costs resulting from cost-cutting measures implemented in the previous fiscal year. Turning now to cash, debt, and inventory. Cash and cash equivalents stood at $10.6 million at quarter-end, an increase of $9.5 million from the prior year fiscal end, and the company had no debt.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Cash generated from operations was used to repay $3.6 million in the principal amount of our outstanding loans, distribute $1.3 million in cash dividends, and fund $403,000 in capital expenditures. Inventory levels decreased by $3.7 million from $48.7 million at fiscal 2026 year-end to $45 million at the end of the first quarter. Despite these outflows, the company maintained its financial flexibility with $54.2 million in available borrowing capacity under its amended and restated loan agreement as of quarter-end, net of standby letters of credit and no outstanding balance on the credit facility. As of yesterday, the company had over $15 million in cash on hand. Finally, I'll discuss our capital allocation strategy. In late fiscal 2026, we announced that our board authorized a new share repurchase program under which we intend to repurchase up to $5 million of our outstanding common shares beginning in fiscal 2027.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

In connection with the repurchase authorization, the board recalibrated the annual dividend to $0.46 per share, beginning with the company's December 31st, 2025, dividend payment. The share repurchase program began on April 21st, 2026, pursuant to a plan structured to comply with the safe harbors of Rules 10b5-1 and 10b-18, which included a customary 90-day waiting period before the first purchases were made. During the quarter, we purchased about 7,600 shares of our stock for approximately $96,000 at an average price of $12.53 per share. As we position the company for sustainable growth, the new share repurchase program and adjusted dividend provide a balanced framework for returning capital to shareholders while preserving flexibility to invest in strategic priorities. We believe this approach supports both near-term returns and long-term shareholder value. Now I'll turn the discussion back to Jeremy for his outlook.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Thank you, Earl. Looking at the early part of the second quarter, consolidated incoming orders increased 8% in May compared to the prior year period, while backlog was up more than 14% year-over-year. This improvement was primarily driven by Margaritaville orders, which had their initial shipments in May. Retailer commitments to Margaritaville products, galleries, and freestanding stores continue to exceed our expectations. To date, we have commitments for 100 in-store galleries and 10 freestanding retail stores, compared with approximately half those numbers when we reported in December. Meaningful shipments are expected to begin in the second half of fiscal 2027 and build through the end of the current fiscal year and beyond. While these order and backlog trends are encouraging, the broader demand environment remains challenging. Housing activity remains pressured and recent consumer confidence readings continue to reflect a very cautious consumer environment.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

The Department of Commerce's April advance monthly estimates showed retail sales for furniture and home furnishing stores decreased 2% from March and 3.6% from the prior year. Given these macroeconomic pressures, our outlook for fiscal 2027 second quarter remains cautious. While we do not expect meaningful near-term improvement in market conditions, our more efficient cost structure and streamlined portfolio should help position us to deliver improved results versus the prior year period, even if current conditions persist. Our advantage is a sharper focus on our core businesses, a more disciplined operating model, and an organization aligned around profitable growth. We believe the actions taken over the past year have positioned the company to generate improved and more consistent earnings as market conditions improve. Combined with continued momentum in incoming orders across our core businesses, we believe we are well positioned to capitalize on opportunities as demand recovers.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

This ends the formal part of our discussion. At this time, I will turn the call over to our operator, Michelle, for questions.

Operator

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for our first question. Our first question is going to come from the line of Anthony Lebiedzinski with Sidoti. Your line is open. Please go ahead.

Anthony Lebiedzinski
Anthony Lebiedzinski
Analyst at Sidoti

Thank you. Good morning, everyone, and thanks for taking the questions. Certainly nice to see the improved bottom line results here. I guess as we look back at the just reported quarter, just wondering if you guys saw any significant monthly variations in revenue as you went from February to April, given all the geopolitical noise that we saw during the quarter. Just wondering, since typically, seasonally speaking, a fiscal Q1 tends to be lower in terms of revenue than fiscal Q4. Maybe you could just speak to that as to how the quarter flowed during, again, from February through April.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

I would say that as we get further removed from what we dealt with in the latter part of last year, which was, you could probably categorize as turmoil, trying to sell the two companies and everything we did to position the company where we are. I think that earlier in the quarter, we're getting our feet underneath us, as the quarter progressed, we're getting more and more focused. I would just say that the longer we have, the better I think we get at positioning ourselves to where we're headed. If that makes sense.

Anthony Lebiedzinski
Anthony Lebiedzinski
Analyst at Sidoti

Mm-hmm. Okay. Got it. Then could you just speak to pricing versus unit volumes? I know you guys typically put this in your 10-Q, but if you could just maybe give us a just general framework as to what pricing was versus unit volumes in the quarter.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Anthony, we don't have that in front of us. Like you said, it'll be in the Q for tomorrow that we file tomorrow afternoon.

Anthony Lebiedzinski
Anthony Lebiedzinski
Analyst at Sidoti

Got you.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Yeah, go ahead.

Anthony Lebiedzinski
Anthony Lebiedzinski
Analyst at Sidoti

Okay. Mm-hmm.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Go ahead, Anthony.

Anthony Lebiedzinski
Anthony Lebiedzinski
Analyst at Sidoti

Okay. I know there was some notion of increased pricing during the quarter. All right, we'll wait for the details in the 10-Q then. That's fine. Okay, I guess my next question as far as the gross margin, it was up more than expected, especially at Hooker Branded. Was there anything unusual to speak of, or do you think this type of gross margin is sustainable going forward?

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

I would say two things. One is, product mix has a lot to do with where gross margin ends up for us, as usual, so depending on certain things that ship and certain things that don't, that can change that dynamic. Number two, as you know, we're on LIFO and that can significantly change things, depending on the timing of how that LIFO plays out. Those are really the two factors.

Anthony Lebiedzinski
Anthony Lebiedzinski
Analyst at Sidoti

Got you. Okay. Lastly, can you talk about what you've seen or heard from your retail partners about Memorial Day traffic, which has historically been a big holiday event for the furniture industry. If you could just maybe speak to what you've heard in regards to your retail partners as far as what they've talked about as far as traffic and any buying activity around the key holiday.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Yeah. I'd say the contacts we made with our customers and partners were pretty optimistic about what they experienced over the Memorial Day holiday, with sales and whatnot. Traffic, they said, was pretty good considering what we're in with everything we've talked about. Pretty good is the general sentiment on Memorial Weekend.

Anthony Lebiedzinski
Anthony Lebiedzinski
Analyst at Sidoti

Well, all right. That sounds great. Well, thank you very much. I'll pass it along.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

We appreciate it. Thanks, Anthony.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Dave Storms with Stonegate. Your line is open. Please go ahead.

Dave Storms
Analyst at Stonegate

Good morning. Thank you for taking the questions.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Sure.

Dave Storms
Analyst at Stonegate

Yeah. Thank you. Wanted to start with Margaritaville. You doubled the number of commitments from 50-100 in-store galleries and then added the 10 freestanding retail stores. How should we think about that going forward? As you start to ship meaningfully in the second half here, would we expect to see those in-store commitments numbers to increase, or do you think it'll level out and it'll be a pivot to volumes and shipments?

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

I'll answer that just based off of my experience with things that you launch with that type of magnitude, which I guess I'd have to say I've never been a part of something that we feel like is that big, which I said I think it's the largest one Hooker has had. However, when you first launch, you get some customers that jump on right away, and then if the program's right and if you execute, you can get more and more participation, more and more galleries. I'm definitely taking a glass-half-full approach with it. I'm optimistic that we'll keep increasing what we've already done, and that's, of course, the goal.

Dave Storms
Analyst at Stonegate

Understood. Would expect some traction there. I guess, and this is kind of going back to the margins question from earlier. I know your backlog is starting to represent some of the Margaritaville ordering. Is there any sense of the texture of the margin profile for that backlog? Should we expect it to be maybe similar or a little bit stronger than maybe this last quarter?

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

I would say the word is consistent. We're not separating that out as a different margin profile publicly. I would say we're going to be consistent with what we're trying to do from a margin standpoint.

Dave Storms
Analyst at Stonegate

That's very fair. Maybe one more from me. I know you mentioned, or it was mentioned in your release that there were some supply constraints and shipping delays in custom upholstery. Maybe taking a more macro view on that, are you seeing any sort of supply chain constraints across the industry in terms of maybe freight increases due to the shutdown in the Strait of Hormuz? Anything like that that's causing supply chain hiccups?

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Just first of all, it wasn't custom upholstery that we said was the delay. We said that on import upholstery. Custom upholstery is our Domestic Upholstery business, very different. Regarding the other part of your question, we really haven't had noticeable delays or whatnot from Strait of Hormuz or anything going on in the world, thankfully. Supply chain from overseas is never perfect, but we feel pretty good about our position right now. The issues really were pretty targeted on that Hooker import upholstery model. Had a couple of factories where we had some issues, but that's not across the board.

Dave Storms
Analyst at Stonegate

Understood. Thank you for taking my questions, and good luck in the next quarter.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Yeah, you're welcome. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of John Deysher with Pinnacle. Your line is open. Please go ahead.

John Deysher
John Deysher
Analyst at Pinnacle

Hi, good morning. Most of my questions were answered, but I just was curious, what was the backlog and the orders numbers for the first quarter, please?

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

One second.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Let's see. Pardon me. For Hooker Branded, at the end of Q1

John Deysher
John Deysher
Analyst at Pinnacle

You can just give me the total if it's easier.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

I do consolidated.

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Consolidated at the end of Q1, orders were $19.4 million, backlog was $39 million.

John Deysher
John Deysher
Analyst at Pinnacle

Orders $19.4 million and backlog $39 million?

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

Correct.

John Deysher
John Deysher
Analyst at Pinnacle

Okay, great. Thank you. In terms of the tariffs, can you give us any feel for the rebate number that you're seeking and when that might be received?

Earl Armstrong
Earl Armstrong
SVP and CFO at Hooker Furnishings

John, we've decided not to disclose that publicly, at least on the call. I think that process is still ongoing, and there'll be some additional disclosure in the 10-Q. The way we're working with it now is we've not recorded anything in first quarter for anticipating any of that. Under U.S. GAAP, it's not realized or realizable at this point. The receipt's not probable, which is why we've not recognized anything. To date, we've not disclosed that number publicly just because there's so much uncertainty regarding the refunds themselves.

John Deysher
John Deysher
Analyst at Pinnacle

Right. Okay, that makes sense. Do you know if any other industry players have actually received checks?

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Yeah, we don't have that type of information from others, no.

John Deysher
John Deysher
Analyst at Pinnacle

Okay. All right, fair enough. We'll take a look at the 10-Q. Thank you.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

Okay, thank you.

Operator

Thank you. I would now like to hand the conference back over to Jeremy Hoff for closing remarks.

Jeremy Hoff
Jeremy Hoff
CEO at Hooker Furnishings

I would like to thank everyone on the call for their interest in Hooker Furnishings. We look forward to sharing our fiscal 2027 second quarter results in September. Take care.

Operator

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Executives
    • Earl Armstrong
      Earl Armstrong
      SVP and CFO
    • Jeremy Hoff
      Jeremy Hoff
      CEO
Analysts
    • Anthony Lebiedzinski
      Analyst at Sidoti
    • Dave Storms
      Analyst at Stonegate
    • John Deysher
      Analyst at Pinnacle
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