Hooker Furniture Corporation Reports Q2 FY26 Results Amid Challenging Market Conditions
TL;DR
Hooker Furniture's Vietnam warehouse transition provides a significant lead time advantage from six months to four-to-six weeks, positioning it for competitive gains when demand recovers.
Hooker Furniture is executing a multi-phase cost reduction program targeting $25M in annual savings by FY27 through warehouse optimization and operational streamlining.
Hooker Furniture's focus on cost efficiency and debt reduction preserves jobs and maintains stability during economic uncertainty, supporting long-term community employment.
Hooker Furniture's Vietnam warehouse slashed lead times from six months to just four-to-six weeks, a dramatic operational improvement enabling faster customer response.
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Hooker Furniture Corporation (NASDAQ: HOFT) reported second quarter fiscal 2026 revenue of $82.1 million, operating income of ($4.4) million, and adjusted earnings per share of ($0.31), falling short of analyst expectations. The company experienced a 13.6% year-over-year revenue decline, primarily driven by a 44.5% decrease at HMI attributed to weak demand, tariff-related buying hesitancy, and the impact of a major customer bankruptcy. Despite these challenges, Hooker Branded net sales grew 1.3% year-over-year while Domestic Upholstery remained flat, demonstrating resilience in the company's legacy brands.
The consolidated gross margin of 20.5% showed sequential stability, supported by ongoing cost savings initiatives and improved labor efficiency. However, mix headwinds and restructuring costs continued to pressure overall profitability. Management reaffirmed its focus on navigating macroeconomic challenges including housing market weakness, high mortgage rates, and subdued consumer demand while positioning the company to return to profitability. The company's strategic response includes significant cost reduction measures and operational improvements designed to enhance long-term competitiveness.
Hooker Furniture is executing a multi-phase cost reduction program targeting approximately $25 million in annualized fixed-cost savings by fiscal year 2027. The company has already achieved $3.7 million in expense reductions during the first half of fiscal 2026, with additional benefits expected in the second half. Key operational changes include exiting the Savannah warehouse, transitioning inventory to a new Vietnam warehouse, and streamlining operations at Domestic Upholstery to improve labor-to-revenue ratios. These efforts are designed to preserve growth investments, including the Margaritaville launch and the Collected Living merchandising platform.
The company has maintained strong balance sheet management, using operating cash flows to repay $16.5 million of debt year-to-date. HOFT ended the quarter with $821,000 in cash and $57.7 million in borrowing capacity. Inventory levels declined to $58.5 million from $70.8 million at year-end, reflecting improved throughput and tighter alignment to demand. The transition to the new Vietnam warehouse facility has significantly shortened lead times from six months to four-to-six weeks, enabling the company to carry less safety stock while maintaining service levels.
HOFT reported an order backlog of $51.2 million, showing strength in legacy segments with Hooker Branded backlog increasing to $15.7 million and Domestic Upholstery backlog rising to $19.3 million. Both segments demonstrated quarterly order growth of approximately 11% and 2% respectively, with July orders accelerating 24% year-over-year. The improved throughput from Vietnam and operational streamlining are expected to provide HOFT with a competitive lead time advantage once market demand normalizes. The company continues to pay one of the highest dividend yields among its comparable set, providing shareholder value during the transition period.
Curated from Reportable
