Hooker Furniture Corporation (NASDAQ: HOFT) reported third-quarter fiscal year 2026 results that reflect a company in transition, with revenue declines offset by improving margins and resilient performance in core business segments. Stonegate Capital Partners updated their coverage on the furniture manufacturer, noting mixed performance against analyst expectations.
The company reported revenue of $70.7 million, operating income of negative $16.3 million, and adjusted earnings per share of negative $1.99 for the quarter. These figures fell below both Stonegate's estimates of $85.2 million in revenue, negative $2.2 million in operating income, and negative $0.15 in adjusted EPS, as well as consensus estimates of $85.5 million in revenue, negative $2.2 million in operating income, and negative $0.14 in adjusted EPS.
Revenue declined 32.2% year-over-year, primarily driven by the company's strategic decision to sell the majority of its HMI business segment. This transformative sale represents a significant shift in Hooker Furniture's business strategy, moving away from lower-margin operations to focus on core strengths. Despite the overall revenue decline, the company's legacy brands demonstrated resilience with Hooker Branded net sales growing 4.4% year-over-year and Domestic Upholstery increasing 3.0%.
The strategic restructuring yielded immediate benefits to the company's margin profile, with consolidated gross margins growing to 25.6% and showing sequential improvement. This margin expansion reflects the company's shift away from lower-margin operations toward more profitable core businesses. However, overall profitability was challenged by one-time trade name impairment charges related to the HMI transaction, which Stonegate expects to be mostly non-recurring in nature.
Management reaffirmed its focus on navigating ongoing macroeconomic headwinds, including housing market weakness, high mortgage rates, and subdued consumer demand. The company's strategic repositioning appears designed to weather these challenges while positioning Hooker Furniture to return to profitability. The sale of the HMI business segment represents a calculated move to streamline operations and improve financial performance in a challenging market environment.
Industry observers are watching the company's upcoming Margaritaville launch with interest, as indicated by the Stonegate Capital Partners coverage update that noted "impressive buzz" around the new product line. This launch could represent a significant growth opportunity for the company as it seeks to capitalize on brand partnerships and expand its market reach.
The furniture industry continues to face significant headwinds from macroeconomic factors, making Hooker Furniture's strategic restructuring particularly relevant for investors and industry observers. The company's ability to grow margins while navigating revenue declines suggests a focus on long-term sustainability rather than short-term revenue growth. The improved gross margin percentage indicates that the company's core operations remain fundamentally sound despite the challenging environment.
For consumers and industry partners, Hooker Furniture's continued investment in its legacy brands suggests ongoing commitment to quality and market presence in key segments. The company's strategic decisions reflect broader trends in the furniture industry, where manufacturers are streamlining operations and focusing on core competencies to maintain profitability amid economic uncertainty. The full details of the company's performance and strategic direction are available through Reportable, Inc., which distributes corporate announcements and financial updates.
