Sales fall at Hooker, with slides in both upholstery, HMI


MARTINSVILLE, Va. – Hooker Furnishings reported first quarter consolidated net sales of $121.8 million, a $25.5 million or 17.3% decrease from last year. The decline was driven by a 32.5% dip in Home Meridian (HMI) sales, as well as a 14.8% reduction in Domestic Upholstery, the latter of which saw its first decline in more than two years.

Consolidated net income was $1.5 million, or 13 cents per diluted share for the quarter, compared with $3.2 million, or 26 cents per diluted share, in the prior year period. Consolidated operating income for the quarter was $2 million compared with $3.9 million in the same quarter a year ago.

A positive was inventory levels, which decreased by $23 million for the quarter and look to be easily eclipsing the company’s goal of a $30 million reduction by fiscal year-end.

Company management was optimistic, highlighting a strengthened cash position as well as a successful High Point Market.

“Considering the softer retail environment, economic uncertainties and our recent exit from the Accentrics Home (ACH) line, we’re pleased to have exceeded internal and external expectations for sales and earnings this quarter,” said Jeremy Hoff, CEO. “Our liquidation of ACH inventories and other obsolete inventories at HMI is about 80% complete as of May end, which is helping us reduce our domestic warehousing footprint and make progress towards getting profitability back on track at HMI. We generated $22.4 million in cash during the quarter, and we are continuing to build cash currently as we further reduce inventories.

“Our new Hooker Legacy showroom opening at the April High Point Market achieved what we intended, as we nearly doubled our attendance from a year ago and attracted new customers,” Hoff continued. “Many of our strategic organic growth initiatives that will enable us to broaden our total addressable market and visibility are tied to the new showroom and the Hooker Legacy Brands.”

Hoff also highlighted the company’s new M brand, saying it “surpassed expectations.”

“This new brand, combining the unique capabilities of HF Custom, Shenandoah, Bradington-Young and Hooker Casegoods, will enable us to compete in a modern lifestyle aesthetic without disrupting any of those core businesses,” he said.

Sales by segment

Hooker Branded saw sales decrease by 0.8%, with sales negatively impacted by higher discounting compared to abnormally lower levels of discounting in the prior year period, the company said. Demurrage and drayage costs also remain elevated, but are trending down. Inventory levels decreased by $14 million compared to last year, but remain higher than pre-pandemic.

“We are actively working to reduce inventory levels to align with current demand, however our inventory management process is working well, so we’re in stock on most best-selling items and inventory obsolescence is not an issue.” said Paul Huckfeldt, senior vice president and chief financial officer.

Sales at HMI were “disappointing” but better than expected, Hoff said. Sales fell 32.5%, or just over $20 million. The company cited a slower retail environment and lower selling prices.

“Our transition to a new business model at HMI will continue into this year as we move away from higher-risk businesses to focus on our core strengths and core businesses. We believe we are on track to achieve profitability in this segment by the end of the fiscal year,” he said.

Domestic Upholstery saw sales decline after 10 consecutive quarters of year-over-year growth, falling 14.8%. Reductions at HF Custom, Sunset West and Shenandoah were partially offset by increased net sales at Bradington-Young.

“Much of the Domestic Upholstery sales dip was driven by the fact that we worked through our large backlogs in the divisions, and then experienced softer demand. We do not think it is a long-term situation,” Hoff said. “The temporary slowdown at Sunset West occurred due to transitioning to a new ERP system and bi-coastal distribution. Now that this transition is largely complete, Sunset West is expanding to a nationally distributed brand, which we believe offers a double-digit organic growth opportunity over multiple years.”

Overall, Hoff is optimistic long-term.

“While retail conditions remain mixed along with some economic uncertainties, we saw increases in consolidated incoming orders in May,” he said, adding that “We believe the industry is getting through some of the elevated inventory challenges and we may be seeing some breakthrough in that area.”

The company’s strategy is to continue to move away from higher-risk business to focus on core strengths.

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