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Tag: Jeremy Hoff

Customer bankruptcy, severance charges push Hooker’s loss in Q3

Martinsville-based Hooker Furnishings reported consolidated net sales of $104.4 million in the third quarter ended Oct. 27, a decrease of $12.5 million, or 10.7%, from last year. It also reported an operating loss of $7.3 million, marking its third quarterly loss in a row.

The company attributed ongoing low demand as a reason for the loss, as well as $7.5 million in charges – which came from $3.1 million in severance (from 44 layoffs announced last quarter), $2.4 million from the bankruptcy of a significant customer and $2 million in trade-name impairment charges related to its Home Meridian (HMI) segment.

For the first nine months of the year, sales were $293 million, a 12.9% decline from last year. This was attributed to “persistent low demand affecting the home furnishings industry” and the absence of $11 million in liquidation sales from the unprofitable ACH product line which Hooker exited last year. Hooker saw a $15.4 million operating loss for the period.

Still, there are positives. The company says it should exceed its goal of saving $10 million in annual costs in 2026; Home Meridian reported its highest ever gross margin of 20.5%; and macro-economic conditions are trending positively.

“Despite the charges recorded in Q3 and the sustained macro-economic and furniture retail challenges, we’re encouraged by the sequential quarterly improvement in our core business profitability and by the progress of our cost reduction efforts, which will be more fully realized beginning in the fourth quarter,” CEO Jeremy Hoff said in a statement.

“There are positive developments in the macro-economic environment, such as cooling inflation and recent interest rate cuts in September and November, which should begin to increase demand for furnishings as lower mortgage rates boost the housing market,” he added.

In Hooker Branded, sales fell 10.7% to $4.2 million due to lower average selling prices, the company said. Unit volume decreased by 2.1% from last year but exceeded the first and second quarters of this year. Hoff said the company has increased the segment’s inventories by nearly $11 million in anticipation of increased demand.

“We are aggressively producing our top collections to ensure we will be in stock during the first quarter of fiscal 2026,” he said, adding that “these inventories are high-quality assortments, centered on our best-selling and most-profitable SKUs.”

In HMI, sales fell $5.1 million, or 11.8%, 40% of which Hoff said was due to the bankruptcy of a major customer. Sales through major furniture chains and independent furniture stores decreased, “though these decreases were partially offset by an 8% increase in sales within the hospitality business, marking two consecutive quarters of higher revenues.” Incoming orders increased by 8.1% compared with the previous year’s third quarter.

“Our strategic focus to support sustained profitability through restructuring Home Meridian’s business is yielding meaningful results, including significantly reduced allowances, improved product margins and lower fixed costs across nearly all areas of this segment,” Hoff said.

In Domestic Upholstery, net sales decreased by $3.2 million, or 9.9%, due to decreased sales at Shenandoah, Bradington-Young and HF Custom, which the company attributed to persistent low demand. This decrease was partially offset by a 9.1% increase in sales at Sunset West, which has delivered year-over-year quarterly sales growth for three consecutive quarters this fiscal year.

The segment reported an operating loss of $281,000, a sequential improvement versus $1.3 million in operating losses recorded in each of this year’s earlier quarters. This quarter’s loss included $560,000 in severance charges. Incoming orders decreased by 4.8% during the quarter.

Cash and cash equivalents were $20.4 million at the end of the third quarter, a decrease of $22.7 million for the year-end in January. Inventory levels increased by $4.7 million from year-end, primarily driven by a $6.2 million increase in Hooker Branded inventories.

Hoff gave some concluding remarks:

“While the macro-economic outlook is improving, our team will continue to focus on the controllables and improvements already underway at Hooker Furnishings,” he said. “Our balance sheet, financial condition and seasoned management team should well-equip us to navigate any remaining challenges as we focus on maximizing efficiencies with the cost reductions while simultaneously investing in expansion strategies that will position us for revenue and profitability growth when demand fully returns.”

Hooker CEO talks layoffs, other takeaways from Q2 earnings report

This story is republished with permission from Furniture Today.

Martinsville-based Hooker Furnishings reported $95.1 million in consolidated net sales for the second quarter last week, a 2.8% drop from last year. It marked the second consecutive quarterly loss for the company, at $3.1 million.

Other than the usual sales figures, there were a few notable things brought up in the report and on the subsequent earnings call. One was that the company announced layoffs. CEO Jeremy Hoff didn’t reveal how many layoffs there were at first, but said they would result in annual savings of around $6 million, and that around $3 million in severance expenses will be shown next quarter.

Hoff gave more information this week, saying that there were 44 layoffs in total, representing 4% of the company’s total workforce. Twenty-four of those were in the form of early retirement packages.

“We did a more expensive option of offering early retirement in order to pull forward people who were going to retire anyway,” he told Furniture Today. “It helped us save jobs and I’m proud of how we did that.”

“Workforce reduction decisions like this are rare for our company and were incredibly difficult for us, as we’re acutely aware of the impact it will have on affected employees,” he said on the earnings call.

The layoffs will help expedite the company’s goal of saving $10 million in fixed costs in the second half of this fiscal year. Around $5 million in savings is expected to come by the end of the fiscal year, split between the third and fourth quarters. Other than layoffs, reductions will come from the consolidation of certain operations, including reducing the company’s Savannah, Georgia, warehouse footprint by half, restructuring the BOBO business into the Hooker Branded business, and eliminating BOBO’s retail store and separate warehouse, among other measures.

“Our first objective was to go to every cost center we have throughout the company and try to find any non-personnel, non-strategic cost that we could eliminate,” Hoff said on the earnings call. “Once we were through that exercise, we went to personnel as well. But even there, we focused on not eliminating strategic costs to execute our organic growth strategy that’s in place. I will tell you that when we say we’re confident we will surpass the $10 million, we’re very confident that we will surpass the $10 million.”

The bleeding slowed from last quarter

Despite the $3.1 million loss, the company’s loss in the first quarter was higher at $5.2 million. Sales fell 23.2% last quarter, compared to this quarter’s 2.8% decline. Sales were also $1.5 million higher than last quarter. A negative margin of 3.3% this quarter was an improvement over last quarter’s negative 5.5%.

Home Meridian gains

Hooker’s Home Meridian segment has suffered the past several years. In 2023, the company opted to exit the unprofitable Accentrics Home business, resulting in a $34 million non-cash charge and short-term revenue losses. But now, light seems to be appearing at the end of the tunnel.

Net sales increased by $1.6 million, or 5.6%, from last year in the segment, primarily driven by strong performance in its hospitality division. Last quarter, sales had fallen by $15.5 million. This marked the first year-over-year quarterly sales increase for the segment in two years.

“All metrics are up for HMI,” Hoff told Furniture Today. “For three years now we have seen straight improvement.”

The segment still reported a loss though, but at less than $1 million. The loss was lower than previous losses ($3.4 million last quarter and $3.3 million last year). Gross margin was 19.5%, one of the highest levels seen since the acquisition of the business in 2016, the company said.

“We believe we have reached the point at HMI where we have a significant path to profitability that is sustainable for the foreseeable future as demand normalizes in the home furnishings industry,” said Paul Huckfeldt, chief financial officer, on the earnings call.

When the business does improve, the margin goal for the segment is around 20%.

“And to stress, we haven’t raised prices,” Hoff said. “We’ve simply been able to exit businesses that were dragging that number down.

“Now it’s just a matter of growing sales,” Huckfeldt added.