Hooker Furniture Reports Q2 Revenue Decline Amid Market Challenges, Maintains Operational Resilience

Hooker Furniture Corporation (NASDAQ: HOFT) reported second-quarter fiscal 2026 revenue of $82.1 million, representing a 13.6% year-over-year decline, with an operating loss of $4.4 million and adjusted earnings per share of ($0.31). The results fell below analyst expectations, primarily driven by a 44.5% decrease at the HMI segment due to weak demand, tariff-related buying hesitancy, and the impact of a major customer bankruptcy.

Despite the challenging quarter, the company demonstrated resilience in its legacy brands. Hooker Branded net sales grew 1.3% year-over-year while Domestic Upholstery remained flat. Consolidated gross margin of 20.5% showed sequential stability, supported by cost savings and improved labor efficiency, though mix headwinds and restructuring costs pressured overall profitability.

The company is executing a multi-phase cost reduction program targeting approximately $25 million in annualized fixed-cost savings by fiscal 2027. Having achieved $3.7 million in expense reductions in the first half of fiscal 2026, management expects additional benefits in the second half, with the new expense structure largely in place by fiscal year-end. Key initiatives include exiting the Savannah warehouse, transitioning inventory to a new Vietnam warehouse, and streamlining operations at Domestic Upholstery to improve labor-to-revenue ratios.

Hooker Furniture continues to strengthen its balance sheet and preserve liquidity amid macroeconomic uncertainty. The company used strong operating cash flows to repay $16.5 million of debt year-to-date, ending the quarter with $821,000 in cash and $57.7 million in borrowing capacity. Inventory declined to $58.5 million from $70.8 million at year-end, reflecting improved throughput and tighter alignment to demand.

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. Order backlog stood at $51.2 million, showing strength in legacy segments with Hooker Branded backlog rising to $15.7 million and Domestic Upholstery backlog increasing to $19.3 million. July orders accelerated 24% year-over-year at both segments, with order momentum continuing through the Labor Day holiday.

Management reaffirmed its focus on navigating macroeconomic headwinds including housing market weakness, high mortgage rates, and subdued consumer demand while positioning the company to return to profitability. The improved operational efficiency from the Vietnam transition and warehouse optimization is expected to provide competitive advantages once market demand normalizes.