Hooker Furniture Reports Q2 Loss Amid Market Challenges, Maintains Cost-Cutting Focus
Hooker Furniture Corporation's second-quarter results reflect ongoing industry headwinds but demonstrate operational improvements through strategic cost reductions and supply chain optimization.
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's revenue declined 13.6% year-over-year, primarily driven by a 44.5% decrease at HMI due to weak demand, tariff-related buying hesitancy, and the impact of a major customer bankruptcy.
Despite the challenging market conditions, Hooker Branded net sales grew 1.3% year-over-year while Domestic Upholstery remained flat, indicating resilience in the company's legacy brands. Consolidated gross margin of 20.5% showed sequential stability, supported by cost savings initiatives and improved labor efficiency, though mix headwinds and restructuring costs continued to pressure 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 during the first half of fiscal 2026, Hooker Furniture 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 facility, and streamlining operations at Domestic Upholstery to improve labor-to-revenue ratios.
Hooker Furniture strengthened its balance sheet by using 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 has significantly reduced lead times from six months to four-to-six weeks, enabling the company to carry less safety stock while maintaining service levels.
The company 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. July orders accelerated 24% year-over-year at both segments, with order momentum continuing through the Labor Day holiday. Management remains focused on navigating macroeconomic challenges including housing market weakness, high mortgage rates, and subdued consumer demand while positioning the company for a return to profitability.