Hooker Furniture Reports Q2 Loss Amid Market Challenges, Maintains Cost-Cutting Focus

Hooker Furniture Corporation reported second-quarter fiscal 2026 revenue of $82.1 million, operating income of negative $4.4 million, and adjusted earnings per share of negative $0.31, missing both Stonegate Capital Partners and consensus estimates. The 13.6% year-over-year revenue decline was primarily driven by a 44.5% decrease at HMI, attributed to weak demand, tariff-related buying hesitancy, and the impact of a major customer bankruptcy.

Despite the overall sales weakness, Hooker Branded net sales grew 1.3% year-over-year while Domestic Upholstery remained flat, demonstrating continued resilience in the company's legacy brands. 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 during 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 actions 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 strengthened its balance sheet and preserved liquidity during the quarter, using strong operating cash flows to repay $16.5 million of debt year-to-date. The company ended 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, tighter demand alignment, and initial benefits from the Vietnam warehouse transition.

The new Vietnam 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. 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.

Order backlog stood at $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. The improved throughput from Vietnam and warehouse optimization is expected to provide Hooker Furniture with a competitive lead time advantage once demand normalizes.