Hooker Furnishings Corporation Q2 FY2026 earnings call

• Hooker Branded broke even despite restructuring costs, domestic upholstery reduced operating loss due to cost reduction initiatives.
• Home Meridian impacted by tariffs and macroeconomic pressures.
• Progress in cost reduction and restructuring initiatives, with new expense structure on track to be in place by end of third quarter.
• Margaritaville launch upcoming, Vietnam fulfillment warehouse shortening container lead times.
• Tariff mitigation efforts: Domestic upholstery via new fabric sourcing, Hooker Branded via SKU-by-SKU pricing evaluation, HMI via near-term mitigation efforts.

The results across segments were mixed. Hooker Branded net sales were 1.3% year over year, reached breakeven with $655,000 restructuring costs. Domestic upholstery net sales were consistent, had a $152,000 restructuring cost reducing operating loss. Home Meridian net sales were down 44.5% due to tariff-related hesitancy, hospitality shipments decline, and loss of a major customer. Consolidated net sales for the second quarter were $82,100,000, down 13.6% from prior year. Consolidated operating loss was $4,400,000, net loss was $3,300,000. For the first six months, consolidated net sales declined 11.2%, operating loss $8,000,000, net loss $6,300,000. Hooker Branded: Net sales up $465,000 (1.3%) in Q2, $766,000 (1.1%) in first six months. Gross profit declined, achieved breakeven. Home Meridian: Net sales down $13,600,000 (44.5%) in Q2, $21,200,000 (37.2%) in first six months. Domestic Upholstery: Net sales flat in Q2, down $1,000,000 (17%) in first six months, gross profit improved, operating loss reduced.

• Believes HMI's fixed cost structure will be aligned by end of fiscal 2026 third quarter, expecting performance enhancement by end of fiscal year.
• On track to have new expense structure reducing fixed cost by 25% in place by end of third quarter.
• July orders up 24% year over year at Hooker Branded and Domestic Upholstery.

• Tariff-related buying hesitancy impacting Home Meridian.
• Macroeconomic pressures affecting home furnishing industry.
• Loss of a major customer contributing to Home Meridian's sales decline.
• Vietnam tariff impact on segments, requiring different mitigation approaches.

Q: What's driving the increased orders or momentum at Hooker Branded and Domestic Upholstery?

A: Jeremy Hoff mentions subtle macro improvements at retail level, with Labor Day being good for many customers and momentum seeming consistent across the board.

Q: How to get HMI back to profitability and annual revenue needed?

A: Jeremy Hoff states main driver is cost savings from 25% reduction in spending, with focus on customers and driving revenue at HMI.

Q: Restructuring impact breakdown between COGS and SG&A?

A: Earl Armstrong says about two-thirds of $2,000,000 quarterly restructuring costs were in COGS and one-third in SG&A.

Q: Logistics and early indicators for Margaritaville launch?

A: Jeremy Hoff mentions it's an 18-month progression, with positive early indicators from partners, seeing it as a large opportunity.

Q: Thoughts on price increases and timing?

A: Jeremy Hoff says arms are clear around 20% tariff impact, evaluated pricing SKU by SKU, with timing related to backlog and shipping.

Q: Timing of additional $2,000,000 charges?

A: Earl Armstrong says most related to closing of Savannah warehouse, likely in 4Q.