Hooker Furnishings reported consolidated net income of $1.7 million for its fiscal 2027 second quarter, marking its third consecutive profitable quarter and representing a $4.9 million improvement from the prior-year period.
The home furnishings company remained profitable despite continued weakness in housing activity, subdued consumer confidence and seasonally lower demand.
Consolidated net sales declined $6 million, or 8.7%, during the quarter. For the first six months of fiscal 2027, sales decreased $7.7 million, or 5.5%.
Operating income was $1.3 million for the second quarter, compared with an operating loss of $500,000 a year earlier. First-half operating income reached $2.9 million compared with a $1 million operating loss in the prior-year period.
Results benefited substantially from tariff recoveries.
Hooker received $7.9 million of tariff recoveries during the quarter following legal developments involving tariffs imposed under the International Emergency Economic Powers Act.
Continuing operations recognized approximately $4.3 million as a reduction in cost of sales and $200,000 of related interest income, partially offset by approximately $500,000 of customer credits recorded as a reduction in revenue.
Discontinued operations recorded approximately $1 million of net pre-tax benefit, while another approximately $1.8 million reduced inventory carrying values at quarter-end.
Hooker said it does not expect to receive material additional tariff recoveries.
Before the tariffs were invalidated, the company estimated that it incurred approximately $10.3 million in cumulative pre-tax tariff costs during fiscal 2026, substantially more than the recoveries recognized in the latest quarter.
Results also benefited from approximately $17.5 million of annualized cost reductions implemented across continuing operations in previous periods.
Hooker Branded net sales declined 4.5% in the quarter, reflecting lower unit volume, higher promotional discounts and out-of-stock conditions on certain products caused by longer Asian lead times.
Gross profit nevertheless increased $3.2 million, and gross margin expanded 1,050 basis points, primarily due to tariff recoveries and higher selling prices.
The segment generated second-quarter operating income of $870,000 compared with approximately breakeven performance a year earlier. Hooker Branded backlog increased 34.7% year over year.
Domestic Upholstery sales fell 5.3%, as softer upscale leather and custom fabric upholstery demand was partially offset by double-digit growth in private-label and outdoor furnishings.
Gross margin improved 450 basis points, and the segment generated operating income of $833,000 compared with a $408,000 operating loss a year earlier. Backlog increased 4.8%.
Hospitality revenue declined 65.8% during the quarter, primarily because of project timing. Approximately 80% of first-half hospitality shipments occurred in the first quarter. The business posted an operating loss for the second quarter but remained profitable for the first six months.
Consolidated backlog increased 6.2% compared with the prior-year second-quarter end and 8.4% sequentially from the first quarter, led by Hooker Branded and Domestic Upholstery.
Hooker also highlighted growing retailer commitments to its Margaritaville product line.
The company has commitments for approximately 100 in-store galleries and 10 standalone retail stores, roughly double the level reported in December. Shipments began during the second quarter and are expected to increase through the remainder of fiscal 2027 and into fiscal 2028.
Cash and cash equivalents increased to $18.7 million from $10.6 million at the end of the first quarter and $1.1 million at the end of fiscal 2026.
The company had no outstanding term loan balance or balance on its credit facility and had $51.8 million of available borrowing capacity at quarter-end.
Hooker generated $24 million in cash from operations and used cash to repay $3.6 million of loan principal, distribute $2.5 million in dividends, repurchase $1.3 million of shares and fund $1.1 million of capital expenditures.
Through the second quarter, Hooker had repurchased 92,357 shares at an average price of $13.68 under its $5 million authorization, leaving approximately $3.7 million available.
Management said it does not expect meaningful near-term improvement in the broader furniture market during the second half, citing weak housing turnover, selective consumer spending and pressure on big-ticket discretionary purchases.
However, the company believes its reduced cost structure, improving orders and expanding Margaritaville business can support better year-over-year results even if market conditions remain difficult.
KEY QUOTES:
“We are encouraged to report $1.7 million in consolidated net income for the quarter, marking our third consecutive quarter of profitability and a $4.9 million improvement over the prior-year second quarter. These results were achieved despite a challenging demand environment characterized by continued weakness in housing activity, low consumer confidence and lower seasonal demand we typically experience in the first half of our fiscal year.”
Jeremy Hoff, Chief Executive Officer of Hooker Furnishings
“Looking forward, retailer commitments to Margaritaville products, galleries, and free-standing stores continue to exceed our expectations. Shipments began in late Q2 and are expected to scale over the second half of fiscal 2027 and into fiscal 2028. Importantly, our fiscal July results, absent any tariff recoveries, showed significant improvement over prior year.”
Jeremy Hoff, Chief Executive Officer of Hooker Furnishings
