UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS employer identification no.) |
(Address of principal executive offices, zip code)
(
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated Filer ☐ | ||
| Non-accelerated Filer ☐ | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
As of December 5, 2025, there were
Table of Contents
| PART I. FINANCIAL INFORMATION | 2 | |
| Item 1. | Financial Statements | 2 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 36 |
| Item 4. | Controls and Procedures | 36 |
| PART II. OTHER INFORMATION | 37 | |
| Item 5. | Other Information | 37 |
| Item 6. | Exhibits | 37 |
| Signature | 38 | |
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| November 2, | ||||||||
| 2025 | February 2, | |||||||
| As of | (unaudited) | 2025 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trade accounts receivable, net | ||||||||
| Inventories | ||||||||
| Income tax recoverable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets held for sale | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Cash surrender value of life insurance policies | ||||||||
| Deferred taxes | ||||||||
| Operating leases right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Non-current assets held for sale | ||||||||
| Other assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Trade accounts payable | $ | $ | ||||||
| Accrued salaries, wages and benefits | ||||||||
| Accrued income taxes | ||||||||
| Customer deposits | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Other accrued expenses | ||||||||
| Current liabilities held for sale | ||||||||
| Total current liabilities | ||||||||
| Long term debt | ||||||||
| Deferred compensation | ||||||||
| Operating lease liabilities | ||||||||
| Long-term liabilities held for sale | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity | ||||||||
| Common stock, no par value, | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
2
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| For the | ||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||
| Goodwill and trade name impairment charges | ||||||||||||||||
| Intangible asset amortization | ||||||||||||||||
| Operating (loss) / income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Interest expense, net | ||||||||||||||||
| (Loss) / income from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax (benefit) / expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income / (loss) from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income / (loss) from discontinued operations, net of taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) / income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic: | ||||||||||||||||
| Loss from continuing operations per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss from discontinued operations per share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted: | ||||||||||||||||
| Loss from continuing operations per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss from discontinued operations per share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Cash dividends declared per share | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME
(In thousands)
(Unaudited)
| For the | ||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net (loss) / income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income: | ||||||||||||||||
| Actuarial adjustments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax effect on adjustments | ||||||||||||||||
| Adjustments to net periodic benefit cost | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total comprehensive (loss) / income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| For the | ||||||||
| Thirty-Nine Weeks Ended | ||||||||
| November 2, | October 27, | |||||||
| 2025 | 2024 | |||||||
| Operating Activities: | ||||||||
| Net (loss) / income | $ | ( | ) | $ | ( | ) | ||
| Less: Loss from discontinued operations, net of taxes | ( | ) | ( | ) | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Deferred income tax expense | ( | ) | ( | ) | ||||
| Goodwill and tradename impairment | ||||||||
| Noncash restricted stock and performance awards | ||||||||
| Provision for doubtful accounts and sales allowances | ||||||||
| Gain on life insurance policies | ( | ) | ( | ) | ||||
| Loss / (gain) on disposal of assets | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Income tax recoverable | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Trade accounts payable | ( | ) | ||||||
| Accrued salaries, wages, and benefits | ( | ) | ||||||
| Accrued income taxes | ( | ) | ||||||
| Customer deposits | ( | ) | ( | ) | ||||
| Operating lease assets and liabilities | ( | ) | ||||||
| Other accrued expenses | ( | ) | ( | ) | ||||
| Deferred compensation | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | $ | $ | ( | ) | ||||
| Investing Activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Premiums paid on life insurance policies | ( | ) | ( | ) | ||||
| Proceeds received on life insurance policies | ||||||||
| Proceeds from sales of assets | ||||||||
| Net cash used in investing activities | $ | ( | ) | $ | ( | ) | ||
| Financing Activities: | ||||||||
| Proceeds from revolving credit facility | ||||||||
| Payments for long-term loans | ( | ) | ( | ) | ||||
| Cash dividends paid | ( | ) | ( | ) | ||||
| Debt issuance cost | ( | ) | ||||||
| Net cash used in financing activities | $ | ( | ) | $ | ( | ) | ||
| Discontinued Operations | ||||||||
| Cash used in operating activities | ( | ) | ||||||
| Cash used in investing activities | ( | ) | ( | ) | ||||
| Cash provided by / (used in) discontinued operations | $ | $ | ( | ) | ||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents - beginning of year | ||||||||
| Cash and cash equivalents - end of quarter | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for / (refund of) income taxes, net | $ | ( | ) | $ | ||||
| Cash paid for interest, net | ||||||||
| Non-cash transactions: | ||||||||
| Increase in lease liabilities arising from changes in right-of-use assets | $ | $ | ||||||
| (Decrease) in lease liabilities arising from changes in right-of-use assets for terminated leases | ( | ) | ||||||
| Increase in property and equipment through accrued purchases | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except per share data)
(Unaudited)
| Accumulated | ||||||||||||||||||||
| Other | Total | |||||||||||||||||||
| Common Stock | Retained | Comprehensive | Shareholders’ | |||||||||||||||||
| Shares | Amount | Earnings | Income | Equity | ||||||||||||||||
| Balance at July 28, 2024 | $ | $ | $ | $ | ||||||||||||||||
| Net loss for the 13 weeks ended October 27, 2024 | ( | ) | ( | ) | ||||||||||||||||
| Actuarial adjustments on defined benefit plan, net of tax of $ | ( | ) | ( | ) | ||||||||||||||||
| Cash dividends paid and accrued ($ | ( | ) | ( | ) | ||||||||||||||||
| Restricted stock grants, net of forfeitures | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Restricted stock compensation cost | ||||||||||||||||||||
| Performance-based restricted stock units cost | ( | ) | ( | ) | ||||||||||||||||
| Balance at October 27, 2024 | $ | $ | $ | $ | ||||||||||||||||
| Balance at August 3, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Net loss for the 13 weeks ended November 2, 2025 | ( | ) | ( | ) | ||||||||||||||||
| Actuarial adjustments on defined benefit plan, net of tax of $ | ( | ) | ( | ) | ||||||||||||||||
| Cash dividends paid and accrued ($ | ( | ) | ( | ) | ||||||||||||||||
| Restricted stock grants, net of forfeitures | ( | ) | ( | ) | ||||||||||||||||
| Restricted stock compensation cost | ||||||||||||||||||||
| Performance-based restricted stock units cost | ||||||||||||||||||||
| Balance at November 2, 2025 | $ | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
6
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONT.)
(In thousands, except per share data)
(Unaudited)
| Accumulated | ||||||||||||||||||||
| Other | Total | |||||||||||||||||||
| Common Stock | Retained | Comprehensive | Shareholders’ | |||||||||||||||||
| Shares | Amount | Earnings | Income (loss) | Equity | ||||||||||||||||
| Balance at January 28, 2024 | $ | $ | $ | $ | ||||||||||||||||
| Net loss for the 39 weeks ended October , 2024 | ( | ) | ( | ) | ||||||||||||||||
| Actuarial adjustments on defined benefit plan, net of tax of $ | ( | ) | ( | ) | ||||||||||||||||
| Cash dividends paid ($ | ( | ) | ( | ) | ||||||||||||||||
| Restricted stock grants, net of forfeitures | ( | ) | ( | ) | ||||||||||||||||
| Restricted stock compensation cost | ||||||||||||||||||||
| Performance-based restricted stock units costs | ( | ) | ( | ) | ||||||||||||||||
| Balance at October 27, 2024 | $ | $ | $ | $ | ||||||||||||||||
| Balance at February 2, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Net loss for the 39 weeks ended November 2, 2025 | ( | ) | ( | ) | ||||||||||||||||
| Actuarial adjustments on defined benefit plan, net of tax of $ | ( | ) | ( | ) | ||||||||||||||||
| Cash dividends paid ($ | ( | ) | ( | ) | ||||||||||||||||
| Restricted stock grants, net of forfeitures | ( | ) | ( | ) | ||||||||||||||||
| Restricted stock compensation cost | ||||||||||||||||||||
| Performance-based restricted stock units costs | ( | ) | ( | ) | ||||||||||||||||
| Balance at November 2, 2025 | $ | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
7
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar and share amounts in tables, except per share amounts, in thousands unless otherwise indicated)
(Unaudited)
For the Thirty-Nine Weeks Ended November 2, 2025
1. Preparation of Interim Financial Statements
The condensed consolidated financial statements of Hooker Furnishings Corporation and subsidiaries (referred to as “we,” “us,” “our,” “Hooker” or the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management these statements include all adjustments necessary for a fair statement of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) are condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of our results of operations and financial position. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended February 2, 2025 (“2025 Annual Report”). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect both the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates. Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year.
The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the 2026 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “third quarter” or “quarterly period”) that began August 4, 2025 and the thirty-nine-week period (also referred to as “nine months”, “nine-month period” or “year-to-date period”) that began February 3, 2025, which both ended November 2, 2025. This report discusses our results of operations for these periods compared to the 2025 fiscal year thirteen-week period that began July 29, 2024, and the thirty-nine-week period that began January 29, 2024, which both ended October 27, 2024; and our financial condition as of November 2, 2025 compared to February 2, 2025.
References in these notes to the condensed consolidated financial statements of the Company to:
| ■ | the 2026 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began February 3, 2025 and will end February 1, 2026; and |
| ■ | the 2025 fiscal year and comparable terminology mean the fifty-three-week fiscal year that began January 29, 2024 and ended February 2, 2025. |
2.
In December 2023, the FASB issued Accounting Standards Updates “ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The new guidance requires enhanced effective tax rate reconciliation and income taxes paid disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 (our fiscal 2026). We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements and will add necessary disclosures upon adoption.
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of income statement expenses”. The new guidance requires new tabular disclosures to disaggregate prescribed natural expenses underlying any income statement caption. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 (our fiscal 2028). We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements and will add necessary disclosures upon adoption.
We reviewed all other newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on our consolidated financial statements as a result of future adoption.
8
3. Discontinued Operations
During the third quarter of fiscal 2026, we determined that the Home Meridian segment no longer aligned with our long-term strategy to streamline our portfolio and enhance profitability by focusing on brands that generate consistent earnings. As a result, we initiated a process to sell two brands in the segment. On December 1, 2025, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with a buyer to sell the Company’s Pulaski Furniture (“PFC”) and Samuel Lawrence (“SLF”) casegoods brands, including specified assets and liabilities associated with those brands. We will retain the Samuel Lawrence brand in connection with the operation of its hospitality business.
We believe this transaction represents a single disposal plan that constitutes a strategic shift expected to have a material effect on our operations and financial results. Accordingly, the PFC and SLF businesses qualify for presentation as assets and liabilities held for sale and as discontinued operations in accordance with U.S. GAAP. As such, the financial results of the PFC and SLF businesses are reflected in our unaudited condensed consolidated statements of operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of the discontinued operations are reflected in our unaudited condensed consolidated balance sheets for both periods presented.
Assets and liabilities classified as held for sale are required to
be recorded at the lower of carrying value or fair value less costs to sell. As of November 2, 2025, we determined that the fair value
of the PFC and SLF businesses, including costs to sell was lower than its carrying value and we recorded $
| November 2, | February 2, | |||||||
| 2025 | 2025 | |||||||
| Assets: | ||||||||
| Trade accounts receivable | $ | $ | ||||||
| Less allowances | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Other current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets | ||||||||
| Operating lease right-of-use assets | ||||||||
| Valuation allowance to adjust assets to estimated fair value | $ | ( | ) | |||||
| Total assets held for sale | $ | $ | ||||||
| Liabilities: | ||||||||
| Accounts payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Operating lease liabilities | $ | $ | ||||||
| Total liabilities of discontinued operations | $ | $ | ||||||
9
The following table represents summarized statements of operations information of carrying amounts of major classes of line items constituting pretax loss of discontinued operations included as part of discontinued operations held for sale as of November 2, 2025 and October 27, 2024:
| For the | ||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ( | ) | ( | ) | ||||||||||||
| Selling and administrative expenses | ||||||||||||||||
| Trade name impairment charges | ||||||||||||||||
| Intangible asset amortization | ||||||||||||||||
| Other income items that are not major | ( | ) | ( | ) | ||||||||||||
| Pretax loss of discontinued operations related to major classes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Pretax loss from classification to held for sale | ||||||||||||||||
| (Loss) / income from discontinued operations before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax (benefit) / expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income / (loss) from discontinued operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
The significant components included in our Consolidated Statements of Cash Flows for the discontinued operations are as follows:
| For the Thirty-Nine Weeks Ended | ||||||||
| November 2, | October 27, | |||||||
| 2025 | 2024 | |||||||
| Operating Activities: | ||||||||
| Loss from discontinued operations, net of tax | $ | ( | ) | $ | ( | ) | ||
| Depreciation and amortization | ||||||||
| Tradename impairment | ||||||||
| Loss from classification on assets held-for-sale | ||||||||
| Loss / (gain) on disposal of assets | ||||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable, net | ||||||||
| Inventories | ||||||||
| Trade accounts payable | ( | ) | ||||||
| Other assets and liabilities | ( | ) | ( | ) | ||||
| Cash provided by / (used in) operating activities from discontinued operations | ( | ) | ||||||
| Investing Activities: | ||||||||
| Purchase of properties and equipment | ( | ) | ( | ) | ||||
| Cash used in investing activities from discontinued operations | $ | ( | ) | $ | ( | ) | ||
4. Accounts Receivable
| November 2, | February 2, | |||||||
| 2025 | 2025 | |||||||
| Gross accounts receivable | $ | $ | ||||||
| Customer allowances | ( | ) | ( | ) | ||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Trade accounts receivable | $ | $ | ||||||
10
5. Inventories
| November 2, | February 2, | |||||||
| 2025 | 2025 | |||||||
| Finished furniture | $ | $ | ||||||
| Furniture in process | ||||||||
| Materials and supplies | ||||||||
| Inventories at FIFO | ||||||||
| Reduction to LIFO basis | ( | ) | ( | ) | ||||
| Inventories | $ | $ | ||||||
6. Property, Plant and Equipment
| Depreciable Lives | November 2, | February 2, | ||||||||
| (In years) | 2025 | 2025 | ||||||||
| Buildings and land improvements | $ | $ | ||||||||
| Machinery and equipment | ||||||||||
| Computer software and hardware | ||||||||||
| Leasehold improvements | ||||||||||
| Furniture and fixtures | ||||||||||
| Other | ||||||||||
| Total depreciable property at cost | ||||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||||
| Total depreciable property, net | ||||||||||
| Land | ||||||||||
| Construction-in-progress | ||||||||||
| Property, plant and equipment, net | $ | $ | ||||||||
7. Cloud Computing Hosting Arrangement
We have implemented a common Enterprise Resource Planning (ERP) system across all divisions. The ERP system went live at Sunset West in December 2022 and in the legacy Hooker divisions and for consolidated reporting in early September 2023. Based on the provisions of ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software, we capitalize implementation costs associated with hosting arrangements that are service contracts. These costs are recorded in “other noncurrent assets” of our consolidated balance sheets. We amortize these costs on a straight-line basis over a 10-year term. The amortization expenses are recorded as a component of selling and administrative expenses in our consolidated statements of operations.
During the third quarter of fiscal 2026, we
capitalized $
11
The capitalized implementation costs at November 2, 2025 and February 2, 2025 were as follows:
| November 2, 2025 | February 2, 2025 | |||||||||||||||
| Gross carrying amount | Accumulated amortization | Gross carrying amount | Accumulated amortization | |||||||||||||
| Implementation Costs | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Interest Expenses | ( | ) | ( | ) | ||||||||||||
8. Fair Value Measurements
Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability (an exit price) in an orderly transaction between market participants on the applicable measurement date. We use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
| ■ | Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; |
| ■ | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
| ■ | Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
As of November 2, 2025 and February 2, 2025, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs. The fair value of the Company-owned life insurance is determined by inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change in fair value is reflected in income for that period.
Our assets measured at fair value on a recurring basis at November 2, 2025 and February 2, 2025, were as follows:
| Fair value at November 2, 2025 | Fair value at February 2, 2025 | |||||||||||||||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Assets measured at fair value | ||||||||||||||||||||||||||||||||
| Company-owned life insurance | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
12
9. Intangible Assets
Our intangible assets with indefinite lives consist
of: goodwill related to the Shenandoah, Sunset West and BOBO Intriguing Objects acquisitions; and trademarks and tradenames related to
the acquisitions of Bradington-Young, Home Meridian and BOBO Intriguing Objects. Our intangible assets with definite lives are recorded
in our Home Meridian and Domestic Upholstery segments.
| November 2, 2025 | February 2, 2025 | |||||||||||||||
| Gross carrying amount | Impairment / Accumulated Amortization | Gross carrying amount | Impairment / Accumulated Amortization | |||||||||||||
| Intangible assets with indefinite lives: | ||||||||||||||||
| Goodwill | ||||||||||||||||
| Domestic Upholstery - Shenandoah * | ||||||||||||||||
| Domestic Upholstery - Sunset West * | ||||||||||||||||
| All Other - BOBO Intriguing Objects | ||||||||||||||||
| Goodwill | ( | ) | ||||||||||||||
| Trademarks and Trade names * | ( | ) | ||||||||||||||
| Intangible assets with definite lives: | ||||||||||||||||
| Customer Relationships | ( | ) | ( | ) | ||||||||||||
| Trademarks and Trade names | ( | ) | ( | ) | ||||||||||||
| Intangible assets, net | ( | ) | ( | ) | ||||||||||||
| *: |
During the third quarter of fiscal 2026, adverse economic conditions, including declines in our market value, as well as other changes in market dynamics, triggered an evaluation of our goodwill and intangible assets. We engaged an independent third-party valuation firm to assist in performing this assessment. The valuation procedures were performed with consideration of applicable accounting guidance, including Accounting Standards Codification (“ASC”) Topic 350, Goodwill and Other Intangible Assets and ASC Topic 820, Fair Value Measurement.
The determination of the fair value of our Home Meridian and Domestic Upholstery reporting units incorporated three valuation approaches: (i) the Discounted Cash Flow method, which utilized management’s cash flow projections and growth assumptions over an eight-year forecast period; (ii) the Guideline Public Company Method, which considered market data for comparable publicly traded companies; and (iii) the Guideline Transaction Method, which considered market multiples derived from transactions involving comparable businesses under varying risk profiles, geographies, and market conditions.
Based on the results of this valuation analysis, we recorded aggregate
non-cash impairment charges of $
Amortization expenses for intangible assets with
definite lives were $
10. Leases
We have operating leases for warehouses, showrooms,
manufacturing facilities, offices and equipment. Sub-lease income totaled $
13
The components of lease cost and supplemental cash flow information for leases for the third quarters and nine months of fiscal 2026 and 2025 were:
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| November 2, 2025 | October 27, 2024 | November 2, 2025 | October 27, 2024 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Variable lease cost | ||||||||||||||||
| Short-term lease cost | ||||||||||||||||
| Total operating lease cost | $ | $ | $ | $ | ||||||||||||
| Operating cash outflows | $ | $ | $ | $ | ||||||||||||
The right-of-use assets and lease liabilities recorded on our condensed consolidated balance sheets as of November 2, 2025 and February 2, 2025 were as follows:
| November 2, 2025 | February 2, 2025 | |||||||
| Real estate | $ | $ | ||||||
| Property and equipment | ||||||||
| Total operating leases right-of-use assets | $ | $ | ||||||
| Current portion of operating lease liabilities | $ | $ | ||||||
| Long term operating lease liabilities | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
The
weighted-average discount rate is
The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheet on November 2, 2025:
| Undiscounted Future Operating Lease Payments | ||||
| Remainder of fiscal 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 and thereafter | ||||
| Total lease payments | $ | |||
| Less: impact of discounting | ( | ) | ||
| Present value of lease payments | $ | |||
11. Long-Term Debt
On December 5, 2024, the Company and its wholly owned subsidiaries, Bradington-Young, LLC, Sam Moore Furniture LLC and Home Meridian Group, LLC (together with the Company, the “Borrowers”), entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”) with Bank of America, N.A. (“BofA”), as lender. The Amended and Restated Loan Agreement amends, restates and replaces the Second Amended and Restated Loan Agreement, dated as of September 29, 2017, between the Borrowers and BofA, as amended (the “Existing Loan Agreement”). The outstanding principal amount of loans and letters of credit issued under the Existing Loan Agreement and used to collateralize certain insurance arrangements and for imported product purchases remain outstanding as loans and letters of credit under the Amended and Restated Loan Agreement.
14
The
Amended and Restated Loan Agreement provides for a revolving credit facility in a committed principal amount of up to $
Availability of loans and letters of credit under the Revolving Commitment is capped by a borrowing base formula calculated as of any date as the sum for the Borrowers of (a) the value of their accounts receivable, (b) the value of their inventory, (c) the value of their in-transit inventory and (d) the life insurance cash surrender value of company-owned life insurance policies, in each case subject to eligibility requirements, advance rates, valuation metrics, reductions for write-offs and other dilutive items and reserves (the “Borrowing Base”). The lesser of the Revolving Commitment and the Borrowing Base, in each case net of the principal amount of outstanding loans and the face amount of letters of credit, constitutes “Availability” under the Amended and Restated Credit Agreement.
Outstanding
loans under the Amended and Restated Loan Agreement bear interest at a rate per annum equal to the then-current
We may prepay any outstanding principal amounts borrowed under the Amended and Restated Loan Agreement at any time, without penalty provided that any payment is accompanied by all accrued interest owed. Subject to the Borrowers having sufficient borrowing base capacity and customary conditions precedent to borrowing, amounts repaid may be reborrowed. The Revolving Commitment will terminate, and all amounts outstanding thereunder will be due and payable, on December 5, 2029.
The obligations under the Amended and Restated Loan Agreement are secured by a first priority security interest in substantially all of the assets of the Borrowers, other than real estate, including all Company-owned life insurance policies, all accounts receivable, all inventory, all intellectual property, all equipment and all other personal property.
The
Amended and Restated Loan Agreement includes customary representations and warranties and requires the Borrowers to comply with customary
affirmative and negative covenants, including, among other things, a financial covenant requiring the maintenance of a ratio of (x) EBITDA
net of capital expenditures (to the extent not paid using Borrowed Money) to (y) the sum of debt service and dividends paid, in each
case as of the last day of each month for the trailing twelve-month period ending on such day, of at least 1.0 to 1.0, if an event of
default has occurred and is continuing or Availability has fallen below 10% of the Revolving Commitment at any time (until such time
as both Availability is 10% or greater and no event of default exists, for the
The Amended and Restated Loan Agreement also limits the Borrowers’ right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions. The Amended and Restated Loan Agreement does not restrict the Company’s ability to pay cash dividends on, or repurchase, shares of its common stock, subject to (a) no default existing prior to or resulting from such dividend or repurchase, (b) Availability is not less than 15% of the Revolving Commitment for each of the preceding 45 days prior to announcement of such dividend or repurchase and after giving pro forma effect to such dividend or repurchase and (c) if Availability is less than 20% of the Revolving Commitment on any day in such 45-day period, the Borrowers are in compliance with the financial covenant described above after giving effect to such dividend or repurchase.
We
incurred $
As
of November 2, 2025, we had $
15
12. Earnings Per Share
We refer you to the discussion of Earnings Per Share in Note 1. Summary of Significant Accounting Policies, in the financial statements included in our 2025 Annual Report, for additional information concerning the calculation of earnings per share (EPS).
All stock awards are designed to encourage retention and to provide an incentive for increasing shareholder value. We have issued restricted stock awards to non-employee members of the board of directors since 2006 and to certain non-executive employees since 2014. We have issued RSUs to certain senior executives since fiscal 2012 under the Company’s Stock Incentive Plan. Each RSU entitles an executive to receive one share of the Company’s common stock if the executive remains continuously employed with the Company through the applicable vesting date. The RSUs may be paid in shares of our common stock, cash or both at the discretion of the Compensation Committee of our board of directors. We have issued PSUs to certain senior executives since fiscal 2019 under the Company’s Stock Incentive Plan. Each PSU entitles the executive officer to receive one share of our common stock based on the achievement of two specified performance conditions if the executive officer remains continuously employed through the end of the three-year performance period. Historically, one target is based on our annual average growth in our EPS over the performance period and the other target is based on EPS growth over the performance period compared to our peers. For the PSUs issued under the Company’s 2024 Plan in fiscal 2025 and afterwards, one target is the Company’s annual EPS growth over the performance period and the other target is the Company’s total shareholder return during the performance period compared to the Company’s peer group. The payout or settlement of the PSUs will be made in shares of our common stock.
We expect to continue to grant these types of awards annually in the future. The following table sets forth the number of outstanding restricted stock awards and RSUs and PSUs, net of forfeitures and vested shares, as of the fiscal period-end dates indicated:
| November 2, | February 2, | |||||||
| 2025 | 2025 | |||||||
| Restricted shares | ||||||||
| RSUs and PSUs | ||||||||
All restricted shares, RSUs and PSUs awarded that have not yet vested are considered when computing diluted earnings per share.
16
The following table sets forth the computation of basic and diluted earnings per share:
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Less: Unvested participating restricted stock dividends | ||||||||||||||||
| Net earnings allocated to unvested participating restricted stock | ||||||||||||||||
| (Loss) / Earnings from continuing operations available for common shareholders | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| (Loss) / Earnings from discontinued operations available for common shareholders | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net (loss) / earnings available for common shareholders | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Weighted average shares outstanding for basic earnings per share | ||||||||||||||||
| Dilutive effect of unvested restricted stock, RSU and PSU awards | ||||||||||||||||
| Weighted average shares outstanding for diluted earnings per share | ||||||||||||||||
| Basic (loss) / earnings from continuing operations per share | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Basic (loss) / earnings from discontinued operations per share | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Basic (loss) / earnings per share | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Diluted (loss) / earnings from continuing operations per share | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Diluted (loss) / earnings from discontinued operations per share | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Diluted (loss) / earnings per share | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Due
to net losses, approximately
13. Income Taxes
For the third quarters of fiscal 2026 and fiscal
2025, we recorded income tax benefits of $
For the nine-month periods of fiscal 2026 and
fiscal 2025, we recorded income tax benefits of $
No material and non-routine positions have been identified as uncertain tax positions.
Tax years ending January 29, 2023 through February 2, 2025 remain subject to examination by federal and state taxing authorities.
17
14. Segment Information
As a public entity, we are required to present disaggregated information by segment using the management approach. The objective of this approach is to allow users of our financial statements to see our business through the eyes of management based upon the way management reviews performance and makes decisions. The management approach requires segment information to be reported based on how management internally evaluates the operating performance of the Company’s business units or segments. The objective of this approach is to meet the basic principles of segment reporting as outlined in ASC 280 Segments (“ASC 280”), which are to allow the users of our financial statements to:
| ■ | better understand our performance; |
| ■ | better assess our prospects for future net cash flows; and |
| ■ | make more informed judgments about us as a whole. |
We define our segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources. The Company’s CODM is the Chief Executive Officer. The CODM regularly reviews net sales, gross profit, and operating income by segment as the primary measures of segment performance. The CODM reviews net sales as a primary indicator of operational performance, assessing how much revenue is brought in from core business activities, after returns, allowances, and discounts, which reflects demand and execution of each segment’s strategy. Gross profit, which is derived from net sales and cost of sales, is reviewed by the CODM as a diagnostic metric, particularly useful in evaluating margin trends. Operating income is the key profitability metric used to assess performance across segments and make decisions related to resource allocation, including capital expenditures, headcount, and other investment initiatives. Each of these metrics are considered in budgeting, forecasting, and operational planning decisions.
For
financial reporting purposes, we are organized into
| ■ | Hooker Branded, consisting of the operations of our imported Hooker Casegoods and Hooker Upholstery businesses; |
| ■ | Domestic Upholstery, which includes the domestic upholstery manufacturing operations of Bradington-Young, HF Custom (formerly Sam Moore), Shenandoah Furniture and Sunset West; and |
| ■ | All Other, consisting of intercompany eliminations and operating segments that are not individually reportable. Due to a change in the way management internally evaluates operating performance, beginning with the fiscal 2026 first quarter, Hooker Branded and Domestic Upholstery segments’ results now include all the sales of products formerly included in H Contract’s results. Fiscal 2025 results discussed below have been recast to reflect this change. Subsequent to the third quarter of fiscal 2026, the Company entered into an Asset Purchase Agreement to sell the Pulaski Furniture (“PFC”) and Samuel Lawrence (“SLF”) casegoods brands, formerly part of the Home Meridian segment. As the PFC and SLF businesses have been classified as discontinued operations, the remaining business does not qualify as a reportable segment, therefore, the Home Meridian segment will be eliminated. The Samuel Lawrence Hospitality product line, along with the remaining Home Meridian businesses, will be reported within All Other. |
18
The following tables present segment information for the periods, and as of the dates, indicated.
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||
| November 2, 2025 |
October 27, 2024 |
November 2, 2025 |
October 27, 2024 |
|||||||||||||||||||||||||||||
| % Net | % Net | % Net | % Net | |||||||||||||||||||||||||||||
| Sales | Sales | Sales | Sales | |||||||||||||||||||||||||||||
| Net Sales | ||||||||||||||||||||||||||||||||
| Hooker Branded | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Domestic Upholstery | % | % | % | % | ||||||||||||||||||||||||||||
| All Other | % | % | % | % | ||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Cost of Sales | ||||||||||||||||||||||||||||||||
| Hooker Branded | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Domestic Upholstery | % | % | % | % | ||||||||||||||||||||||||||||
| All Other | % | % | % | % | ||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||||||||||||||
| Hooker Branded | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Domestic Upholstery | % | % | % | % | ||||||||||||||||||||||||||||
| All Other | % | % | % | % | ||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Selling and Administrative Expenses | ||||||||||||||||||||||||||||||||
| Hooker Branded | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Domestic Upholstery | % | % | % | % | ||||||||||||||||||||||||||||
| All Other | % | % | % | % | ||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Goodwill and Intangible assets impairment | ||||||||||||||||||||||||||||||||
| Domestic Upholstery | % | $ | - | % | % | $ | - | % | ||||||||||||||||||||||||
| All Other | % | % | % | % | ||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Operating (Loss) / Income | ||||||||||||||||||||||||||||||||
| Hooker Branded | $ | % | $ | ( |
) | - |
% | $ | % | $ | ( |
) | - |
% | ||||||||||||||||||
| Domestic Upholstery | ( |
) | - |
% | ( |
) | - |
% | ( |
) | - |
% | ( |
) | - |
% | ||||||||||||||||
| All Other | ( |
) | - |
% | ( |
) | - |
% | ( |
) | - |
% | ( |
) | - |
% | ||||||||||||||||
| Consolidated | $ | ( |
) | - |
% | $ | ( |
) | - |
% | $ | ( |
) | - |
% | $ | ( |
) | - |
% | ||||||||||||
| Other Income, net | ||||||||||||||||||||||||||||||||
| Hooker Branded | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Domestic Upholstery | % | % | % | % | ||||||||||||||||||||||||||||
| All Other | % | % | % | % | ||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Interest expense - Corporate | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Income taxes - Corporate | $ | ( |
) | - |
% | $ | ( |
) | - |
% | $ | ( |
) | - |
% | $ | ( |
) | - |
% | ||||||||||||
| Net (loss) / income from continuing operations - Corporate | $ | ( |
) | - |
% | $ | ( |
) | - |
% | $ | ( |
) | - |
% | $ | ( |
) | - |
% | ||||||||||||
19
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| November 2, 2025 | October 27, 2024 | November 2, 2025 | October 27, 2024 | |||||||||||||
| Restructuring Costs | ||||||||||||||||
| Hooker Branded | $ | $ | $ | $ | ||||||||||||
| Domestic Upholstery | ||||||||||||||||
| All Other | ||||||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| Capital Expenditures | ||||||||||||||||
| Hooker Branded | $ | $ | $ | $ | ||||||||||||
| Domestic Upholstery | ||||||||||||||||
| All Other | ||||||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| Depreciation & Amortization | ||||||||||||||||
| Hooker Branded | $ | $ | $ | $ | ||||||||||||
| Domestic Upholstery | ||||||||||||||||
| All Other | ||||||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
We
recorded $
Within discontinued operations, we recorded expenses of $
As of November 2, 2025 and February 2, 2025, we had
accrued restructuring charges of approximately $
| As of November 2, |
As of February 2, |
|||||||||||||||
| 2025 | %Total | 2025 | %Total | |||||||||||||
| Assets | Assets | |||||||||||||||
| Assets | ||||||||||||||||
| Hooker Branded | $ | % | $ | % | ||||||||||||
| Domestic Upholstery | % | % | ||||||||||||||
| All Other | % | % | ||||||||||||||
| Assets Held for Sale, net | % | % | ||||||||||||||
| Consolidated Assets | $ | % | $ | % | ||||||||||||
| Consolidated Goodwill | ||||||||||||||||
| and Intangibles | ||||||||||||||||
| Total Consolidated Assets | $ | $ | ||||||||||||||
20
Sales by product type are as follows:
| Net Sales (in thousands) | ||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||
| November 2, 2025 | %Total | October 27, 2024 | %Total | November 2, 2025 | %Total | October 27, 2024 | %Total | |||||||||||||||||||||||||
| Casegoods | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Upholstery | % | % | % | % | ||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
15. Subsequent Events
Dividends
On
Sale of Certain Casegoods Brands
On December 1, 2025, the Company entered into
an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Magnussen Home Furnishings, Inc. (“Magnussen”)
to sell the Company’s Pulaski Furniture (“PFC”) and Samuel Lawrence (“SLF”) casegoods brands, including
specified assets and liabilities related to those brands. Pursuant to the terms of the Asset Purchase Agreement, at closing, an estimated
purchase price will be determined and paid based upon the net book value of the assets being sold in the transaction. As of November 2,
2025, the Company’s fiscal third quarter-end, the currently estimated purchase price is approximately $
The transaction is subject to customary closing conditions, including third party consents, and is currently expected to close by mid-December 2025. Ten percent of the purchase price paid at closing will be subject to a holdback for 210 days for customary indemnification and final purchase price adjustments. The transactions contemplated by the Asset Purchase Agreement do not require the approval of the Company’s or Magnussen’s shareholders.
The Company’s HMI segment currently had three brands: PFC, SLF and Samuel Lawrence Hospitality (“SLH”) and the Company is retaining the SLH product line, which has been retroactively included in the “All other” segment. To accommodate the Company’s continued use of the “Samuel Lawrence Hospitality” name, Magnussen will license back the use of the name to the Company pursuant to an exclusive, worldwide, royalty-free, fully-paid license agreement. Under the Asset Purchase Agreement, Magnussen has agreed, for a period of three (3) years following the closing, not to, directly or indirectly, engage or participate in the hospitality business in the U.S. or in any jurisdiction in which the Company or any successor or assign operates.
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
All references to the “Company,” “we,” “us” and “our” in this document refer to Hooker Furnishings Corporation and its consolidated subsidiaries, unless specifically referring to segment information. All references to the “Hooker,” “Hooker Division(s),” “Hooker Legacy Brands” or “traditional Hooker” divisions or companies refer to all current business units and brands except for those in the former Home Meridian segment. The Hooker Branded segment includes Hooker Casegoods and Hooker Upholstery. The Domestic Upholstery segment includes Bradington-Young, HF Custom (formerly Sam Moore), Shenandoah Furniture and Sunset West. All Other includes intercompany eliminations and operating segments that are not individually reportable.
Forward-Looking Statements
Certain statements made in this report, including statements under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the notes to the consolidated financial statements included in this report, are not based on historical facts, but are forward-looking statements. These statements reflect our reasonable judgment with respect to future events and typically can be identified by the use of forward-looking terminology such as “believes,” “expects,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “would,” “could,” or “anticipates,” or the negatives thereof, or other variations thereof, or comparable terminology, or by discussions of strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Those risks and uncertainties include but are not limited to:
(1) adverse political acts or developments in, or affecting, the international markets from which we import products and some components used in our Domestic Upholstery segment, including duties or tariffs imposed on those products or product components by foreign governments or the U.S. government, such as the current twenty percent tariff, potential additional higher reciprocal tariffs on imports from key sourcing countries, U.S. Department of Commerce’s Section 232 investigation into timber, lumber, and their derivative products, including furniture, affecting the countries from which we source imported home furnishings and components, including the possible adverse effects on our sales, earnings, and liquidity;
(2) general economic or business conditions, both domestically and internationally, including the current macroeconomic uncertainties and challenges to the retail environment for home furnishings along with instability in the financial and credit markets, in part due to fluctuating interest rates and housing market volatility, which can affect consumer spending patterns, existing home sales, and demand for home furnishings, including their potential impact on (i) our sales and operating costs and access to financing, (ii) customers, and (iii) suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses;
(3) the impairment of our long-lived assets, which can result in reduced earnings and net worth;
(4) the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit;
(5) future actions by activist stockholders that could divert management attention, create uncertainty around our strategic direction, disrupt relationships with key shareholders, increase our costs, drive stock price volatility, and otherwise materially impact our business, financial condition, results of operations, and cash flows;
(6) risks associated with the ultimate outcome of our cost reduction plans, including the amounts and timing of savings realized and the ability to scale the business appropriately as customer demand increases or decreases based on the macroeconomic environment;
(7) risks associated with our ability to satisfy the necessary conditions to consummate the sale of Pulaski Furniture and Samuel Lawrence casegoods brands on a timely basis or at all;
22
(8) risks associated with our new warehouse facility in Vietnam, including our ability to execute the planned shift of inventories from domestic facilities to Vietnam without increasing overall inventories and adversely affecting working capital levels and start-up risks including technology-related risks or disruption in our offshore suppliers or the transportation and handling industries, including labor stoppages, strikes, or slowdowns, and the ability to timely fulfill customer orders;
(9) the risks specifically related to the concentrations of a material part of our sales and accounts receivable in only a few customers, including the loss of several large customers through business consolidations, failures or other reasons, or the loss of significant sales programs with major customers;
(10) risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, customs issues, freight costs, including the price and availability of shipping containers, ocean vessels, domestic trucking, and warehousing costs and the risk that a disruption in our supply chain or the transportation and handling industries, including labor stoppages, strikes, or slowdowns, could adversely affect our ability to timely fulfill customer orders;
(11) interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the internet or other related issues including unauthorized disclosures of confidential information, hacking or other cybersecurity threats or inadequate levels of cyber insurance or risks not covered by cyber insurance;
(12) difficulties in forecasting demand for our imported products and raw materials used in our domestic operations;
(13) our inability to collect amounts owed to us or significant delays in collecting such amounts;
(14) the risks associated with our Amended and Restated Loan Agreement, including the fact that our asset-based lending facility is secured by substantially all of our assets and contains provisions which limit the amount of our future borrowings under the facility, as well as financial and negative covenants that, among other things, may limit our ability to incur additional indebtedness;
(15) risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs, availability of skilled labor, and environmental compliance and remediation costs;
(16) risks associated with our self-insured healthcare and workers compensation plans, which utilize stop-loss insurance for aggregate claims above specified thresholds and can be impacted by higher healthcare inflation and expenditures, all of which may cause our healthcare and workers compensation costs to rise unexpectedly, adversely affecting our earnings, financial condition, and liquidity;
(17) disruptions and damage (including those due to weather) affecting our Virginia or North Carolina warehouses, our Virginia, North Carolina or California administrative and manufacturing facilities, our High Point, Las Vegas, and Atlanta showrooms or our representative office or warehouse in Vietnam;
(18) changes in U.S. and foreign government regulations and in the political, social and economic climates of the countries from which we source our products;
(19) risks associated with product defects, including higher than expected costs associated with product quality and safety, regulatory compliance costs related to the sale of consumer products and costs related to defective or non-compliant products, product liability claims and costs to recall defective products and the adverse effects of negative media coverage;
(20) the direct and indirect costs and time spent by our associates related to the implementation of our Enterprise Resource Planning system (“ERP”), including costs resulting from unanticipated disruptions to our business;
(21) achieving and managing growth and change, and the risks associated with new business lines, acquisitions, including the selection of suitable acquisition targets, restructurings, strategic alliances and international operations;
(22) risks associated with distribution through third-party retailers, such as non-binding dealership arrangements;
23
(23) changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials;
(24) price competition in the furniture industry;
(25) changes in consumer preferences, including increased demand for lower-priced furniture, especially in light of recently imposed tariffs on imported furniture; and
(26) decisions concerning the allocation of capital including the extent to which we repurchase shares of our common stock which will affect shares outstanding and EPS.
Our forward-looking statements could be wrong considering these and other risks, uncertainties and assumptions. The future events, developments or results described in this report could turn out to be materially different. Any forward-looking statement we make speaks only as of the date of that statement, and we undertake no obligation, except as required by law, to update any forward-looking statements whether as a result of new information, future events or otherwise and you should not expect us to do so.
Also, our business is subject to significant risks and uncertainties, any of which can adversely affect our business, results of operations, financial condition or future prospects. For a discussion of risks and uncertainties that we face, see the Forward-Looking Statements detailed above and Item 1A, “Risk Factors” in our 2025 Annual Report.
Investors should also be aware that while we occasionally communicate with securities analysts and others, it is against our policy to selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, investors should not assume that we agree with any projection, forecast or report issued by any analyst regardless of the content of the statement or report, as we have a policy against confirming information issued by others.
Quarterly Reporting
This quarterly report on Form 10-Q includes our unaudited condensed consolidated financial statements for the 2026 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “third quarter” or “quarterly period”) that began August 4, 2025 and the thirty-nine-week period (also referred to as “nine months”, “nine-month period” or “year-to-date period”) that began February 3, 2025, which both ended November 2, 2025. This report discusses our results of operations for these periods compared to the 2025 fiscal year thirteen-week period that began July 29, 2024, and the thirty-nine-week period that began January 29, 2024, which both ended October 27, 2024; and our financial condition as of November 2, 2025 compared to February 2, 2025.
References in this report to:
| ■ | the 2026 fiscal year and comparable terminology mean the fiscal year that began February 3, 2025, and will end February 1, 2026; and |
| ■ | the 2025 fiscal year and comparable terminology mean the fiscal year that began January 29, 2024, and ended February 2, 2025. |
Dollar amounts presented in the tables below are in thousands except for per share data.
The following discussion should be read in conjunction with the condensed consolidated financial statements, including the related notes, contained elsewhere in this quarterly report. We also encourage users of this report to familiarize themselves with all our recent public filings made with the SEC, especially our 2025 Annual Report. Our 2025 Annual Report contains critical information regarding known risks and uncertainties that we face, critical accounting policies and information on commitments and contractual obligations that are not reflected in our condensed consolidated financial statements, as well as a more thorough and detailed discussion of our corporate strategy and new business initiatives.
Our 2025 Annual Report and other public filings made with the SEC are available, without charge, at www.sec.gov and at http://investors.hookerfurnishings.com.
24
Overview
Hooker Furnishings Corporation, incorporated in Virginia in 1924, is a designer, marketer, and importer of casegoods (wooden and metal furniture), leather furniture, fabric-upholstered furniture, lighting, accessories, and home décor for the residential, hospitality and contract markets. We also domestically manufacture premium residential custom leather, custom fabric-upholstered furniture and outdoor furniture.
During fiscal 2026, management determined that the Pulaski Furniture (“PFC”) and Samuel Lawrence Furniture (“SLF”) brands within the Home Meridian segment no longer aligned with the Company’s long-term strategic direction. As a result, the Company initiated a formal process to sell these businesses.
In recent years, the value-priced PFC and SLF businesses have faced substantial sales declines due to adverse macroeconomic conditions, including elevated housing prices and mortgage rates that have weakened the housing market, reduced consumer discretionary spending, inflationary pressures, and ongoing tariffs. These uncontrollable factors disproportionately impacted the higher-volume, low-margin business model under which these brands operate. Despite implementing organizational restructuring and cost-reduction initiatives, the model no longer supports the Company’s strategy of achieving sustainable, long-term profitability. We believe that divesting the PFC and SLF businesses will allow management to realign our portfolio around our strongest brands and position the Company for consistent, long-term performance.
For the nine-month period of fiscal 2026, the combined net sales of PFC and SLF accounted for approximately 75% of the Home Meridian segment’s net sales and 15% of consolidated net sales. Following their sale, the Home Meridian segment will be eliminated, with its remaining Samuel Lawrence Hospitality brand reclassified into the “All Other” category. This divestiture represents a strategic shift and will result in a significant change to the Company’s operations and financial reporting.
An active buyer was identified, and a letter of intent was executed before the end of the third quarter. Accordingly, management concluded that the PFC and SLF businesses met the criteria to be classified as held for sale and reported as discontinued operations. On December 1, 2025, the Company entered into an Asset Purchase Agreement with the buyer. Pursuant to the terms of the Agreement, a preliminary purchase price was established at execution. Following closing, the purchase price will be adjusted to reflect the final net book value of the assets sold as of the closing date. See Note 3 to the Condensed Consolidated Financial Statements for additional information.
The following analysis excludes discontinued operations except as otherwise indicated.
Orders and Backlog
In the discussion below and herein, we reference changes in sales orders or “orders” and sales order backlog (unshipped orders at a point in time) or “backlog” over and compared to certain periods of time and changes discussed are in sales dollars and not units of inventory, unless stated otherwise. We believe orders are generally good current indicators of sales momentum and business conditions. If the items ordered are in stock and the customer has requested immediate delivery, we generally ship products in about seven days or less from receipt of order; however, orders may be shipped later if they are out of stock or there are production or shipping delays or the customer has requested the order to be shipped at a later date or has requested that we ship the order “in-full”, meaning all products ordered for the end-user must ship together. It is our policy and industry practice to allow order cancellation for casegoods up to the time of shipment or, in the case of container direct orders, up until the time the container is booked with the ocean freight carrier; therefore, customer orders for casegoods are not firm. However, domestically produced upholstered products are predominantly custom-built and consequently, cannot be cancelled once the leather or fabric has been cut. Additionally, our hospitality products are highly customized and are generally not cancellable. Similarly, for our outdoor furnishings, most orders require a deposit upon order and the balance before production is started, and hence are generally not cancellable.
For the Hooker Branded and Domestic Upholstery segments, we generally consider backlogs to be one helpful indicator of sales for the upcoming 30-day period, but because of our relatively quick delivery and our cancellation policies, we do not consider order backlogs to be a reliable indicator of expected long-term sales.
25
At November 2, 2025, our backlog of unshipped orders was as follows:
| Order Backlog | ||||||||||||
| (Dollars in 000s) | ||||||||||||
| Reporting Segment | November 2, 2025 | February 2, 2025 | October 27, 2024 | |||||||||
| Hooker Branded | $ | 15,364 | $ | 13,108 | $ | 14,242 | ||||||
| Domestic Upholstery | 16,147 | 18,123 | 15,018 | |||||||||
| All Other | 1,224 | 5,259 | 13,678 | |||||||||
| Consolidated | $ | 32,735 | $ | 36,490 | $ | 42,938 | ||||||
At the end of the third quarter of fiscal 2026, consolidated order backlog decreased 10.3% compared to the fiscal year-end on February 2, 2025, and 23.8% compared to the prior year third quarter end. These decreases were primarily driven by the absence of large projects in the hospitality business during the current period, reflecting the project-based nature and inherent variability of that business.
Hooker Branded’s backlog increased 17.2% compared to fiscal year-end and 7.9% compared to the prior-year third quarter, supported by a 4.1% increase in incoming orders during the quarter. Domestic Upholstery’s backlog decreased 10.9% from year-end but increased 7.5% compared to the prior-year quarter-end, driven by a 3.5% increase in incoming orders. Both Hooker Branded and Domestic Upholstery experienced year-over-year increases in incoming orders for two consecutive quarters.
Executive Summary
Fiscal 2026 third quarter:
Consolidated net sales from continuing operations for the third quarter of fiscal 2026 decreased $11.9 million, or 14.4%, to $70.7 million compared to $82.7million in the prior-year period. The decline was primarily attributable to the timing of shipments in the hospitality business, as several large projects were shipped in the prior-year quarter. The decrease was partially offset by a 3.0% increase in net sales at Domestic Upholstery and a 1.1% increase at Hooker Branded.
Gross profit from continuing operations decreased $2.4 million, consistent with the lower sales volume; however, gross margin increased slightly to 25.6% compared to 24.8% in the prior-year period. Margin improvement at Hooker Branded offset margin declines within All Other due to lower sales volume in the hospitality business. Domestic Upholstery gross margin remained consistent with the prior-year quarter.
Consolidated operating loss from continuing operations for the quarter was $16.3 million driven by the $15.6 million non-cash impairment charges to certain intangible assets within the Domestic Upholstery segment and All Other. The challenging macroeconomic environment has created significant pressure across the home furnishings and broader consumer discretionary sectors, which adversely affected our near-term results and contributed to a sustained decline in our share price during the third quarter. These conditions triggered an interim impairment analysis under U.S. GAAP. Market-based valuation inputs, including trading multiples and discount rates, were negatively impacted, resulting in non-cash impairments of certain goodwill and indefinite-lived intangible assets. These accounting charges are not expected to affect our liquidity, ongoing operations, or strategic view of the related brands and businesses. Additionally, approximately $600,000 of restructuring costs, primarily severance associated with cost-reduction initiatives, were recorded in the current quarter. Net loss from continuing operations for the quarter was $12.5 million, or ($1.18) per diluted share.
Fiscal 2026 nine months:
Consolidated net sales from continuing operations for the first nine months of fiscal 2026 decreased $22.0 million, or 9.4%, to $211.1 million compared to $233.1 million in the prior-year period. The decline was also driven by lower hospitality net sales, as several large projects shipped during the third quarter, and to a lesser extent, the second quarter, of the prior fiscal year. This decline was partially offset by a $1.2 million, or 1.1%, increase in net sales at Hooker Branded. Domestic Upholstery net sales were essentially flat for the period.
Gross profit decreased $2.9 million, largely reflecting the reduction in hospitality volume. Despite the lower sales, consolidated gross margin improved to 25.0% from 23.9% in the prior-year period, primarily due to increased profitability at Domestic Upholstery resulting from modest decreases in direct labor, warehousing labor, and material costs. Hooker Branded gross margin remained essentially unchanged.
26
Consolidated operating loss from continuing operations for the nine-month period was $17.4 million, which included the $15.6 million non-cash impairment charges discussed above to certain intangible assets within the Domestic Upholstery segment and All Other, as well as the $1.7 million of restructuring costs related to severance and warehousing consolidation costs. The Company reported a net loss of $13.6 million, or ($1.29) per diluted share.
Multi-Phased Cost Reduction Initiatives
Through our multi-phased cost reduction initiatives, we have exceeded our initial goal to reduce our fixed costs by approximately $25 million by the end of the fiscal 2026 third quarter. We now have our new cost structure in place, which we projected to be complete by the end of this quarter.
Our fiscal 2026 third quarter and first nine months performance is discussed in greater detail below under “Results of Operations – Continuing Operations” and “Results of Operations – Discontinued Operations”.
Results of Operations – Continuing Operations
The following table sets forth the percentage relationship to net sales of certain items included in the condensed consolidated statements of income included in this report.
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
| Cost of sales | 74.4 | 75.2 | 75.0 | 76.1 | ||||||||||||
| Gross profit | 25.6 | 24.8 | 25.0 | 23.9 | ||||||||||||
| Selling and administrative expenses | 25.7 | 29.2 | 24.9 | 26.8 | ||||||||||||
| Goodwill and trade name impairment charges | 22.0 | 0.9 | 7.4 | 0.3 | ||||||||||||
| Intangible asset amortization | 0.9 | 0.8 | 0.9 | 0.9 | ||||||||||||
| Operating (loss)/income | (23.1 | ) | (6.2 | ) | (8.2 | ) | (4.1 | ) | ||||||||
| Other income, net | 0.4 | 0.7 | 0.2 | 1.1 | ||||||||||||
| Interest expense | 0.1 | 0.4 | 0.3 | 0.4 | ||||||||||||
| (Loss)/income from continuing operations before income taxes | (22.8 | ) | (5.8 | ) | (8.3 | ) | (3.4 | ) | ||||||||
| Income tax (benefit) / expense | (5.1 | ) | (1.5 | ) | (1.9 | ) | (0.9 | ) | ||||||||
| Net (loss)/income from continuing operations | (17.7 | ) | (4.3 | ) | (6.5 | ) | (2.5 | ) | ||||||||
Fiscal 2026 Third Quarter and First Nine Months Compared to Fiscal 2025 Third Quarter and First Nine Months
| Net Sales | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Hooker Branded | $ | 36,492 | 51.6 | % | $ | 36,107 | 43.7 | % | $ | 385 | 1.1 | % | $ | 109,851 | 52.0 | % | $ | 108,700 | 46.6 | % | $ | 1,151 | 1.1 | % | ||||||||||||||||||||||||
| Domestic Upholstery | 30,197 | 42.7 | % | 29,327 | 35.5 | % | 870 | 3.0 | % | 87,787 | 41.6 | % | 87,910 | 37.7 | % | (123 | ) | -0.1 | % | |||||||||||||||||||||||||||||
| All Other | 4,041 | 5.7 | % | 17,236 | 20.8 | % | (13,195 | ) | -76.6 | % | 13,519 | 6.4 | % | 36,518 | 15.7 | % | (22,999 | ) | -63.0 | % | ||||||||||||||||||||||||||||
| Consolidated | $ | 70,730 | 100 | % | $ | 82,670 | 100 | % | $ | (11,940 | ) | -14.4 | % | $ | 211,157 | 100 | % | $ | 233,128 | 100 | % | $ | (21,971 | ) | -9.4 | % | ||||||||||||||||||||||
27
| Unit Volume | FY26 Q3 vs. FY25 Q3 Change | FY26 YTD vs. FY25 YTD Change | Average Selling Price (“ASP”) | FY26 Q3 vs. FY25 Q3 Change | FY26 YTD vs. FY25 YTD Change | |||||||||||||
| Hooker Branded | -9.3 | % | -1.3 | % | Hooker Branded | 10.8 | % | 2.3 | % | |||||||||
| Domestic Upholstery | 1.5 | % | 0.5 | % | Domestic Upholstery | 0.8 | % | -1.0 | % | |||||||||
| All Other | -63.4 | % | -52.5 | % | All Other | -17.4 | % | 3.9 | % | |||||||||
| Consolidated | -18.0 | % | -9.8 | % | Consolidated | 11.9 | % | 5.9 | % | |||||||||
Consolidated net sales decreased $11.9 million, or 14.4%, for the third quarter of fiscal 2026, and $22.0 million, or 9.4%, for the nine-month period, primarily due to a significant decline in hospitality net sales under All Other.
| ■ | The Hooker Branded segment’s net sales increased 1.1% for both the third quarter and the nine-month period, driven by higher average selling prices in both periods, partially offset by lower unit volume. Gross revenue remained essentially unchanged; however, reduced discounts and, to a lesser extent, lower returns and allowances, reflecting higher handling charges in the prior year, resulted in a slight increase in net sales. |
| ■ | The Domestic Upholstery segment’s net sales increased $870,000, or 3.0%, in the third quarter and remained essentially flat for the nine-month period. Performance varied across the segment’s divisions. Shenandoah Furniture, which serves the private-label market, reported net sales increases of 7.2% for the quarter and 2.2% for the nine-month period, supported by strong incoming orders in the second and third quarters. Sam Moore net sales increased 6.8% in the third quarter, following a 10% increase in the second quarter, driven by improved capacity and operational efficiency; however, Sam Moore’s net sales decreased 1.7% for the nine-month period. Sunset West, the outdoor furnishings division, reported flat net sales for both periods, while Bradington-Young experienced slight decreases of 1.8% in the third quarter and 1.6% for the nine-month period. |
| ■ | All Other net sales decreased significantly in both periods, primarily due to the decrease in hospitality net sales resulting from the timing of shipments of several large projects in the prior fiscal year. |
| Gross Profit / (Loss) and Margin | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Hooker Branded | $ | 12,030 | 33.0 | % | $ | 10,818 | 30.0 | % | $ | 1,211 | 11.2 | % | $ | 33,636 | 30.6 | % | $ | 32,983 | 30.3 | % | $ | 652 | 2.0 | % | ||||||||||||||||||||||||
| Domestic Upholstery | 6,009 | 19.9 | % | 5,748 | 19.6 | % | 261 | 4.5 | % | 16,594 | 18.9 | % | 15,099 | 17.2 | % | 1,495 | 9.9 | % | ||||||||||||||||||||||||||||||
| All Other | 49 | 1.2 | % | 3,898 | 22.6 | % | (3,849 | ) | 98.7 | % | 2,506 | 18.5 | % | 7,599 | 20.8 | % | (5,093 | ) | 67.0 | % | ||||||||||||||||||||||||||||
| Consolidated | $ | 18,088 | 25.6 | % | $ | 20,464 | 24.8 | % | $ | (2,377 | ) | -11.6 | % | $ | 52,736 | 25.0 | % | $ | 55,681 | 23.9 | % | $ | (2,946 | ) | -5.3 | % | ||||||||||||||||||||||
Consolidated gross profit decreased for both periods due to lower net sales, while consolidated gross margin increased in each period.
| ■ | The Hooker Branded segment’s gross profit increased $1.2 million, and gross margin improved 300 bps in the third quarter, benefiting from price increases implemented to offset tariffs and higher costs, as well as reduced discounts. Warehousing costs decreased modestly during the quarter due to decreased freight expenses, while partially offset by higher rent and labor expenses associated with warehouse consolidation. For the nine-month period, gross profit increased $652,000, driven by higher net sales, while gross margin remained essentially flat. Price increases and lower returns and allowances were offset by reduced margins on discounted products used to balance the inventory mix earlier this year. Warehousing expenses increased slightly for the period also due to higher rent and labor costs related to warehouse consolidation, along with increased medical claims. Restructuring costs of $47,000 and $258,000 were recorded for the third quarter and nine-month period, respectively, compared to $47,000 recorded in the prior-year period. |
| ■ | The Domestic Upholstery segment’s gross profit increased $261,000 in the third quarter, while gross margin remained consistent with the prior-year period. Direct material, direct labor, and indirect costs remained relatively flat as a percentage of net sales compared to last year’s third quarter. For the nine-month period, gross profit increased $1.5 million and gross margin improved 170 bps. Direct material costs decreased slightly as a percentage of net sales, and direct labor costs also decreased due to cost-reduction initiatives. Indirect costs were modestly lower than the prior-year period, reflecting improved absorption driven by increased production efficiency at Sam Moore. Restructuring costs of $26,000 and $63,000 were recorded in the third quarter and nine-month period, respectively, related to relocating Sunset West inventory from the former Savannah warehouse. |
28
| ■ | All Other gross profit and gross margin decreased in both periods, driven by lower net sales in the hospitality business. |
| Selling and Administrative Expenses (S&A) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Hooker Branded | $ | 11,318 | 31.0 | % | $ | 12,308 | 34.1 | % | $ | (990 | ) | -8.0 | % | $ | 32,886 | 29.9 | % | $ | 34,623 | 31.9 | % | $ | (1,736 | ) | -5.0 | % | ||||||||||||||||||||||
| Domestic Upholstery | 5,172 | 17.1 | % | 5,435 | 18.5 | % | (263 | ) | -4.8 | % | 15,631 | 17.8 | % | 16,191 | 18.4 | % | (560 | ) | -3.5 | % | ||||||||||||||||||||||||||||
| All Other | 1,714 | 42.4 | % | 6,357 | 36.9 | % | (4,643 | ) | -73.0 | % | 4,150 | 30.7 | % | 11,594 | 31.7 | % | (7,443 | ) | -64.2 | % | ||||||||||||||||||||||||||||
| Consolidated | $ | 18,204 | 25.7 | % | $ | 24,100 | 29.2 | % | $ | (5,896 | ) | -24.5 | % | $ | 52,667 | 24.9 | % | $ | 62,408 | 26.8 | % | $ | (9,739 | ) | -15.6 | % | ||||||||||||||||||||||
Consolidated selling and administrative (“S&A”) expenses decreased $5.9 million in the third quarter and $9.7 million for the nine-month period. The reduction was primarily due to the exit of the PRI business, including the recognition of bad debt associated with the bankruptcy of its major customer, as well as lower restructuring costs related to the cost-reduction initiatives that began in the prior-year third quarter. The decreases also reflect reduced spending associated with the cost-reduction and restructuring efforts.
| ■ | The Hooker Branded segment’s S&A expenses decreased $990,000, or 310 bps, in the third quarter. Restructuring costs totaled $390,000 in the current-year quarter compared to $950,000 in the prior-year third quarter. Excluding commissions and restructuring costs, S&A expenses were approximately $450,000 lower than the prior-year period. For the nine-month period, S&A expenses decreased $1.7 million. Restructuring costs were $961,000 in the current-year period compared to $950,000 in the prior-year period. Excluding commissions and restructuring costs, S&A expenses were $1.8 million lower than the prior-year nine-month period. These decreases were driven primarily by lower compensation and other spending, partially offset by higher professional services costs, largely attributable to increased IT-related licensing and contract fees and, to a lesser extent, higher accounting-related fees. |
| ■ | The Domestic Upholstery segment’s S&A expenses decreased $263,000, or 140 bps, in the third quarter. Restructuring costs totaled $127,000 in the current-year quarter compared to $559,000 in the prior-year third quarter. Excluding commissions and restructuring costs, S&A expenses increased, driven by higher rent expense, increased compensation costs resulting from higher medical claims, and a higher bonus accrual reflecting improved profitability, partially offset by reductions in other discretionary spending. For the nine-month period, S&A expenses decreased $560,000, or 60 basis points. Restructuring costs were $356,000 in the current-year period compared to $559,000 in the prior-year period. Excluding commissions and restructuring costs, S&A expenses decreased slightly, primarily due to lower professional service fees, elevated in the prior year, and reduced spending on advertising supplies and other operating expenses. These decreases were largely offset by higher compensation costs, rent, sample and product development expenses, and banking fees. |
| ■ | All Other S&A expenses decreased in both periods due primarily to the absence of bad debt from a major customer bankruptcy in the prior year third quarter and the related exit of the PRI business, as well as the absence of BOBO consolidation costs. |
29
| Intangible Asset Impairment and Amortization | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | $ | 14,462 | 20.4 | % | $ | - | 0.0 | % | $ | 14,462 | $ | 14,462 | 6.8 | % | $ | - | 0.0 | % | $ | 14,462 | ||||||||||||||||||||||||||||
| Tradenames impairment | 1,114 | 1.6 | % | 781 | 1.9 | % | 333 | 42.6 | % | 1,114 | 0.5 | % | 781 | 0.7 | % | 333 | 42.6 | % | ||||||||||||||||||||||||||||||
| Intangible asset amortization | 623 | 0.9 | % | 687 | 0.9 | % | -64 | -9.3 | % | 1,911 | 0.9 | % | 2,073 | 0.9 | % | -162 | -7.8 | % | ||||||||||||||||||||||||||||||
We recorded $15.6 million of non-cash impairment charges during the third quarter and nine-month period. These costs included $14.5 million to write down goodwill in the Sunset West division, $556,000 to write down the Bradington-Young trade name, both within the Domestic Upholstery segment, and $558,000 to the remaining HMI business classified in All Other. See Note 9 to our Condensed Consolidated Financial Statements for additional information.
| Operating Profit / (Loss) and Margin | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Hooker Branded | $ | 711 | 1.9 | % | $ | (1,490 | ) | -4.1 | % | $ | 2,201 | 147.7 | % | $ | 748 | 0.7 | % | $ | (1,640 | ) | -1.5 | % | $ | 2,388 | 145.6 | % | ||||||||||||||||||||||
| Domestic Upholstery | (14,725 | ) | -48.8 | % | (281 | ) | -1.0 | % | (14,444 | ) | -5140.2 | % | (15,729 | ) | -0.8 | % | (2,875 | ) | -3.3 | % | (12,854 | ) | -447.1 | % | ||||||||||||||||||||||||
| All Other | (2,301 | ) | -56.9 | % | (3,333 | ) | -19.3 | % | 1,032 | -31.0 | % | (2,437 | ) | -18.0 | % | (5,067 | ) | -13.9 | % | 2,630 | -51.9 | % | ||||||||||||||||||||||||||
| Consolidated | $ | (16,315 | ) | -23.1 | % | $ | (5,104 | ) | -6.2 | % | $ | (11,211 | ) | 219.7 | % | $ | (17,418 | ) | -8.2 | % | $ | (9,582 | ) | -4.1 | % | $ | (7,836 | ) | 81.8 | % | ||||||||||||||||||
We recorded operating loss of $16.3 million for the fiscal 2026 third quarter, driven primarily by a $15.6 million non-cash intangible impairment charge and $597,000 in restructuring costs. For the nine-month period, operating loss was $17.4 million likewise reflects the impact of the $15.6 million impairment and $1.7 million in restructuring charges.
| Income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Consolidated income tax (benefit) / expense | $ | (3,604 | ) | -5.1 | % | $ | (1,230 | ) | -1.5 | % | $ | (2,374 | ) | -193.0 | % | $ | (3,924 | ) | -1.9 | % | $ | (2,017 | ) | -0.9 | % | $ | (1,907 | ) | 94.5 | % | ||||||||||||||||||
| Effective Tax Rate | 22.3 | % | 25.6 | % | 22.3 | % | 25.6 | % | ||||||||||||||||||||||||||||||||||||||||
30
For the third quarters of fiscal 2026 and fiscal 2025, we recorded income tax benefits of $3.6 million and $1.2 million on the pretax loss from continuing operations. For the nine-month periods of fiscal 2026 and fiscal 2025, we recorded income tax benefits of $3.9 million and $2.0 million on the pretax loss from continuing operations. The effective tax rates for these periods were 22.3% and 25.6%, respectively. The fiscal 2025 effective tax rate was higher due to the impact of favorable tax adjustments including the cash surrender value gain on company-owned life insurance applied to a lower pretax loss.
| Net (Loss) / Income from Continuing Operations | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Net (loss) / income from Continuing Operations | $ | (12,534 | ) | -17.7 | % | $ | (3,581 | ) | -4.3 | % | $ | (8,953 | ) | -250.0 | % | $ | (13,648 | ) | -6.5 | % | $ | (5,875 | ) | -2.5 | % | $ | (7,773 | ) | 132.3 | % | ||||||||||||||||||
| Diluted (loss) / earnings from continuing operations per share | $ | (1.18 | ) | $ | (0.34 | ) | $ | (1.29 | ) | $ | (0.56 | ) | ||||||||||||||||||||||||||||||||||||
Results of Operations – Discontinued Operations
The following table sets forth the percentage relationship to net sales of certain items included in the condensed consolidated statements of income included in this report.
| For the | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| November 2, | October 27, | November 2, | October 27, | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| % Net Sales | % Net Sales | $ Change | % Change | % Net Sales | % Net Sales | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 10,341 | 100.0 | % | $ | 21,683 | 100.0 | % | $ | (11,342 | ) | -52.3 | % | $ | 37,379 | 100.0 | % | $ | 59,877 | 100.0 | % | $ | (22,498 | ) | -37.6 | % | ||||||||||||||||||||||
| Cost of sales | 12,081 | 116.8 | % | 18,122 | 83.6 | % | 37,929 | 101.5 | % | 51,240 | 85.6 | % | (13,311 | ) | -26.0 | % | ||||||||||||||||||||||||||||||||
| Gross profit | (1,740 | ) | -16.8 | % | 3,561 | 16.4 | % | (5,301 | ) | -148.9 | % | (550 | ) | -1.5 | % | 8,637 | 14.4 | % | (9,187 | ) | -106.4 | % | ||||||||||||||||||||||||||
| S&A expenses | 4,042 | 39.1 | % | 4,316 | 19.9 | % | (274 | ) | -6.3 | % | 11,597 | 31.0 | % | 12,623 | 21.1 | % | (1,026 | ) | -8.1 | % | ||||||||||||||||||||||||||||
| Tradename impairment | - | 0.0 | % | 1,172 | 5.4 | % | (1,172 | ) | -100.0 | % | - | 0.0 | % | 1,175 | 2.0 | % | (1,175 | ) | -100.0 | % | ||||||||||||||||||||||||||||
| Intangible asset amortization | 248 | 2.4 | % | 229 | 1.1 | % | 19 | 8.3 | % | 745 | 2.0 | % | 688 | 1.1 | % | 57 | 8.3 | % | ||||||||||||||||||||||||||||||
| Other income itmes that are not major | (665 | ) | -6.4 | % | - | 0.0 | % | (665 | ) | (665 | ) | -1.8 | % | - | 0.0 | % | (665 | ) | ||||||||||||||||||||||||||||||
| Pretax loss of discontinued oprations related to major classes | (5,365 | ) | -51.9 | % | (2,156 | ) | -9.9 | % | (3,209 | ) | -148.8 | % | (12,227 | ) | -32.7 | % | (5,849 | ) | -9.8 | % | (6,378 | ) | -109.0 | % | ||||||||||||||||||||||||
| Pretax loss from classification to held-for-sale | 6,544 | 63.3 | % | - | 0.0 | % | 6,544 | 6,544 | 17.5 | % | - | 0.0 | % | 6,544 | ||||||||||||||||||||||||||||||||||
| (Loss) / income from discontinued operations before income taxes | (11,909 | ) | -115.2 | % | (2,156 | ) | -9.9 | % | (9,753 | ) | -452.4 | % | (18,771 | ) | -50.2 | % | (5,849 | ) | -9.8 | % | (12,922 | ) | -220.9 | % | ||||||||||||||||||||||||
| Income tax benefits | (3,269 | ) | -31.6 | % | (1,606 | ) | -7.4 | % | (1,663 | ) | -103.5 | % | (4,916 | ) | -13.2 | % | (1,550 | ) | -2.6 | % | (3,366 | ) | -217.2 | % | ||||||||||||||||||||||||
| Net loss from discontinued operations | (8,640 | ) | -83.6 | % | (550 | ) | -2.5 | % | (8,090 | ) | -1470.9 | % | (13,855 | ) | -37.1 | % | (4,299 | ) | -7.2 | % | (9,556 | ) | -222.3 | % | ||||||||||||||||||||||||
31
| Unit Volume | FY26 Q3 vs. FY25 Q3 Change | FY26 YTD vs. FY25 YTD Change | Average Selling Price (“ASP”) | FY26 Q3 vs. FY25 Q3 Change | FY26 YTD vs. FY25 YTD Change | |||||||||||||
| Discontinued Operations | -59.1 | % | -44.1 | % | Discontinued Operations | 2.7 | % | -5.5 | % | |||||||||
Combined net sales for PFC and SLF decreased $11.3 million, or 52.3%, in the third quarter and $22.5 million, or 37.6%, for the nine-month period due to significantly lower unit volume. These declines were primarily driven by continued macroeconomic pressures and tariff-related buying hesitancy among their value-oriented customers, particularly major furniture chains.
We recorded restructuring costs of $2.6 million in the third quarter and $4.1 million year-to-date associated with the exit of the Savannah warehouse, which primarily supported the PFC and SLF businesses These costs included fixed-asset write-offs, inventory liquidation, severance, and relocation expenses. Low sales volumes resulted in under-absorption of warehouse and international operating costs, which also adversely impacted gross profitability.
Persistently low sales volume, unfavorable product and customer mix, restructuring costs, and approximately $1 million of bad debt related to a recent customer bankruptcy resulted in significant operating losses for both periods. Additionally, valuation allowance of $6.5 million was recorded in the third quarter against held for sale assets.
Outlook
Incoming orders for Hooker branded and Domestic Upholstery segments have increased year-over-year for two consecutive quarters. While macroeconomic headwinds, including elevated housing prices, inflation, low consumer confidence and ongoing tariffs, remain largely unchanged, these challenges were most acute in our higher-volume, lower-margin discontinued business. With a more efficient cost structure and sharper portfolio, we believe we are better positioned to improve profitability even in a prolonged downturn. The advantage going forward is focus, and our team is now fully aligned around our core businesses, which we believe will allow us to drive organic growth and build sustainable profitability.
Financial Condition, Liquidity and Capital Resources
Cash Flows – Operating, Investing and Financing Activities
| Thirty-Nine Weeks Ended | ||||||||
| November 2, | October 27, | |||||||
| 2025 | 2024 | |||||||
| Net cash provided by operating activities | $ | 22,903 | $ | (11,870 | ) | |||
| Net cash used in investing activities | (2,870 | ) | (1,825 | ) | ||||
| Net cash used in financing activities | (25,511 | ) | (8,311 | ) | ||||
| Net cash provided by / (used in) discontinued operations | 537 | (743 | ) | |||||
| Net decrease in cash and cash equivalents | $ | (4,941 | ) | $ | (22,749 | ) | ||
32
During the nine-month period of fiscal 2026, cash decreased by $4.9 million from the prior fiscal year-end. Cash used in financing activities, primarily related to repayments on the term loan and revolving credit facility, together with cash used in investing activities, was largely offset by cash provided by operating activities, which was driven by favorable changes in working capital and non-cash items.
| ● | Cash generated from operating activities totaled $22.9 million compared to $11.9 million used in operations for the same period in the prior year. Key drivers of operating cash flow increase: |
| ○ | Although net loss from continuing operations was $13.6 million, compared to $5.9 million in the prior-year period, the increase was primarily attributable to the $15.6 million of non-cash tradename impairment charges, which were added back to net income in the reconciliation to net cash provided by operating activities. |
| ○ | Trade receivables: Collections of trade accounts receivable generated $13.6 million of cash inflows, compared to $1.4 million outflows in the prior-year period, primarily due to large, project-based receipts. |
| ○ | Inventories: Reductions in inventory levels provided $14.1 million cash inflows, compared to $7.8 million outflows in the prior-year period. The decrease was concentrated in the Hooker Branded segment, where inventory transitioned from previously elevated seasonal build-up to active sell-through. |
| ○ | Prepaid expenses and other assets: Cash inflows totaled $1.8 million, compared to $3.9 million outflows in the prior-year period, primarily reflecting the reduced spending on the ERP system implementation. |
| ○ | Accrued salaries, wages, and benefits: Accrued compensation increased by $0.9 million, compared to a $463,000 outflow in the prior-year period, due to the timing of related cash disbursement. |
| ● | Offsetting factors |
| ○ | These cash inflows were partially offset by a $4 million decline in accounts payable, as we paid down outstanding payables, compared to a $6.6 million cash inflow in the prior year same period, as we reduced purchasing activity and did not continue building inventory levels during the current period. |
Cash used in investing activities totaled $2.9 million, compared to $1.8 million in the prior-year period. The increase was primarily due to $936,000 life insurance proceeds received in the prior year that did not recur in the current period.
Cash used in financing activities was $25.5 million, compared to $8.3 million in the prior-year period, primarily due to $17.9 million of repayments on the revolving credit facility during the current period.
Cash provided by discontinued operations was $537,000, compared to $743,000 used in the prior-year period. Favorable adjustments including non-cash valuation allowance and asset disposals were added back to the net loss, and $6.8 million inflow from collections of trade accounts receivable led to $722,000 cash generated from operating activities.
Liquidity, Financial Resources and Capital Expenditures
Our financial resources include:
| ■ | available cash and cash equivalents, which are highly dependent on incoming order rates and our operating performance; |
| ■ | expected cash flow from operations; |
| ■ | available lines of credit; and |
| ■ | cash surrender value of Company-owned life insurance. |
33
The most significant components of our working capital are inventory, accounts receivable and cash and cash equivalents reduced by accounts payable and accrued expenses.
Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for inventory, lease payments and payroll), quarterly dividend payments and capital expenditures related primarily to our ERP project, showroom renovations and upgrading systems, buildings and equipment. The timing of our working capital needs can vary greatly depending on demand for and availability of raw materials and imported finished goods but is generally the greatest in mid-summer because of inventory build-up for the traditional fall selling season. Long-term cash requirements relate primarily to funding lease payments and repayment of long-term debt.
Loan Agreements and Revolving Credit Facility
On December 5, 2024, the Company and its wholly owned subsidiaries, Bradington-Young, LLC, Sam Moore Furniture LLC and Home Meridian Group, LLC (together with the Company, the “Borrowers”), entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”) with Bank of America, N.A. (“BofA”), as lender. The Amended and Restated Loan Agreement amends, restates and replaces the Second Amended and Restated Loan Agreement, dated as of September 29, 2017, between the Borrowers and BofA, as amended (the “Existing Loan Agreement”). The outstanding principal amount of loans and letters of credit issued under the Existing Loan Agreement and used to collateralize certain insurance arrangements and for imported product purchases remain outstanding as loans and letters of credit under the Amended and Restated Loan Agreement.
The Amended and Restated Loan Agreement provides for a revolving credit facility in a committed principal amount of up to $70,000,000 (the “Revolving Commitment”), including a subline of $8,000,000 for letters of credit, and an option to increase the Revolving Commitment by up to $30,000,000 upon meeting certain conditions, including agreement by BofA to increase the Revolving Commitment by such amount. Proceeds of loans and letters of credit under the Amended and Restated Loan Agreement were available (a) on entry into the Amended and Restated Loan Agreement to replace the outstanding loans and letters of credit outstanding under the Existing Loan Agreement and to pay fees and expenses related to entry into the Amended and Restated Loan Agreement and (b) from and after entry into the Amended and Restated Loan Agreement, for general working capital and other corporate purposes of the Borrower.
Availability of loans and letters of credit under the Revolving Commitment is capped by a borrowing base formula calculated as of any date as the sum for the Borrowers of (a) the value of their accounts receivable, (b) the value of their inventory, (c) the value of their in-transit inventory and (d) the life insurance cash surrender value of company-owned life insurance policies, in each case subject to eligibility requirements, advance rates, valuation metrics, reductions for write-offs and other dilutive items and reserves (the “Borrowing Base”). The lesser of the Revolving Commitment and the Borrowing Base, in each case net of the principal amount of outstanding loans and the face amount of letters of credit, constitutes “Availability” under the Amended and Restated Credit Agreement.
Outstanding loans under the Amended and Restated Loan Agreement bear interest at a rate per annum equal to the then-current Term SOFR Rate for a period of one month plus 0.10% plus a margin of 1.75%. The Term SOFR Rate will be adjusted on a monthly basis. Letters of credit are subject to a letter of credit fee equal to the actual daily amount of undrawn letters of credit multiplied by a per annum rate of 1.75% and a fronting fee equal to the actual daily amount of undrawn letters of credit multiplied by a per annum rate of 0.125%. We must also pay a monthly unused commitment fee that is based on the average daily unused amount of Revolving Commitment multiplied by a per annum rate of 0.25%. All accrued interest and fees are payable in cash monthly in arrears.
We may prepay any outstanding principal amounts borrowed under the Amended and Restated Loan Agreement at any time, without penalty provided that any payment is accompanied by all accrued interest owed. Subject to the Borrowers having sufficient borrowing base capacity and customary conditions precedent to borrowing, amounts repaid may be reborrowed. The Revolving Commitment will terminate, and all amounts outstanding thereunder will be due and payable, on December 5, 2029.
34
The obligations under the Amended and Restated Loan Agreement are secured by a first priority security interest in substantially all of the assets of the Borrowers, other than real estate, including all Company-owned life insurance policies, all accounts receivable, all inventory, all intellectual property, all equipment and all other personal property.
The Amended and Restated Loan Agreement includes customary representations and warranties and requires the Borrowers to comply with customary affirmative and negative covenants, including, among other things, a financial covenant requiring the maintenance of a ratio of (x) EBITDA net of capital expenditures (to the extent not paid using Borrowed Money) to (y) the sum of debt service and dividends paid, in each case as of the last day of each month for the trailing twelve-month period ending on such day, of at least 1.0 to 1.0, if an event of default has occurred and is continuing or Availability has fallen below 10% of the Revolving Commitment at any time (until such time as both Availability is 10% or greater and no event of default exists, for the 30 consecutive days prior to such month end).
The Amended and Restated Loan Agreement also limits the Borrowers’ right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions. The Amended and Restated Loan Agreement does not restrict the Company’s ability to pay cash dividends on, or repurchase, shares of its common stock, subject to (a) no default existing prior to or resulting from such dividend or repurchase, (b) Availability is not less than 15% of the Revolving Commitment for each of the preceding 45 days prior to announcement of such dividend or repurchase and after giving pro forma effect to such dividend or repurchase and (c) if Availability is less than 20% of the Revolving Commitment on any day in such 45-day period, the Borrowers are in compliance with the financial covenant described above after giving effect to such dividend or repurchase.
We incurred $480,000 in fiscal 2025 and an additional $33,000 in fiscal 2026 first half in debt issuance costs in connection with our term loans. As of November 2, 2025, unamortized loan costs of $426,000 were netted against the carrying value of our term loans on our consolidated balance sheet.
As of November 2, 2025, we had $4.1 million principal amount of outstanding loans and $2.1 million face amount of letters of credit. We had $63.8 million of Availability based on the current Borrowing Base.
Capital Expenditures
We expect to spend approximately $1 million in capital expenditures over the remainder of fiscal 2026 to maintain and enhance our operating systems and facilities, excluding any possible spending decreases resulting from the cost reduction plan discussed above.
Dividends
On December 11, 2025, our board of directors declared a quarterly cash dividend of $0.115 per share which will be paid on December 31, 2025, to shareholders of record at December 21, 2025.
Critical Accounting Policies
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2025 Annual Report.
35
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes, raw materials price risk and changes in foreign currency exchange rates, which could impact our results of operations or financial condition. We manage our exposure to this risk through our normal operating activities.
Interest Rate Risk
Borrowings under the Amended and Restated Loan Agreement will bear interest at a rate per annum equal to the then-current Term SOFR Rate for a period of one month plus 0.10% plus a margin of 1.75%. The Term SOFR Rate will be adjusted on a monthly basis. As such, these debt instruments expose us to market risk for changes in interest rates. As of November 2, 2025, we had $4.1 million in principal amount of outstanding loans. At current borrowing levels, a 1% increase in the SOFR rate would result in an annual increase in interest expenses of approximately $41,000. There were no additional borrowings outstanding under the Amended and Restated Loan Agreement as of November 2, 2025.
Raw Materials Price Risk
We are exposed to market risk from changes in the cost of raw materials used in our domestic upholstery manufacturing processes; principally, wood, fabric, and foam products. Increases in home construction activity could result in increases in wood and fabric costs. Additionally, the cost of petroleum-based foam products we utilize are sensitive to crude oil prices, which vary due to supply, demand, and geo-political factors.
Currency Risk
For imported products, we generally negotiate firm pricing denominated in U.S. Dollars with our foreign suppliers, typically for periods of at least one year. We accept the exposure to exchange rate movements beyond these negotiated periods. We do not use derivative financial instruments to manage this risk but could choose to do so in the future. Most of our imports are purchased from suppliers located in Vietnam and China. The Chinese currency floats within a limited range in relation to the U.S. Dollar, resulting in exposure to foreign currency exchange rate fluctuations.
Since we transact our imported product purchases in U.S. Dollars, a relative decline in the value of the U.S. Dollar could increase the price we pay for imported products beyond the negotiated periods. We generally expect to reflect substantially all of the effect of any price increases from suppliers in the prices we charge for imported products. However, these changes could adversely impact sales volume or profit margins during affected periods.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended November 2, 2025. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective as of November 2, 2025.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the fiscal quarter ended November 2, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
36
PART II. OTHER INFORMATION
Item 5. Other Information
During
the three months ended November 2, 2025, no director or officer of the Company
Item 6. Exhibits
| * | The Company agrees to furnish supplementally to the SEC, upon request, any omitted schedules or similar attachments to Exhibit 10.1. |
| ** | Filed herewith |
| *** | Furnished herewith |
37
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HOOKER FURNISHINGS CORPORATION | ||
| Date: December 12, 2025 | By: | /s/ C. Earl Armstrong III |
| C. Earl Armstrong III | ||
| Chief Financial Officer and | ||
| Senior Vice President – Finance | ||
38