Executive Summary
Hooker Furnishings Corporation reported a challenging QQ2 2026 (fiscal 2026 second quarter) with a revenue decline and an elevated net loss, driven largely by the Home Meridian (HMI) segment and softer demand in traditional channels. Consolidated net sales reached $82.1 million, down 13.6% year over year, while the company posted a consolidated operating loss of $4.40 million and a net loss of $3.30 million (EPS -0.31). The quarter featured ongoing restructuring costs and a substantial effort to reduce fixed costs across all segments. Hooker Branded achieved breakeven despite restructuring charges, and Domestic Upholstery significantly reduced operating losses, signaling early progress from the broader cost-reduction program. Management reiterated a commitment to a multi-phase cost structure overhaul designed to cut fixed costs by $25 million annually (25%) and to be largely in place by the end of fiscal 2026 third quarter, with $25 million in annualized cost savings expected to begin in fiscal 2027.
Key Performance Indicators
QoQ: -3.71% | YoY:-13.60%
QoQ: -11.39% | YoY:-19.52%
QoQ: -23.48% | YoY:-39.76%
QoQ: -7.37% | YoY:-67.97%
QoQ: -6.90% | YoY:-63.16%
Key Insights
Revenue: $82.149 million in Q2 2026, down 13.6% YoY and 3.7% QoQ. Gross Profit: $16.837 million, down 19.5% YoY and 11.4% QoQ. Gross Margin: 20.5% (0.2049). Operating Income: -$4.401 million, down 39.8% YoY and 23.5% QoQ. Net Income: -$3.278 million, down 68.0% YoY and 7.4% QoQ. EPS: -$0.31 (diluted), down 63.2% YoY and 6.9% QoQ. Segment performance highlighted by a mix shift: Hooker Branded net sales up ~1.3% YoY but gross margin compressed; Home Meridian down ~44.5% YoY driven by tariff hesita...
Financial Highlights
Revenue: $82.149 million in Q2 2026, down 13.6% YoY and 3.7% QoQ. Gross Profit: $16.837 million, down 19.5% YoY and 11.4% QoQ. Gross Margin: 20.5% (0.2049). Operating Income: -$4.401 million, down 39.8% YoY and 23.5% QoQ. Net Income: -$3.278 million, down 68.0% YoY and 7.4% QoQ. EPS: -$0.31 (diluted), down 63.2% YoY and 6.9% QoQ. Segment performance highlighted by a mix shift: Hooker Branded net sales up ~1.3% YoY but gross margin compressed; Home Meridian down ~44.5% YoY driven by tariff hesitancy and project mix; Domestic Upholstery flat to slightly higher revenue with meaningful margin expansion. Management expects significant fixed-cost reduction to support profitability, with a 25% cut from fiscal 2025 levels largely in place by the end of Q3 2026.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
82.15M |
-13.60% |
-3.71% |
| Gross Profit |
16.84M |
-19.52% |
-11.39% |
| Operating Income |
-4.40M |
-39.76% |
-23.48% |
| Net Income |
-3.28M |
-67.97% |
-7.37% |
| EPS |
-0.31 |
-63.16% |
-6.90% |
Management Commentary
Management emphasized progress on cost reductions and restructuring across all segments. Key themes include: 1) Cost structure optimization: A multiphase plan aimed at eliminating $25 million in fixed costs (roughly 25%), with $11 million in warehousing/distribution and $14 million in SG&A, on target to be largely in place by the end of fiscal 2026 third quarter. 2) Margin and profitability trajectory: Hooker Branded breakeven in the quarter despite restructuring costs; Domestic Upholstery reducing operating losses by 68% in Q2 and 61% in the first half; HMI remains a key profitability challenge but is targeted for meaningful fixed-cost reductions that should enable a path to profitability even at current revenue levels. 3) Growth initiatives and product/tariff strategy: Margaritaville collection launch planned for October 2027 with a new Vietnam fulfillment warehouse intended to shorten container lead times to 4-6 weeks from ~6 months, and tariff mitigation plans across segments for the 20% Vietnam tariff enacted August 1, 2025. 4) Customer and demand dynamics: Management cited modest positive momentum in Hooker legacy orders (July up 24% YoY; quarter Hooker Branded up ~11%; Domestic Upholstery up ~1.6%) against a still challenging macro housing backdrop with low existing-home sales and elevated mortgage rates. 5) Financial flexibility and liquidity: Cash on hand approximately $1.9 million with $67.9 million available borrowing capacity; no amounts due under the credit facility, signaling improved liquidity alongside ongoing debt reduction.
We are well into our multiphase cost reduction plan to eliminate $25,000,000 or 25% of our fixed cost.
— Earl Armstrong
By the end of our fiscal 2026 third quarter, we believe HMI's fixed cost structure will be aligned to support what we believe to be a sustainable business and one in which sales can be significantly scaled from current levels when demand returns.
— Jeremy Hoff
Forward Guidance
Management guidance centers on structural cost reform and selective growth initiatives. Key forward-looking elements include: (i) Fixed-cost structure: Targeting a 25% reduction from fiscal 2025 levels, largely complete by the end of Q3 2026, which should underpin a path to profitability at current revenue levels. (ii) HMI profitability: Expect fixed-cost alignment to enable sustainable profitability for HMI once cost reductions are fully realized, with potential revenue growth through sharper customer focus and product mix optimization. (iii) Margaritaville and Vietnam logistics: The Margaritaville launch remains a strategic growth driver, aided by a Vietnam fulfillment warehouse that is expected to shorten lead times and reduce inventory levels. (iv) Tariff mitigation: Tariff adjustments are being addressed segment-by-segment, with near-term pricing, sourcing, and product-mix adjustments to preserve value. Investors should monitor HMI cost-out progress, the timing and market reception of Margaritaville, Vietnam warehouse operations, tariff-related cost shifts, and the evolution of housing-market demand as catalysts for improvement in the second half of fiscal 2026 and into fiscal 2027.