Executive Summary
Hooker Furnishings reported Q2 2025 net sales of $95.1 million, down 2.8% year over year, with a consolidated operating loss of $3.15 million and a net loss of $1.95 million ($0.19 per diluted share). The quarterly deterioration was modest relative to the prior quarter’s deeper losses, signaling stabilization in a still-challenging macro furniture market. Management attributes the six-month revenue decline (down 14% vs. the prior year) primarily to the absence of ACH liquidation sales and ongoing weak demand, while highlighting resilience in Home Meridian (HMI) hospitality-driven revenue and a meaningful margin inflection for HMI (gross margin 19.5% in Q2, among the highest since 2016). The company is implementing a targeted cost-reduction program aimed at $10 million in annualized savings, with management asserting it will exceed that target and begin realizing savings in fiscal 2025 Q3 and Q4. In parallel, Hooker is pursuing financing optimization (credit facility refinancing) and a near-term debt payoff plan ($22 million of term debt in Q3) to strengthen liquidity. Strategic initiatives around merchandising, product speed-to-market, and channel realignment (notably Sunset West’s bi-coastal approach) are designed to support a recoverable pathway once demand improves. The balance sheet remains solid, with cash and cash equivalents at $42.1 million and total stockholders’ equity of $215.3 million, providing a buffer to navigate the downturn and fund selective investments as the market recovers. Key takeaway: HOFT is navigating a cyclical downturn with a credible plan to restore profitability through margin discipline (notably at HMI), selective growth initiatives, and substantial fixed-cost reductions, while maintaining liquidity and dividend integrity for the foreseeable future.
Key Performance Indicators
QoQ: 0.00% | YoY:-135.91%
QoQ: 0.00% | YoY:-127.72%
QoQ: 0.00% | YoY:-129.23%
Key Insights
Revenue: $95.1M in Q2 2025, yoy change -2.8% (Q2 2024). QoQ change 0.0%. Gross Profit: $19.998M, gross margin 21.03% (YoY margin decline vs prior year). Operating income: -$3.149M, operating margin -3.31%. Net income: -$1.951M, net income margin -2.05%. EPS: -$0.19 per diluted share. Six-months: net sales down ~14% vs year-ago period; ACH liquidation impact about $11M of revenue (roughly 35% of the six-month decline). EBITDA: -$0.815M for the quarter. Cash flow from operations: $3.837M; Free cas...
Financial Highlights
Revenue: $95.1M in Q2 2025, yoy change -2.8% (Q2 2024). QoQ change 0.0%. Gross Profit: $19.998M, gross margin 21.03% (YoY margin decline vs prior year). Operating income: -$3.149M, operating margin -3.31%. Net income: -$1.951M, net income margin -2.05%. EPS: -$0.19 per diluted share. Six-months: net sales down ~14% vs year-ago period; ACH liquidation impact about $11M of revenue (roughly 35% of the six-month decline). EBITDA: -$0.815M for the quarter. Cash flow from operations: $3.837M; Free cash flow: $3.259M. Cash at end of period: $42.05M. Total debt: $73.01M; Net debt: $30.96M. Backlog: Q2 end backlog remains ~20% above pre-pandemic levels. Dividends: ongoing; company plans to refinance and pay down debt to support cash generation.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
95.08M |
-18.62% |
0.00% |
| Gross Profit |
20.00M |
-37.94% |
4.62% |
| Operating Income |
-3.15M |
-135.91% |
0.00% |
| Net Income |
-1.95M |
-127.72% |
0.00% |
| EPS |
-0.19 |
-129.23% |
0.00% |
Management Commentary
Key management themes from the earnings call: - Strategy and merchandising: A renewed emphasis on integrated whole-home offerings, aided by the appointment of Chief Creative Officer Caroline Hipple to lead re-merchandising of Hooker Legacy Brands and accelerate speed-to-market ahead of the October High Point Market. - Cost discipline: The company initiated a cost-reduction plan targeting 10% fixed-cost reductions ($10M annualized) with expectations to exceed that target; savings are expected to begin in FY2025 Q3 and Q4. - HMI margin expansion: HMI gross margin rose to 19.5% in Q2 2025, with a management view that 20% is a realistic target once demand normalizes and non-core businesses are exited. - Backlog and demand signals: Backlog remains robust, with Q2 backlog ~20% above pre-pandemic levels; Sunset West has transitioned to a bi-coastal distribution model and is contributing to demand with roughly 50% of current demand from the East Coast. - Financial health and liquidity: Cash position of $42.1M, revolver availability of $28M, and ongoing plan to refinance the credit facility; commitment to paying down $22M of term debt in Q3; emphasis on preserving liquidity while funding growth initiatives. - Market environment: Management notes macro headwinds (high rates, housing shortages) persist but sees favorable external signals (lower inflation, potential rate cuts) that could improve demand in the back half of 2025. - Commentary on channel mix: Growth in hospitality-driven sales within HMI and expansion of major furniture chains/mass merchants, partially offset by declines in independent retailers and e-commerce channels.
We have begun a cost reduction plan aimed at reducing fixed costs by 10% for a total of $10 million in annualized savings. As of now, we expect to exceed that target.
— Jeremy Hoff
Paul and I believe 20 would be a reasonable mark for or goal for HMI.
— Paul Huckfeldt
Forward Guidance
HOFT’s near-term outlook centers on executing the cost-reduction program to achieve >$10M in annualized savings, with portions realized in F2025 Q3 and Q4. Management also anticipates continued improvement in HMI profitability as non-core, low-margin products are exited and SG&A leverage materializes as volumes recover. Key qualitative catalysts include: - Margin stabilization at HMI: Target gross margin near 20% as price realization improves and product mix is optimized. - Backlog momentum: Maintain a backlog at or above current levels heading into the October High Point Market to support holiday and early-2026 orders. - Operational efficiency: Ongoing consolidation of non-strategic operations, including warehouse footprint reductions and structure-shifting of businesses (BOBO to Hooker-branded operations). - Balance sheet actions: Refinancing the credit facility and paying down term debt (target $22M in Q3) to improve liquidity and reduce interest expense exposure. - Growth initiatives: Strengthened merchandising and faster speed-to-market to capture share in a slower retail environment. Risks include persistent macroeconomic weakness, consumer discretionary spending softness, potential freight/disruption costs, and the risk that price/mix improvements cannot fully offset volume declines. Management’s plan, if executed, supports a path to improved profitability as demand normalizes and the company reframes its product and channel mix. Monitoring points for investors: trajectory of HMI margins toward the 20% target, progress on cost savings realization (timing and durability), backlog evolution into the fall market, debt refinancing progress, and cash burn/working capital needs during the transition.”,