Hooker cites reduced tariff risks, strategic shifts as it logs Q3

MARTINSVILLE, VA. – Hooker Furnishings reported a deeper third-quarter loss as hospitality project timing, non-cash impairment charges and continued macroeconomic pressure weighed on results, but executives said the company’s recent strategic divestiture and upcoming product launches have set it on a clearer path toward profitability.

For the quarter ended Nov. 2, consolidated net sales fell 14.4% from the prior year, driven primarily by an $11 million decline in Samuel Lawrence Hospitality (SLH) shipments.

Operating loss totaled $16.3 million, largely the result of $15.6 million in non-cash intangible impairment charges. Loss from discontinued operations was $8.6 million.

See also: Tariffs are the talk of the town in High Point

The company also completed a major portfolio shift. On Dec. 1, Hooker announced the sale of its Pulaski Furniture and Samuel Lawrence Furniture value-priced brands within the Home Meridian (HMI) segment. Those businesses are now classified as discontinued operations and held for sale. The remaining SLH division is being re-designated to the “All Other” reporting category.

“Over the past two years, we’ve executed bold, disciplined actions to reposition Hooker Furnishings as a focused, higher-margin, design-led company by exiting low-margin, tariff-sensitive categories and doubling down on our strongest brands,” said CEO Jeremy Hoff. “Amid one of the most persistent industry downturns, we’ve implemented a multi-phase cost-reduction program that achieved approximately $25 million to $26.5 million in annualized savings, putting us on a track toward profitability even as industry challenges continue.”

Margaritaville launch exceeds expectations

Hooker executives highlighted what they view as the company’s most significant organic growth driver: the new Margaritaville licensed collection, which debuted at the October High Point Market.

“We delivered modest sales and margin improvements this quarter in Hooker Branded and Domestic Upholstery and are encouraged by commitments to our new Margaritaville licensed collection at the recent fall High Point Market,” Hoff said. He noted that interest has far outpaced past introductions, adding, “The excitement for this launch and the initial purchase commitments we have received are beyond historic levels for any Hooker product line.”

The company said 55 retailers have already committed to installing Margaritaville-branded galleries.

“We believe this will drive meaningful incremental revenue across the business, especially moving into the second half of next year when we are fully in market without cannibalizing existing placements,” Hoff said.

Tariff exposure down, cost reductions highlighted

With two major tariff-sensitive brands now held for sale, Hooker said its risk tied to U.S. import duties has been materially reduced.

“More than 40% of our net sales come from products produced or assembled domestically, which meaningfully reduces our exposure,” Hoff said. “In addition, the tariff environment has largely stabilized, with a 20% tariff on case goods imports from Vietnam and a 30% lumber tariff on all imported upholstered furniture taking effect on Nov. 1.”

He added that the portfolio realignment has tariff benefits as well: “Since tariffs disproportionately affected the more value-priced HMI lines that are held for sale, the divestiture will be beneficial in mitigating current or future tariffs. Coupled with targeted pricing actions and strong vendor partnerships, we have largely mitigated the tariff impact, and we believe our imported upholstery now benefits from a competitive advantage over those importing from other regions.”

Hoff said the company’s revised warehouse strategy — centered on its new Vietnam facility — now allows “collections from our various suppliers to be mixable in single containers and providing six to 10-week fulfillment to our customers’ door,” improving service and reducing tariff-related inventory risk.

Executives emphasized that the company’s 18-month restructuring and warehousing overhaul has permanently reset its expense base.

“Our multi-phased cost reduction initiatives were initially projected to reduce our fixed costs by approximately $25 million by the end of the fiscal 2026 third quarter,” Hoff said. “We are pleased to have exceeded our goal and are moving ahead from a position of strength with our new cost structure in place.”

S&A expenses declined $5.9 million in Q3 and $9.7 million year-to-date, reflecting restructuring progress and the absence of prior-year bad debt from the exit of PRI.

Positioned for growth

Hooker repaid $17.9 million of debt year-to-date and ended the quarter with $63.8 million in borrowing capacity. Inventory decreased to $52.1 million.

Hoff said order trends in core brands remain encouraging. “Incoming orders for branded segments have increased year-over-year for two consecutive quarters.

“With a more efficient cost structure and sharper portfolio, we believe we are better positioned to improve profitability even in a prolonged downturn,” Hoff said. “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.”