Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated net sales for the fourth quarter increased by $7.7 million, an approximate 8% gain over the previous year's fourth quarter.
- Hooker Branded and Home Meridian sales increased by 2% and 13%, respectively, based on average net sales per shipping day.
- The company expects fiscal '26 cost savings of about $1 million from the Savannah warehouse exit, with additional annualized cost savings of between $8 million to $10 million anticipated over the next fiscal year.
- Hooker Furnishings demonstrated resilience with market share growth of 3 to 15 basis points in each of the first three quarters of fiscal '25.
- The company strategically increased inventory to support new collections and improve product availability, positioning itself for better speed-to-market.
Negative Points
- Consolidated operating loss was $18.1 million for the year, primarily due to lower sales volumes and $10.8 million in charges.
- Consolidated net sales for fiscal '25 were $397.5 million, a decrease of $35.8 million, or 8.3% compared to the previous fiscal year.
- Significant charges in the fourth quarter included $1.3 million in inventory write-downs, $878,000 in tradename impairment charges, and $718,000 in bad debt expense.
- Domestic Upholstery sales decreased by $2 million, or 7%, in the fourth quarter due to soft demand.
- Cash and cash equivalents decreased by $36.9 million from the previous year-end, largely due to increased accounts receivable and strategic inventory increases.
Q & A Highlights
Q: Can you provide more insight into the sales improvements at Hooker Branded and what drove the unit volume increase?
A: Jeremy Hoff, CEO, explained that the October market had a significant positive impact, particularly on Hooker Casegoods, with two new collections performing well in early placements and orders. However, he did not provide specific details on the first quarter results.
Q: How do you view the potential opportunity for Domestic Upholstery given recent tariff announcements?
A: Jeremy Hoff, CEO, sees a tremendous opportunity for Domestic Upholstery due to the tariffs. The company has significant capacity in BY and Bedford, positioning them well to grow and capitalize on this momentum.
Q: How do you anticipate gross margins for Home Meridian to evolve, and how does the current backlog compare to pre-pandemic levels?
A: Jeremy Hoff, CEO, noted a focus on growing Pulaski and Samuel Lawrence Furniture, which has led to margin expansion. The company is not focused on low-margin products, which has allowed for cost savings. However, specific backlog comparisons to pre-pandemic levels were not provided.
Q: Does the current 90-day tariff pause allow for strategic inventory builds?
A: Jeremy Hoff, CEO, stated that the company had already strategically increased inventory, particularly in Hooker Branded. The Vietnam footprint allows for easier management of inventory, with a four- to six-week lead time for warehouse replenishment.
Q: What are the main drivers behind the market share gains, and can this growth continue?
A: Jeremy Hoff, CEO, attributed market share gains to the company's merchandising strategy and collective living approach, which integrates various product lines. He believes the company can improve on the current growth rate and continue gaining market share.
Q: Can you provide more details on the pacing of the cost savings plan through fiscal 2027?
A: Jeremy Hoff, CEO, explained that the company aims to reduce overall spend to $89 million to $91 million, equivalent to fiscal '22 levels. The Savannah exit will contribute a minimum of $4 million in savings, with additional efficiencies being explored.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
