HOOKER FURNISHINGS Corp Q3 FY26 Results

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. 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. We believe the launch of Margaritaville, together with the recently announced sale of Pulaski and Samuel Lawrence Furniture enables us to realign our portfolio around our strongest brands and position Hooker Furnishings to consistently drive future revenue growth. Additionally, we have reduced our overall cost structure by 25%, or $25 million over the past 18 months and are positioned to provide continued savings in fiscal 2027. Together with the major shift in our warehousing strategy, we have also been able to combat tariff exposure and better serve customers by allowing collections from our various suppliers to be mixable in single containers and providing 6–10-week fulfillment to our customers’ door. We are more confident that Hooker now has the potential to shift from a cost reduction story to an organic growth story, and we see a clear path to profitable growth by focusing on our core expertise of better-to-best home furnishings. 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. We are pleased to have exceeded our goal and are moving ahead from a position of strength with our new cost structure in place. More than 40% of our net sales come from products produced or assembled domestically, which meaningfully reduces our exposure. In addition, the tariff environment has largely stabilized, with a 20% tariff on casegoods imports from Vietnam and a 30% lumber tariff on all imported upholstered furniture taking effect on November 1. Incoming orders for branded 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 businesses. 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.

Similar to the volatility experienced in 2020, today’s macroeconomic backdrop is creating unusual pressure across the home furnishings and consumer discretionary sectors. That environment has weighed heavily on our near-term results and contributed to a sustained decline in our share price during the third quarter. These factors triggered an interim asset impairment analysis under U.S. GAAP. Current conditions adversely affected market-based valuation inputs, such as trading multiples and discount rates, used in the analysis. As a result of the required testing, we recorded non-cash impairments to certain goodwill and indefinite-lived intangible assets. Importantly, these are non-cash accounting charges and do not change our strategic view of these brands or businesses, nor affect liquidity or ongoing operations. We believe these actions appropriately balance capital return and liquidity needs, and will enhance long-term shareholder value. As Hooker transitions to being a leaner, growth-oriented company, the new repurchase program coupled with the reduced dividend allows us to continue returning capital to shareholders while providing greater balance sheet flexibility to continue appropriately investing in the Company.