by Results highlight softened demand in the industry and company’s exits from unprofitable segments of the business
MARTINSVILLE, N.C. — Hooker Furnishings reported a drop in consolidated net sales and net income for its second fiscal quarter ended July 30, which the company said was driven by a decrease in industrywide demand for home furnishings, along with its planned exits from unprofitable operations in its Home Meridian division.
Consolidated net sales totaled $97.8 million, down 36% from the $152.9 million reported the same period last year.
Net income totaled $785,000, or 7 cents per share, compared to $5.5 million, or 46 cents per share, the same period last year.
Its consolidated operating income was $1.3 million, or 1.3% of net sales, compared to $7.3 million, or 4.8% of net sales, last year.
For the full six months, the company reported consolidated net sales of $219.6 million, compared to $219.6 million the year before, a 26.8% decrease.
Net income for the six-month period was $2.2 million, or 20 cents per share, compared to $8.7 million, or 73 cents per share, the same period last year.
The company noted that during the second quarter, it generated more than $51 million in cash from operations and ended the quarter with cash and cash equivalents of $50 million. It also reported that inventory levels have been reduced by $70 million from a year ago and that it has completed most of its planned liquidation sales of Home Meridian’s discontinued inventories.
“Despite a tough business climate and our team’s focus on navigating the last phases of liquidating excess inventories related to higher risk, unprofitable operations that were exited in the Home Meridian segment, we continue to strengthen our balance sheet and reduce overhead and costs while focusing on executing our strategic growth initiatives,” said Jeremy Hoff, chief executive officer and director.
“We believe the softer demand seen currently industrywide is driven by retailers continuing to sell through over-inventoried positions and a short-term glut of heavily discounted home furnishings in the market,” Hoff added. “In addition, the year-over-year comparisons reflect our exit from higher-risk, unprofitable operations at Home Meridian. We are encouraged that incoming orders have trended higher each month through the summer compared to the prior year, and consolidated orders are up by double digits versus a year ago.”
“In this environment, we’ve prioritized strengthening our financial position and strategically deploying capital and other resources, while investing in new showrooms and systems that position us to immediately leverage increasing demand when it occurs,” he said, noting that the collective impact of its new showrooms in High Point, Atlanta and Las Vegas “have increased our customer contacts from about 3,000 to around 14,000 annually, more than quadrupling the number of existing and potential customers. While we expect the full benefit of this investment will have a mostly longer-term impact, we have already opened 1,000 new accounts in the first half as visibility and engagement have increased.”
By segment the company reported the following results:
+ Net sales in its Hooker Branded segment totaled $34.7 million, or 35.4% of sales, during the second quarter, compared to $52.8 million, or 34.5% of sales, during the same period last year, a 34.3% decrease. Its operating income was $3.2 million, compared to just over $6 million the same period last year.
+ Sales in Home Meridian totaled $28.9 million, or 29.6% of sales, compared to $59 million, or 38.6% of sales, the same period last year, a 51% decrease. Its operating loss was $3.3 million, compared to a loss of $991,000 the same period last year.
+ Sales in domestic upholstery totaled $30.9 million, or 31.6% of sales, compared to $38.3 million, or 25.1% of sales, the same period last year, a 19.4% decrease. Operating income in the segment totaled $724,000, compared to $1.7 million the same period last year.
