HF Foods 2025 Q1 Earnings Misses Targets with Net Income Plunging 173.7%

HF Foods (HFFG) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The company experienced a challenging quarter as it missed revenue expectations and saw a significant widening in net losses. Despite a year-over-year revenue increase of 0.9% to $298.43 million, driven by stable top-line growth, HF Foods reported a net loss of $1.53 million compared to a $559,000 loss in the same period last year. Guidance remains focused on operational adjustments and strategic technology investments to drive long-term profitability amid a fluid macroeconomic landscape.

Revenue
HF Foods reported a slight uptick in Q1 2025 revenue, reaching $298.43 million compared to $295.65 million in Q1 2024. Seafood led the growth, contributing $105.58 million, while Asian Specialty added $60.98 million. Meat and Poultry accounted for $66.03 million, followed by Produce at $27.91 million. Packaging and Other generated $14.12 million, and Commodity rounded out the segments with $23.82 million.

Earnings/Net Income
HF Foods saw its losses deepen, with EPS falling to $0.03 per share in Q1 2025, compared to a loss of $0.01 per share in Q1 2024. The net loss widened to $1.53 million, up from $559,000 in the previous year, reflecting unfavorable interest rate swap impacts.

Price Action
The stock price of HF Foods dropped 7.42% during the latest trading day, rose 10.16% during the most recent week, and declined 2.37% month-to-date.

Post-Earnings Price Action Review
The strategy of buying HF Foods Group (HFFG) following a revenue miss and holding for 30 days remains speculative, hinging on expectations of a short-term price rebound. This approach carries significant risk, particularly for investors focused on long-term stability and capital preservation. While some may anticipate a rebound if revenue misses are temporary, persistent structural issues could lead to continued declines. Short-term holding exposes investors to volatility without guaranteed returns, especially as negative news could further impact stock prices. Considering alternative strategies, investors might benefit from waiting for clear signs of recovery, such as consistent revenue beats or strategic initiatives indicating improved financial health. A longer-term horizon could allow for the impact of strategic initiatives, including digital transformation, to materialize. Ultimately, investors should assess their risk tolerance and investment goals, potentially monitoring the company's performance over time to identify stabilization before committing.

CEO Commentary
Felix Lin, President and CEO, highlighted HF Foods' stable top-line growth despite operational challenges and inflationary pressures. Gross profit rose by $0.5 million to $51.0 million, maintaining a margin of 17.1%. Lin attributed the net loss of $1.5 million primarily to non-cash changes in interest rate swaps and emphasized the company's commitment to improving margins and operational efficiency.

Guidance
HF Foods remains committed to enhancing margins and streamlining operations, supported by strategic technology investments aimed at long-term profitability. Despite acknowledging the fluid macroeconomic and trade policy landscape, the company believes in its positioning for sustained growth through operational discipline, targeted customer acquisition, and an agile distribution network.

Additional News
HF Foods Group Inc. has recently focused on significant infrastructure investments, including strategic enhancements at distribution centers in Charlotte and Atlanta. These facility improvements aim to optimize their network and create growth opportunities through cross-selling initiatives. The company has also successfully implemented a new ERP system across its entire network, enhancing efficiency through data-driven decision-making. Additionally, HF Foods launched a new e-commerce platform in key distribution centers, improving customer access to products and supporting future growth. These steps reflect HF Foods' commitment to digital transformation and operational excellence in the competitive foodservice distribution industry.