Hooker Furnishings Q1 2026: Tariffs, Margins, and Order Trends in Conflict

Impact of tariffs on order cadence, Hooker branded discounting's impact on gross margins, impact of tariffs and shipment cadence, order trends and sales performance, and order and shipment trends are the key contradictions discussed in Hooker Furnishings Corporation's latest 2026Q1 earnings call.



Sales Decrease and Operational Improvements:
- Hooker Furnishings reported consolidated net sales of $85.3 million for the first quarter, a decrease of $8.3 million or 8.8% compared to the same period last year.
- Despite the decrease in net sales, the company reduced its operating loss by $1.6 million or 31% to $3.6 million, reflecting the impact of cost reduction initiatives implemented in the second half of the prior fiscal year.
- The decline in sales was primarily due to a double-digit decrease at HMI, while operational improvements were driven by cost reduction strategies aimed at achieving approximately $25 million in annualized savings.

Cost Reduction and Savings:
- The company is executing a phased cost reduction strategy aiming for $25 million in annualized savings by next year, with $14 million in savings expected for fiscal 2026.
- Phase 1 actions included reducing fixed costs by over $10 million and achieving over $3 million in fiscal '25 savings, with an expectation of over $10 million annually this fiscal year.
- Phase 2 involves logistics and operations consolidation, with the opening of a new Vietnam warehouse facility expected to enhance supply chain efficiency and reduce lead times.

Segment Performance and Market Conditions:
- The Domestic Upholstery segment achieved a 55% reduction in operating losses, despite a 3.7% sales decrease, with a 2.7% increase in incoming orders and a 260 basis point increase in gross margin.
- Home Meridian experienced a 29% decrease in net sales, primarily due to a significant reduction in unit volume and the loss of a major customer, but saw a 200 basis point increase in gross margin.
- The overall decrease in consolidated sales was attributed to macroeconomic headwinds, including persistent softness in the housing market and tariff uncertainties impacting consumer confidence.

Orders and Future Outlook:
- May orders showed significant increases across Hooker Legacy brands, with Hooker Branded orders up nearly 40%, and Domestic Upholstery orders up 25% compared to the prior year.
- The company is optimistic about its strategic growth priorities, including the Vietnam Warehouse Advantage and the upcoming Margaritaville license collection.
- The positive order trends are seen as a result of new merchandising strategies and cost optimization efforts, providing optimism for potential market recovery.