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Hooker Furnishings Corp. (HOFT - Free Report) continues to focus on execution during this sustained downturn in the furniture industry. This Zacks Rank #5 (Strong Sell) is expected to see a big decrease in earnings in fiscal 2025.
Hooker Furnishings is celebrating its 100th year of business this year. It is a designer, marketer and importer of casegoods (wooden and metal furniture), leather furniture, fabric-upholstered furniture, lighting, accessories and home decor for the residential, hospitality and contract markets.
The company's corporate offices and manufacturing facilities are located in Virginia, North Carolina and California. It has showrooms in High Point, NC, Las Vegas, Atlanta and Ho Chi Minh City, Vietnam. It also operates distribution centers in Virginia, Georgia and Vietnam.
Hooker Furnishings also sells online.
A Big Miss in the First Quarter of Fiscal 2025
On June 6, 2024, Hooker Furnishings reported its fiscal 2025 first quarter results and missed on the Zacks Consensus by $0.36. Earnings were a loss of $0.39 versus the consensus of a loss of $0.03.
It was the second miss in a row.
Net sales fell 23.2% to $93.6 million year-over-year. All three of its reporting segments experienced a decline in sales driven mostly by the continued weak demand for home furnishings.
Year-over-year, industry-wide US furniture store sales fell compared to the prior year same months for the 14th consecutive month.
Balance Sheet and Dividend
The company is focused on maintaining a healthy financial position and balance sheet while the downturn in the industry continues. After all, Hooker didn't get to 100 years in business without navigating challenging economic conditions.
It has $41 million in cash on hand and inventory levels are well-aligned to current demand. They have actually come down $5.2 million to $56.6 million compared to $61.8 million three months prior, which was at the end of the fiscal year.
“Given the uncertainty in the furniture industry and the general economy, we remain committed to our capital allocation policy. Our short-term capital allocation strategy is focused on preserving capital until we begin to see an industry-turnaround, while also protecting our 50-plus year history of quarterly dividends and continuing to invest in organic growth,” said Chief Financial Officer, Paul Huckfeldt.
“We believe we have a conservative balance sheet, which can help us weather the current demand environment”, he continued, “but understand the need for caution in a cyclical industry like ours," he added.
Earnings Estimates Were Cut
Given the tough industry conditions, it's not a surprise that the earnings estimates have been cut.
One estimate was cut for fiscal 2025 in the last 60 days but it took the Zacks Consensus down to $0.09 from $1.10. That's a decline of 90.1% as Hooker made $0.91 last year.
Shares Near 5-Year Lows
Shares of Hooker soared during the pandemic as furniture sales also soared. But the party ended in 2021 and the stock has struggled.
It's trading near 5-year lows.
Image Source: Zacks Investment Research
But is it cheap?
With the cutting of earnings estimates, Hooker still has a high forward P/E of 171.
The company is committed to its dividend, however. That is yielding 5.96%.
But investors might want to wait for the furniture industry to see some green shoots before jumping in on Hooker Furnishings.
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Bear of the Day: Hooker Furnishings (HOFT)
Hooker Furnishings Corp. (HOFT - Free Report) continues to focus on execution during this sustained downturn in the furniture industry. This Zacks Rank #5 (Strong Sell) is expected to see a big decrease in earnings in fiscal 2025.
Hooker Furnishings is celebrating its 100th year of business this year. It is a designer, marketer and importer of casegoods (wooden and metal furniture), leather furniture, fabric-upholstered furniture, lighting, accessories and home decor for the residential, hospitality and contract markets.
The company's corporate offices and manufacturing facilities are located in Virginia, North Carolina and California. It has showrooms in High Point, NC, Las Vegas, Atlanta and Ho Chi Minh City, Vietnam. It also operates distribution centers in Virginia, Georgia and Vietnam.
Hooker Furnishings also sells online.
A Big Miss in the First Quarter of Fiscal 2025
On June 6, 2024, Hooker Furnishings reported its fiscal 2025 first quarter results and missed on the Zacks Consensus by $0.36. Earnings were a loss of $0.39 versus the consensus of a loss of $0.03.
It was the second miss in a row.
Net sales fell 23.2% to $93.6 million year-over-year. All three of its reporting segments experienced a decline in sales driven mostly by the continued weak demand for home furnishings.
Year-over-year, industry-wide US furniture store sales fell compared to the prior year same months for the 14th consecutive month.
Balance Sheet and Dividend
The company is focused on maintaining a healthy financial position and balance sheet while the downturn in the industry continues. After all, Hooker didn't get to 100 years in business without navigating challenging economic conditions.
It has $41 million in cash on hand and inventory levels are well-aligned to current demand. They have actually come down $5.2 million to $56.6 million compared to $61.8 million three months prior, which was at the end of the fiscal year.
“Given the uncertainty in the furniture industry and the general economy, we remain committed to our capital allocation policy. Our short-term capital allocation strategy is focused on preserving capital until we begin to see an industry-turnaround, while also protecting our 50-plus year history of quarterly dividends and continuing to invest in organic growth,” said Chief Financial Officer, Paul Huckfeldt.
“We believe we have a conservative balance sheet, which can help us weather the current demand environment”, he continued, “but understand the need for caution in a cyclical industry like ours," he added.
Earnings Estimates Were Cut
Given the tough industry conditions, it's not a surprise that the earnings estimates have been cut.
One estimate was cut for fiscal 2025 in the last 60 days but it took the Zacks Consensus down to $0.09 from $1.10. That's a decline of 90.1% as Hooker made $0.91 last year.
Shares Near 5-Year Lows
Shares of Hooker soared during the pandemic as furniture sales also soared. But the party ended in 2021 and the stock has struggled.
It's trading near 5-year lows.
Image Source: Zacks Investment Research
But is it cheap?
With the cutting of earnings estimates, Hooker still has a high forward P/E of 171.
The company is committed to its dividend, however. That is yielding 5.96%.
But investors might want to wait for the furniture industry to see some green shoots before jumping in on Hooker Furnishings.