Form 8-K
0001077688 False 0001077688 2023-12-07 2023-12-07 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 7, 2023

_______________________________

Hooker Furnishings Corporation

(Exact name of registrant as specified in its charter)

_______________________________

Virginia000-2534954-0251350
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

440 East Commonwealth Boulevard

Martinsville, Virginia 24112

(Address of Principal Executive Offices) (Zip Code)

(276) 632-2133

(Registrant's telephone number, including area code)

 

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueHOFTNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 
Item 2.02. Results of Operations and Financial Condition.

On December 7, 2023, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.
      
99.1 Press Release dated December 7, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 Hooker Furnishings Corporation
   
  
Date: December 7, 2023By: /s/ Paul A. Huckfeldt        
  Paul A. Huckfeldt
  Chief Financial Officer and
Senior Vice-President - Finance and Accounting
  

 

EdgarFiling

EXHIBIT 99.1

Hooker Furnishings Posts Double-Digit Income Gains in Third Quarter

MARTINSVILLE, Va., Dec. 07, 2023 (GLOBE NEWSWIRE) -- Hooker Furnishings Corporation (NASDAQ-GS: HOFT), a global leader in the design, production, and marketing of home furnishings for nearly a century, today reported operating results for its fiscal 2024 third quarter and nine-month period ended October 29, 2023.

Fiscal 2024 Third Quarter overview:

Management Commentary

“Despite a challenging macroeconomic environment for the home furnishings industry, we’re proud of our team for persevering through some difficult decisions and short-term pain to create a more sustainable and profitable business model for Hooker Furnishings,” said Jeremy Hoff, chief executive officer. “After spending considerable time repositioning HMI to focus on its core products and businesses, it is encouraging to see HMI report a quarterly profit for the first time in two years and contribute to our overall profitability. Liquidating excess inventories, rightsizing our overhead and exiting unprofitable businesses have put us in a much stronger overall position,” Hoff said. “Ongoing execution of our strategic growth initiatives is our main focus,’ he continued.

“While the housing market slowdown driven by high interest rates, and a shift in consumer discretionary spending away from home furnishings continue to challenge, we’re encouraged by positive indicators like the normalization of ocean freight rates, eased supply chain constraints, more stable raw material costs and increased labor availability.

“Demand is improving, with consolidated orders up $12.7 million, or 15.7%, for the third quarter versus the prior year period. For the first nine months, consolidated orders increased by $75.8 million or 33.5%,” he said. “Most of the consolidated increase is driven by Home Meridian segment orders which were unusually low in both prior year periods.”

“The recent Fall High Point Market was positive by all measurables across the company,” Hoff added. “Increased visibility is one of our major strategic objectives. Adding two smaller showrooms in Las Vegas and Atlanta, while moving to our largest High Point showroom, has created an exponentially larger audience for our products on the Legacy side of our business, including Sunset West. HMI also had a good market as they focused on strengthening the product assortment for Pulaski (PFC), Samuel Lawrence Furniture (SLF) and Prime Resources International (PRI). The efforts by our team at HMI have reenergized and repositioned the product offerings for growth and have received a lot of positive retail feedback along with new placements,” he said.

“As reported previously, the collective impact of our new showrooms in High Point, Atlanta and Las Vegas has increased our customer contacts from about 3,000 to around 14,000 annually, more than quadrupling the number of existing and potential customers. In the first half of the fiscal year, we opened 1,000 new accounts as visibility and engagement increased. This quarter that pace continued as we added 150 new customers on average per month,” Hoff said.

Segment Reporting: Hooker Branded

Segment Reporting: Home Meridian (HMI)

Segment Reporting: Domestic Upholstery

Cash, Debt, and Inventory

Capital Allocation

“Going into the end of the year, our inventory levels are aligned with current demand and our S&OP process is working well,” said Paul Huckfeldt, chief financial officer. “Our balance sheet gives us the cushion to get through the softer demand we’re seeing in the fourth quarter and continue to fund our internal growth initiatives, as well as maintaining our dividend and funding some capital projects, including further development of our ERP, which is now live at the Hooker Legacy divisions.”

Dividends

On December 5, 2023, our board of directors declared a quarterly cash dividend of $0.23 per share which will be paid on December 29, 2023 to shareholders of record at December 15, 2023. This represents a $0.01 per share or 4.5% increase over the previous quarterly dividend and the eighth consecutive annual dividend increase.

Outlook

“While economic indicators remain mixed and furniture industry retail traffic is down about 15% from January through October 2023, we believe the long-term economic outlook has improved which bodes well for Hooker and the industry,” said Hoff. “Reduced housing activity and high mortgage interest rates are still challenging, but several positives have emerged since last quarter. Core inflation is at the lowest level since 2021, the US economy grew nearly 5% last quarter, unemployment remains at record lows and a recession appears less likely.

“As mentioned earlier, current retail conditions are soft, but consolidated orders are up $12.7 million, or 15.7% for the third quarter. For the first nine months, consolidated orders increased by $75.8 million or 33.5%,” Hoff said.

“As we look to the next quarter, we see flat sales for our higher-priced Hooker Legacy brands as compared to the prior year fourth quarter. We expect that the current downturn in the furniture retail business will temporarily suppress sales growth at HMI through the fourth quarter. However, significant new retail product placements achieved by HMI recently should begin to buoy sales by the first quarter of next fiscal year as the placements generate orders and backlogs.

We believe a lot of our growth initiatives will begin to gain traction in the first half of calendar 2024. We believe that our focus on reducing costs, keeping our balance sheet strong and judiciously deploying capital, along with our investments to promote higher visibility and future growth will continue to put us in the strongest possible position to leverage a return of furniture demand to more typical levels,” Hoff concluded.

Conference Call Details

Hooker Furnishings will present its fiscal 2024 third quarter financial results via teleconference and live internet webcast on Thursday morning, December 7th, 2023 at 9:00 AM Eastern Time. A live webcast of the call will be available on the Investor Relations page of the Company’s website at https://investors.hookerfurnishings.com/events and archived for replay. To access the call by phone, participants should go to this link (registration link) and you will be provided with dial in details. To avoid delays, participants are encouraged to dial into the conference call fifteen minutes ahead of the scheduled start time.

Hooker Furnishings Corporation, in its 99th year of business, is a designer, marketer and importer of casegoods (wooden and metal furniture), leather furniture, fabric-upholstered furniture, lighting, accessories, and home décor for the residential, hospitality and contract markets. The Company also domestically manufactures premium residential custom leather and custom fabric-upholstered furniture and outdoor furniture. Major casegoods product categories include home entertainment, home office, accent, dining, and bedroom furniture in the upper-medium price points sold under the Hooker Furniture brand. Hooker’s residential upholstered seating product lines include Bradington-Young, a specialist in upscale motion and stationary leather furniture, HF Custom (formerly Sam Moore), a specialist in fashion forward custom upholstery offering a selection of chairs, sofas, sectionals, recliners and a variety of accent upholstery pieces, Hooker Upholstery, imported upholstered furniture targeted at the upper-medium price-range and Shenandoah Furniture, an upscale upholstered furniture company specializing in private label sectionals, modulars, sofas, chairs, ottomans, benches, beds and dining chairs in the upper-medium price points for lifestyle specialty retailers. The H Contract product line supplies upholstered seating and casegoods to upscale senior living facilities. The Home Meridian division addresses more moderate price points and channels of distribution not currently served by other Hooker Furnishings divisions or brands. Home Meridian’s brands include Pulaski Furniture, casegoods covering the complete design spectrum in a wide range of bedroom, dining room, accent and display cabinets at medium price points, Pulaski Upholstery, stationary and motion upholstery collections available in fabric and leather covering the complete design spectrum at medium price points, Samuel Lawrence Furniture, value-conscious offerings in bedroom, dining room, home office and youth furnishings, Prime Resources International, value-conscious imported leather upholstered furniture, and Samuel Lawrence Hospitality, a designer and supplier of hotel furnishings. The Sunset West division is a designer and manufacturer of comfortable, stylish and high-quality outdoor furniture. Hooker Furnishings Corporation’s corporate offices and upholstery manufacturing facilities are located in Virginia, North Carolina and California, with showrooms in High Point, N.C., Las Vegas, N.V., Atlanta, G.A. and Ho Chi Minh City, Vietnam. The company operates distribution centers in Virginia, Georgia, and Vietnam. Please visit our websites hookerfurnishings.com, hookerfurniture.com, bradington-young.com, hfcustomfurniture.com, hcontractfurniture.com, homemeridian.com, pulaskifurniture.com, slh-co.com, bobointriguingobjects.com, and sunsetwestusa.com.

Certain statements made in this release, other than those based on historical facts, may be forward-looking statements. Forward-looking statements reflect our reasonable judgment with respect to future events and typically can be identified by the use of forward-looking terminology such as “believes,” “expects,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “would,” “could” or “anticipates,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Those risks and uncertainties include but are not limited to: (1) general economic or business conditions, both domestically and internationally, including the current macro-economic uncertainties and challenges to the retail environment for home furnishings along with instability in the financial and credit markets, in part due to inflation and rising interest rates, including their potential impact on (i) our sales and operating costs and access to financing, (ii) customers, and (iii) suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses; (2) the direct and indirect costs and time spent by our associates associated with the implementation of our Enterprise Resource Planning system (“ERP”), including costs resulting from unanticipated disruptions to our business; (3) the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit; (4) difficulties in forecasting demand for our imported products and raw materials used in our domestic operations; (5) risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, customs issues, freight costs, including the price and availability of shipping containers, ocean vessels, ocean and domestic trucking, and warehousing costs and the risk that a disruption in our offshore suppliers or the transportation and handling industries, including labor stoppages, strikes, or slowdowns, could adversely affect our ability to timely fill customer orders; (6) risks associated with HMI segment restructuring and cost-savings efforts, including our ability to timely dispose of excess inventories, reduce expenses and return the segment to profitability; (7) the impairment of our long-lived assets, which can result in reduced earnings and net worth; (8) adverse political acts or developments in, or affecting, the international markets from which we import products, including duties or tariffs imposed on those products by foreign governments or the U.S. government and possible future U.S. conflict with China; (9) the interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the internet or other related issues including unauthorized disclosures of confidential information, hacking or other cyber-security threats or inadequate levels of cyber-insurance or risks not covered by cyber- insurance; (10) risks associated with our Georgia warehouse including the inability to realize anticipated cost savings and subleasing excess space on favorable terms; (11) risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs, availability of skilled labor, and environmental compliance and remediation costs; (12) the risks related to the Sunset West Acquisition including integration costs, maintaining Sunset West’s existing customer relationships, debt service costs, interest rate volatility, the use of operating cash flows to service debt to the detriment of other corporate initiatives or strategic opportunities, the loss of key employees from Sunset West, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies across the business which could adversely affect our internal control or information systems and the costs of bringing them into compliance and failure to realize benefits anticipated from the Sunset Acquisition; (13) the risks related to the BOBO Intriguing Objects acquisition, including the loss of a key BOBO employee, inconsistencies in standards, controls, procedures and policies across the business which could adversely affect our internal control or information systems and failure to realize benefits anticipated from the BOBO Acquisition; (14) changes in U.S. and foreign government regulations and in the political, social and economic climates of the countries from which we source our products; (15) risks associated with product defects, including higher than expected costs associated with product quality and safety, regulatory compliance costs (such as the costs associated with the US Consumer Product Safety Commission’s new mandatory furniture tip-over standard, STURDY) related to the sale of consumer products and costs related to defective or non-compliant products, product liability claims and costs to recall defective products and the adverse effects of negative media coverage; (16) disruptions and damage (including those due to weather) affecting our Virginia or Georgia warehouses, our Virginia, North Carolina or California administrative facilities, our High Point, Las Vegas, and Atlanta showrooms or our representative offices or warehouses in Vietnam and China; (17) the risks specifically related to the concentrations of a material part of our sales and accounts receivable in only a few customers, including the loss of several large customers through business consolidations, failures or other reasons, or the loss of significant sales programs with major customers; (18) our inability to collect amounts owed to us or significant delays in collecting such amounts; (19) achieving and managing growth and change, and the risks associated with new business lines, acquisitions, including the selection of suitable acquisition targets, restructurings, strategic alliances and international operations; (20) capital requirements and costs; (21) risks associated with distribution through third-party retailers, such as non-binding dealership arrangements; (22) the cost and difficulty of marketing and selling our products in foreign markets; (23) changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials; (24) price competition in the furniture industry; (25) competition from non-traditional outlets, such as internet and catalog retailers; and (26) changes in consumer preferences, including increased demand for lower-priced furniture; and (27) other risks and uncertainties described under Part I, Item 1A. "Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2023. Any forward-looking statement that we make speaks only as of the date of that statement, and we undertake no obligation, except as required by law, to update any forward-looking statements whether as a result of new information, future events or otherwise and you should not expect us to do so.


 
Table I
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
         
  For the
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 29,October 30, October 29,October 30,
   2023   2022   2023   2022 
         
Net sales $ 116,831  $151,580  $ 336,452  $451,803 
         
Cost of sales  83,121   119,572   251,495   359,281 
         
Gross profit  33,710   32,008   84,957   92,522 
         
Selling and administrative expenses  24,016   24,712   70,207   72,255 
Intangible asset amortization  924   878   2,732   2,634 
         
Operating income  8,770   6,418   12,018   17,633 
         
Other income, net  659   191   1,071   425 
Interest expense, net  364   434   1,197   546 
         
Income before income taxes  9,065   6,175   11,892   17,512 
         
Income tax expense  2,027   1,334   2,620   3,946 
         
Net income $ 7,038  $4,841  $ 9,272  $13,566 
         
Earnings per share        
Basic $ 0.66  $0.42  $ 0.85  $1.16 
Diluted $ 0.65  $0.42  $ 0.85  $1.14 
         
Weighted average shares outstanding:       
Basic  10,536   11,465   10,748   11,736 
Diluted  10,676   11,525   10,878   11,838 
         
Cash dividends declared per share $ 0.22  $0.20  $ 0.66  $0.60 
         


 
Table II
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
         
  For the
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 29, October 30, October 29,October 30,
   2023   2022   2023   2022 
         
Net income $ 7,038  $4,841  $ 9,272  $13,566 
Other comprehensive income:        
Amortization of actuarial (gain)/loss  (70)  21   (209)  62 
Income tax effect on amortization  17   (5)  50   (15)
Adjustments to net periodic benefit cost  (53)  16   (159)  47 
         
Total comprehensive income $ 6,985  $4,857  $ 9,113  $13,613 
         


 
Table III
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
As of October 29, January 29,
   2023   2023 
  (Unaudited)  
Assets    
Current assets    
Cash and cash equivalents $ 39,795  $19,002 
Trade accounts receivable, net  59,065   62,129 
Inventories  65,156   96,675 
Income tax recoverable  3,073   3,079 
Prepaid expenses and other current assets  5,934   6,418 
Total current assets  173,023   187,303 
Property, plant and equipment, net  29,079   27,010 
Cash surrender value of life insurance policies  28,264   27,576 
Deferred taxes  11,959   14,484 
Operating leases right-of-use assets  54,202   68,949 
Intangible assets, net  29,547   31,779 
Goodwill  15,036   14,952 
Other assets  13,388   9,663 
Total non-current assets  181,475   194,413 
Total assets $ 354,498  $381,716 
     
Liabilities and Shareholders' Equity    
Current liabilities    
Current portion of long-term debt $ 1,393  $1,393 
Trade accounts payable  23,294   16,090 
Accrued salaries, wages and benefits  6,716   9,290 
Customer deposits  5,033   8,511 
Current portion of lease liabilities  7,045   7,316 
Other accrued expenses  3,135   7,438 
Total current liabilities  46,616   50,038 
Long term debt  21,829   22,874 
Deferred compensation  7,737   8,178 
Operating lease liabilities  49,651   63,762 
Other long-term liabilities  877   843 
Total long-term liabilities  80,094   95,657 
Total liabilities  126,710   145,695 
     
Shareholders' equity    
Common stock, no par value, 20,000 shares authorized,    
10,672 and 11,197 shares issued and outstanding on each date 49,503   50,770 
Retained earnings  177,579   184,386 
Accumulated other comprehensive income  706   865 
Total shareholders' equity  227,788   236,021 
   Total liabilities and shareholders' equity $ 354,498  $381,716 
     
     


  
Table IV
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
  
  For the
  Thirty-Nine Weeks Ended
  October 29, October 30,
   2023   2022 
Operating Activities:    
Net income $ 9,272  $13,566 
Adjustments to reconcile net income to net cash    
provided by/(used in) operating activities:    
Depreciation and amortization  6,626   6,578 
Deferred income tax expense  2,575   1,650 
Noncash restricted stock and performance awards  1,685   1,323 
Provision for doubtful accounts and sales allowances  (270)  (3,831)
Gain on life insurance policies  (784)  (744)
Loss on sales of assets  29   - 
Changes in assets and liabilities:    
Trade accounts receivable  3,334   3,069 
Inventories  33,264   (56,343)
Income tax recoverable  5   2,357 
Prepaid expenses and other assets  (3,400)  (5,863)
Trade accounts payable  7,169   (1,522)
Accrued salaries, wages, and benefits  (2,574)  936 
Customer deposits  (3,477)  (1,277)
Operating lease assets and liabilities  366   (238)
Other accrued expenses  (4,400)  (391)
Deferred compensation  (650)  (419)
Net cash provided by/(used in) operating activities $ 48,770  $(41,149)
     
Investing Activities:    
Acquisitions  (2,373)  (25,912)
Purchases of property and equipment  (5,718)  (3,469)
Premiums paid on life insurance policies  (378)  (464)
Proceeds of life insurance policies  444   - 
Net cash used in investing activities  (8,025)  (29,845)
     
Financing Activities:    
Purchase and retirement of common stock  (11,674)  (9,359)
Cash dividends paid  (7,228)  (7,117)
Payments for long-term loans  (1,050)  (350)
Proceeds from long-term loans  -   25,000 
Proceeds from revolving credit facility  -   36,190 
Payments for revolving credit facility  -   (36,190)
Debt issuance cost  -   (38)
Net cash (used in)/provided by financing activities  (19,952)  8,136 
     
Net increase/(decrease) in cash and cash equivalents  20,793   (62,858)
Cash and cash equivalents - beginning of year  19,002   69,366 
Cash and cash equivalents - end of quarter $ 39,795  $6,508 
     
Supplemental disclosure of cash flow information:    
Cash paid/(refund) for income taxes $ 74  $(1)
Cash paid for interest, net  1,375   293 
     
Non-cash transactions:    
(Decrease)/Increase in lease liabilities arising from changes in right-of-use assets $ (8,987) $7,402 
Increase in property and equipment through accrued purchases  35   112 
     


   
Table V
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
NET SALES AND OPERATING INCOME/(LOSS) BY SEGMENT
(In thousands)
(Unaudited)
             
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 29,
2023
  October 30,
2022
  October 29,
2023
  October 30,
2022
 
   % Net  % Net  % Net  % Net
Net sales  Sales  Sales  Sales  Sales
Hooker Branded $ 39,122 33.5% $56,632 37.4% $ 118,936 35.4% $154,133 34.1%
Home Meridian  43,692 37.4%  50,588 33.4%  114,524 34.0%  171,721 38.0%
Domestic Upholstery  32,559 27.9%  43,436 28.7%  98,555 29.3%  122,982 27.2%
All Other  1,458 1.2%  924 0.5%  4,437 1.3%  2,967 0.7%
Consolidated $ 116,831 100% $151,580 100% $ 336,452 100% $451,803 100%
             
Operating income/(loss)           
Hooker Branded $ 7,287 18.6% $5,860 10.3% $ 13,298 11.2% $16,423 10.7%
Home Meridian  923 2.1%  (3,205)-6.3%  (4,532)-4.0%  (7,290)-4.2%
Domestic Upholstery  688 2.1%  3,823 8.8%  2,739 2.8%  8,288 6.7%
All Other  (128)-8.8%  (60)-6.5%  513 11.6%  212 7.1%
Consolidated $ 8,770 7.5% $6,418 4.2% $ 12,018 3.6% $17,633 3.9%
             


For more information, contact:
Paul A. Huckfeldt, Senior Vice President & Chief Financial Officer, Phone: (276) 666-3949