MARTINSVILLE, Va. — Hooker Furnishings is moving ahead with a multi-phase restructuring plan aimed at cutting $25 million in annual fixed costs by fiscal 2027, roughly 25% of its baseline, company executives revealed in an earnings call this week.
The plan comes as Hooker navigates uncertain economic conditions continued headwinds like soft consumer sentiment and a weak housing market.
CFO Earl Armstrong said the company is executing its strategy in two phases. The first, initiated last year, included facility downsizing, headcount reductions and other fixed cost cuts, resulting in $10 million in expected annual savings starting this fiscal year. It incurred between $4.1 million and $4.9 million in restructuring charges, including $3.6 million in severance expenses.
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“We’ve already achieved over $3 million in savings in fiscal 2025,” Armstrong said. “In total, we expect to eliminate approximately $25 million, or roughly 25% of our fixed costs.”
The second phase, underway now, involves logistics and operational consolidation. The company plans to close its Savannah warehouse by Oct. 31, and it opened a new facility in Vietnam last month to shorten lead times from six months to four to six weeks. Hooker expects $3.4 million in net savings from phase two in fiscal 2026, growing to $14 million annually by fiscal 2027.
CEO Jeremy Hoff noted that tariff concerns are disrupting order flow, especially among large-volume customers.
“Cadence changed pretty drastically for us with the tariffs,” Hoff said. “It definitely affects what we call the mega customer, which is really the HMI customer, more so than the many customers we have that are very different on the Hooker Branded and domestic upholstery side of our business.”
HMI net sales fell 29% year-over-year, driven by the loss of a major customer and buying hesitancy tied to potential tariffs. Incoming orders and backlog also declined, but gross margin improved by 200 basis points, and operating losses narrowed to $2.8 million from $3.4 million.
Hooker Branded saw modest sales growth and improved gross margin. Domestic upholstery sales dipped 3.7% due to softer indoor demand but were offset by a 12.7% increase in outdoor furnishings sales from its Sunset West brand. That segment cut operating losses by more than half.
The company ended the quarter with $18 million in cash, up $11.7 million from year-end, and lowered inventory by $7 million. It paid off all borrowings on its revolving credit facility after the quarter ended, leaving $63 million in borrowing capacity.
“These actions are not only improving near-term liquidity but also positioning us to pursue strategic growth with a stronger, more efficient balance sheet,” Armstrong said.
Hooker declared its regular quarterly dividend following the quarter’s close, extending a 50-year streak of uninterrupted payments.
“We are focused on disciplined capital deployment that supports both shareholder returns and operational resilience,” Armstrong said. “As we move through the year, we remain committed to capital allocation decisions that enhance long-term value creation.”
