• Powell Slaughter

Hooker boosts fiscal Q2 sales, net income

MARTINSVILLE, Va. – Full-line vendor Hooker Furniture reported consolidated net sales of $156.3 million and net income of $7.8 million, or 67 cents per diluted share, for its fiscal 2018 second quarter ended July 30.

That represents a 14.8% increase in sales and a 46% jump in earnings from the comparable prior-year quarter.

Through fiscal 2018’s first six months, sales of $287 million are up 11.4%, and net income of $12.5 million, or $1.08 per diluted share, is 59% ahead of the prior-year first half.

"Sales rose in all segments and in eight of Hooker’s 10 business units,” according to Paul B. Toms Jr., chairman and CEO.

“The strong performance was particularly gratifying considering the second quarter is traditionally the softest of the year in the home furnishings industry,” he said. “Our sales and income gains validate our strategy of focusing on emerging and winning channels of distribution. Our channel-focused strategy to grow sales is producing significant revenue momentum in our Home Meridian segment and beginning to have a positive impact on our legacy business as well.”

Hooker’s case goods sales rose 4% in the second quarter and are up 2% for the first half of fiscal 2018.

“Orders and backlogs are out-pacing shipments, with orders up 9% year-to-date and our backlog up over 25% at quarter-end, as we enter the historically strong fall selling season at retail,” Toms said.

Mike Delgatti, president of Hooker Legacy Brands, which includes Hooker Casegoods, Hooker Upholstery, Bradington-Young and Sam Moore, said the uptick is driven by several factors.

“We’re realizing the benefits of successful product introductions for case goods the last two furniture markets,” he said. “In addition, our focus on emerging channels is beginning to positively impact case goods sales, along with our emphasis on key accounts, which are best-in-class retailers within the traditional furniture store channel.”

The Home Meridian segment led the consolidated net sales increase with a 20% improvement in net sales for the quarter and a 17% increase for the fiscal first half, driven by higher sales to mega, e-commerce and emerging channel accounts.

“Operating profit for the quarter more than doubled from last year, as measures we put in place earlier in the year to improve operating profit have been successfully implemented,” said George Revington, chief operating officer of Hooker Furniture. “The increase in sales and profits is due to several factors, most important of which is the continued focus on large, fast-growing customers in emerging channels. Based on demand, we feel the sales momentum will continue, as year-over-year backlog at quarter end was up 23%, and year-to-date orders were up 24%. HMI continues to adapt rapidly in addressing the fastest-growing retail channels, product categories and customers.

The Upholstery segment achieved a double-digit sales increase for the quarter and an upper single-digit increase for the first six months on the strength of robust sales increases in both the Hooker Upholstery and Bradington-Young divisions. Hooker Upholstery’s sales increase was driven by a better in-stock position, and Bradington-Young’s increase was driven by “dramatic growth in the luxury motion upholstery line,” said Delgatti.

Incoming orders for the Upholstery segment were up 5% at quarter-end, and the backlog was up 14%.

Net sales decreases at Sam Moore in both the quarter and six-month periods partially offset upholstery performance, but Delgatti noted that July orders showed improvement in August and gained more steam in August.

The H Contract line of senior living furnishings, reported 12% and 10% net sales increases for the second quarter and six month periods, respectively. Incoming orders for H Contract were up 20% for the six months, and the backlog was up over 7% at quarter end compared to last year.

Toms said strong incoming orders and increased backlogs across all segments are encouraging for the fall season.

“We do have some concern about reports of slower retail business, experienced across most channels recently, as well as lower housing starts,” he said. “However, the positives outweigh the negatives, with a generally positive macro environment with a healthy stock market and strong employment and consumer confidence at historically high levels. Our expectation for the fall selling season and the balance of the year is optimistic.”

In a separate announcement Thursday, Hooker announced that it had reached a definitive agreement to acquire North Carolina-based Shenandoah Furniture, an upscale domestic upholstery manufacturer, for $40 million.

Powell SlaughterPowell Slaughter | Senior Editor
PSlaughter@furnituretoday.com

I'm Powell Slaughter, senior editor at Furniture/Today. I returned to the publication in January 2015 after nine years of writing about furniture retail strategies and best practices at a monthly magazine focusing on home furnishings retail operations. Prior to that, I spent 10 years with F/T covering wood furniture, the last five of those as case goods editor. While I cover occasional, home entertainment and home office here, a major responsibility is expanding our attention to the logistics side of the industry. I hope my articles will encourage a dialogue with retailers, vendors, third-party logistics specialists and carriers. I’d love to hear your ideas, concerns and suggestions for smoother flow of material and goods.

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