Hooker Furniture Reports Q3 Results with Revenue Decline but Improved Margins Following HMI Sale

Stonegate Capital Partners has updated its coverage on Hooker Furniture Corporation following the company's third-quarter fiscal year 2026 results. Hooker Furniture reported revenue of $70.7 million, operating income of negative $16.3 million, and adjusted earnings per share of negative $1.99 for the quarter. These figures compare to Stonegate's estimates of $85.2 million in revenue, negative $2.2 million in operating income, and negative $0.15 in adjusted EPS, as well as consensus estimates of $85.5 million, negative $2.2 million, and negative $0.14, respectively.

The company's revenue declined 32.2% year-over-year, primarily driven by the sale of the majority of its HMI business segment. This transformative sale of two HMI brands represents a strategic shift for the company. In contrast to the overall revenue decline, Hooker Branded net sales grew 4.4% year-over-year, and Domestic Upholstery increased 3.0%, underscoring continued resilience in the legacy brands. Following the sale of its lower-margin HMI business, consolidated gross margins grew to 25.6%, showing sequential improvement.

Overall profitability was challenged by one-time trade name impairment charges related to the HMI transaction, which Stonegate expects to be mostly one-time in nature. The firm notes impressive buzz around the upcoming Margaritaville launch, which represents a new growth opportunity for the company. Management has reaffirmed its focus on navigating macro headwinds such as housing market weakness, high mortgage rates, and subdued consumer demand while positioning the company to return to profitability.

The improved gross margins following the HMI divestiture suggest the company is making progress toward its strategic objectives despite the challenging operating environment. Stonegate's analysis indicates that while revenue came in below expectations due to the business segment sale, the underlying performance of Hooker's core brands remains solid. The company's ability to grow its legacy brands in a difficult market environment demonstrates the strength of its core business operations. To view the full announcement, including downloadable images, bios, and more, click here.

The furniture industry continues to face significant challenges from economic factors affecting consumer spending and housing markets. Hooker Furniture's strategic repositioning through the HMI sale appears designed to improve long-term profitability by focusing on higher-margin segments. The company's performance in its core brands suggests it maintains competitive strengths in its traditional markets. As the company works to return to profitability, investors will be watching how effectively management executes its strategy amid ongoing market headwinds.