UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
Commission file number
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices, Zip Code)
(
(Registrant’s telephone
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated Filer ☐ | |
| Non-accelerated Filer ☐ | Smaller reporting company |
| 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | |
As of November 29, 2024, there were
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. |
3 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
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Item 3. |
31 |
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Item 4. |
31 |
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PART II. OTHER INFORMATION |
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Item 5. |
32 |
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Item 6. |
32 |
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33 |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
As of |
October 27, |
January 28, |
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2024 |
2024 |
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(unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ | $ | ||||||
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Trade accounts receivable, net |
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Inventories |
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Income tax recoverable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Cash surrender value of life insurance policies |
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Deferred taxes |
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Operating leases right-of-use assets |
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Intangible assets, net |
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Goodwill |
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Other assets |
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Total non-current assets |
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Total assets |
$ | $ | ||||||
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Liabilities and Shareholders’ Equity |
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Current liabilities |
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Current portion of long-term debt |
$ | $ | ||||||
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Trade accounts payable |
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Accrued salaries, wages and benefits |
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Customer deposits |
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Current portion of operating lease liabilities |
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Other accrued expenses |
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Total current liabilities |
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Long term debt |
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Deferred compensation |
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Operating lease liabilities |
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Other long-term liabilities |
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Total long-term liabilities |
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Total liabilities |
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Shareholders’ equity |
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| Common stock, no par value, |
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Retained earnings |
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Accumulated other comprehensive income |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
$ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
For the |
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Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
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October 27, |
October 29, |
October 27, |
October 29, |
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2024 |
2023 |
2024 |
2023 |
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Net sales |
$ | $ | $ | $ | ||||||||||||
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Cost of sales |
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Gross profit |
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Selling and administrative expenses |
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Trade name impairment charges |
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Intangible asset amortization |
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Operating (loss) / income |
( |
) | ( |
) | ||||||||||||
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Other income, net |
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Interest expense, net |
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(Loss) / income before income taxes |
( |
) | ( |
) | ||||||||||||
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Income tax (benefit) / expense |
( |
) | ( |
) | ||||||||||||
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Net (loss) / income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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(Loss) / earnings per share |
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Basic |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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Diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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Cash dividends declared per share |
$ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME
(In thousands)
(Unaudited)
|
For the |
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Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
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October 27, |
October 29, |
October 27, |
October 29, |
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2024 |
2023 |
2024 |
2023 |
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Net (loss) / income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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Other comprehensive income: |
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Actuarial adjustments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Income tax effect on adjustments |
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Adjustments to net periodic benefit cost |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Total comprehensive (loss) / income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
For the |
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Thirty-Nine Weeks Ended |
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October 27, |
October 29, |
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2024 |
2023 |
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Operating Activities: |
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Net (loss) / income |
$ | ( |
) | $ | ||||
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Adjustments to reconcile net (loss) / income to net cash (used in) / provided by operating activities: |
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Depreciation and amortization |
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Deferred income tax (benefit) / expense |
( |
) | ||||||
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Tradename impairment |
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Noncash restricted stock and performance awards |
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Provision for doubtful accounts and sales allowances |
( |
) | ||||||
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Gain on life insurance policies |
( |
) | ( |
) | ||||
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(Gain) / loss on disposal of assets |
( |
) | ||||||
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Changes in assets and liabilities: |
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Trade accounts receivable |
( |
) | ||||||
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Inventories |
( |
) | ||||||
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Income tax recoverable |
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Prepaid expenses and other assets |
( |
) | ( |
) | ||||
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Trade accounts payable |
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Accrued salaries, wages, and benefits |
( |
) | ( |
) | ||||
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Customer deposits |
( |
) | ( |
) | ||||
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Operating lease assets and liabilities |
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Other accrued expenses |
( |
) | ( |
) | ||||
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Deferred compensation |
( |
) | ( |
) | ||||
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Net cash (used in) / provided by operating activities |
$ | ( |
) | $ | ||||
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Investing Activities: |
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Purchases of property and equipment |
( |
) | ( |
) | ||||
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Premiums paid on life insurance policies |
( |
) | ( |
) | ||||
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Proceeds received on life insurance policies |
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Proceeds from sales of assets |
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Acquisitions |
( |
) | ||||||
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Net cash used in investing activities |
$ | ( |
) | $ | ( |
) | ||
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Financing Activities: |
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Purchase and retirement of common stock |
( |
) | ||||||
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Cash dividends paid |
( |
) | ( |
) | ||||
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Payments for long-term loans |
( |
) | ( |
) | ||||
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Net cash used in financing activities |
$ | ( |
) | $ | ( |
) | ||
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Net (decrease) / increase in cash and cash equivalents |
( |
) | ||||||
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Cash and cash equivalents - beginning of year |
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Cash and cash equivalents - end of quarter |
$ | $ | ||||||
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Supplemental disclosure of cash flow information: |
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Cash paid for income taxes, net of refund |
$ | $ | ||||||
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Cash paid for interest, net |
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Non-cash transactions: |
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Increase / (decrease) in lease liabilities arising from changes in right-of-use assets |
$ | $ | ( |
) | ||||
|
Increase in property and equipment through accrued purchases |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except per share data)
(Unaudited)
|
Accumulated |
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Other |
Total |
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Common Stock |
Retained |
Comprehensive |
Shareholders' |
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Shares |
Amount |
Earnings |
Income |
Equity |
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Balance at July 30, 2023 |
$ | $ | $ | $ | ||||||||||||||||
|
Net income for the 13 weeks ended October 29, 2023 |
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| Actuarial adjustments on defined benefit plan, net of tax of $ |
( |
) | ( |
) | ||||||||||||||||
| Cash dividends paid ($ |
( |
) | ( |
) | ||||||||||||||||
|
Purchase and retirement of common stock |
( |
) | $ | ( |
) | ( |
) | ( |
) | |||||||||||
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Restricted stock grants, net of forfeitures |
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Restricted stock compensation cost |
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Performance-based restricted stock units cost |
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Balance at October 29, 2023 |
$ | $ | $ | $ | ||||||||||||||||
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Balance at July 28, 2024 |
$ | $ | $ | $ | ||||||||||||||||
|
Net loss for the 13 weeks ended October 27, 2024 |
( |
) | ( |
) | ||||||||||||||||
| Actuarial adjustments on defined benefit plan, net of tax of $ |
( |
) | ( |
) | ||||||||||||||||
| Cash dividends paid ($ |
( |
) | ( |
) | ||||||||||||||||
|
Restricted stock grants, net of forfeitures |
( |
) | ( |
) | ( |
) | ||||||||||||||
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Restricted stock compensation cost |
||||||||||||||||||||
|
Performance-based restricted stock units cost |
( |
) | ( |
) | ||||||||||||||||
|
Balance at October 27, 2024 |
$ | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONT.)
(In thousands, except per share data)
(Unaudited)
|
Accumulated |
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Other |
Total |
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|
Common Stock |
Retained |
Comprehensive |
Shareholders' |
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|
Shares |
Amount |
Earnings |
Income (loss) |
Equity |
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|
Balance at January 29, 2023 |
$ | $ | $ | $ | ||||||||||||||||
|
Net income for the 39 weeks ended October 29, 2023 |
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| Actuarial adjustments on defined benefit plan, net of tax of $ |
( |
) | ( |
) | ||||||||||||||||
| Cash dividends paid ($ |
( |
) | ( |
) | ||||||||||||||||
|
Purchase and retirement of common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
|
Restricted stock grants, net of forfeitures |
( |
) | ( |
) | ||||||||||||||||
|
Restricted stock compensation cost |
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|
Performance-based restricted stock units costs |
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|
Balance at October 29, 2023 |
$ | $ | $ | $ | ||||||||||||||||
|
Balance at January 28, 2024 |
$ | $ | $ | $ | ||||||||||||||||
|
Net loss for the 39 weeks ended October 27, 2024 |
( |
) | ( |
) | ||||||||||||||||
| Actuarial adjustments on defined benefit plan, net of tax of $ |
( |
) | ( |
) | ||||||||||||||||
| Cash dividends paid ($ |
( |
) | ( |
) | ||||||||||||||||
|
Restricted stock grants, net of forfeitures |
( |
) | ( |
) | ||||||||||||||||
|
Restricted stock compensation cost |
||||||||||||||||||||
|
Performance-based restricted stock units costs |
( |
) | ( |
) | ||||||||||||||||
|
Balance at October 27, 2024 |
$ | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar and share amounts in tables, except per share amounts, in thousands unless otherwise indicated)
(Unaudited)
For the Thirty-Nine Weeks Ended October 27, 2024
1. Preparation of Interim Financial Statements
The condensed consolidated financial statements of Hooker Furnishings Corporation and subsidiaries (referred to as “we,” “us,” “our,” “Hooker” or the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management these statements include all adjustments necessary for a fair statement of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) are condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of our results of operations and financial position. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended January 28, 2024 (“2024 Annual Report”). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect both the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates. Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year.
The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the 2025 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “third quarter” or “quarterly period”) that began July 29, 2024, and the thirty-nine week period (also referred to as “nine months”, “nine-month period” or “year-to-date period”) that began January 29, 2024, which both ended October 27, 2024. This report discusses our results of operations for these periods compared to the 2024 fiscal year thirteen-week period that began July 31, 2023, and the thirty-nine week period that began January 30, 2023, which both ended October 29, 2023; and our financial condition as of October 27, 2024 compared to January 28, 2024.
References in these notes to the condensed consolidated financial statements of the Company to:
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■ |
the 2025 fiscal year and comparable terminology mean the fifty-three-week fiscal year that began January 29, 2024 and will end February 2, 2025; and |
|
■ |
the 2024 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began January 30, 2023 and ended January 28, 2024. |
2. Recently Adopted Accounting Policies
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The new guidance requires enhanced reportable segment disclosures to include significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 (our fiscal 2025) and interim periods beginning after December 15, 2024 (our fiscal 2026). We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements and will add necessary disclosures upon adoption.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The new guidance requires enhanced effective tax rate reconciliation and income taxes paid disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 (our fiscal 2026). We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements and will add necessary disclosures upon adoption.
We reviewed all other newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on our consolidated financial statements as a result of future adoption.
3. Accounts Receivable
|
October 27, |
January 28, |
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|
2024 |
2024 |
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|
Gross accounts receivable |
$ | $ | ||||||
|
Customer allowances |
( |
) | ( |
) | ||||
|
Allowance for doubtful accounts |
( |
) | ( |
) | ||||
|
Trade accounts receivable |
$ | $ | ||||||
4. Inventories
|
October 27, |
January 28, |
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|
2024 |
2024 |
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Finished furniture |
$ | $ | ||||||
|
Furniture in process |
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Materials and supplies |
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Inventories at FIFO |
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|
Reduction to LIFO basis |
( |
) | ( |
) | ||||
|
Inventories |
$ | $ | ||||||
5. Property, Plant and Equipment
| Depreciable Lives | October 27, | January 28, | |||||||||
| (In years) | 2024 | 2024 | |||||||||
| Buildings and land improvements | $ | $ | |||||||||
| Machinery and equipment | |||||||||||
| Computer software and hardware | |||||||||||
| Leasehold improvements |
| ||||||||||
| Furniture and fixtures | |||||||||||
| Other | |||||||||||
| Total depreciable property at cost | |||||||||||
| Less accumulated depreciation | ( | ) | ( | ) | |||||||
| Total depreciable property, net | |||||||||||
| Land | |||||||||||
| Construction-in-progress | |||||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
6. Cloud Computing Hosting Arrangement
We implemented a common Enterprise Resource Planning (ERP) system across all legacy Hooker divisions in fiscal 2023 and 2024.
Based on the provisions of ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software, we capitalize implementation costs associated with hosting arrangements that are service contracts. These costs are recorded in other noncurrent assets of our consolidated balance sheets. We amortize on a straight-line basis over a
Due to our cost reduction initiatives, we have temporarily paused the ERP project in the Home Meridian segment beginning in the third quarter of fiscal 2025. Implementation costs and interest expense of $
|
October 27, 2024 |
January 28, 2024 |
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Gross carrying amount |
Accumulated amortization |
Gross carrying amount |
Accumulated amortization |
|||||||||||||
|
Implementation Costs |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
|
Interest Expenses |
( |
) | ( |
) | ||||||||||||
7. Fair Value Measurements
Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability (an exit price) in an orderly transaction between market participants on the applicable measurement date. We use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
|
■ |
Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; |
|
■ |
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
|
■ |
Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
As of October 27, 2024 and January 28, 2024, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs. The fair value of the Company-owned life insurance is determined by inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change in fair value is reflected in income for that period.
|
Fair value at October 27, 2024 |
Fair value at January 28, 2024 |
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|
Description |
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||||||||||||||
|
(In thousands) |
||||||||||||||||||||||||||||||||
|
Assets measured at fair value |
||||||||||||||||||||||||||||||||
|
Company-owned life insurance |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
8. Intangible Assets
Our intangible assets with indefinite lives consist of: goodwill related to the Shenandoah, Sunset West and BOBO Intriguing Objects acquisitions; and trademarks and tradenames related to the acquisitions of Bradington-Young, Home Meridian and BOBO Intriguing Objects. Our intangible assets with definite lives are recorded in our Home Meridian and Domestic Upholstery segments.
|
October 27, 2024 |
January 28, 2024 |
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|
Gross carrying amount |
Impairment / Accumulated Amortization |
Gross carrying amount |
Impairment / Accumulated Amortization |
|||||||||||||
|
Intangible assets with indefinite lives: |
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|
Goodwill |
||||||||||||||||
|
Domestic Upholstery - Shenandoah * |
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Domestic Upholstery - Sunset West |
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All Other - BOBO Intriguing Objects |
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|
Goodwill |
||||||||||||||||
|
Trademarks and Trade names * |
( |
) | - | |||||||||||||
|
Intangible assets with definite lives: |
||||||||||||||||
|
Customer Relations |
( |
) | ( |
) | ||||||||||||
|
Trademarks and Trade names |
( |
) | ( |
) | ||||||||||||
|
Intangible assets, net |
( |
) | ( |
) | ||||||||||||
*
Amortization expenses for intangible assets with definite lives were $
9. Leases
We have operating leases for warehouses, showrooms, manufacturing facilities, offices and equipment. We recognized sub-lease income of $
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
|||||||||||||||
|
October 27, 2024 |
October 29, 2023 |
October 27, 2024 |
October 29, 2023 |
|||||||||||||
|
Operating lease cost |
$ | $ | $ | $ | ||||||||||||
|
Variable lease cost |
||||||||||||||||
|
Short-term lease cost |
||||||||||||||||
|
Total operating lease cost |
$ | $ | $ | $ | ||||||||||||
|
Operating cash outflows |
$ | $ | $ | $ | ||||||||||||
|
October 27, 2024 |
January 28, 2024 |
|||||||
|
Real estate |
$ | $ | ||||||
|
Property and equipment |
||||||||
|
Total operating leases right-of-use assets |
$ | $ | ||||||
|
Current portion of operating lease liabilities |
$ | $ | ||||||
|
Long term operating lease liabilities |
||||||||
|
Total operating lease liabilities |
$ | $ | ||||||
The weighted-average discount rate is
|
Undiscounted Future Operating Lease Payments |
||||
|
Remainder of fiscal 2025 |
$ | |||
|
2026 |
||||
|
2027 |
||||
|
2028 |
||||
|
2029 |
||||
|
2030 and thereafter |
||||
|
Total lease payments |
$ | |||
|
Less: impact of discounting |
( |
) | ||
|
Present value of lease payments |
$ | |||
10. Long-Term Debt
On July 26, 2022, we entered into the Fourth Amendment (the “amendment”) to the Second Amended and Restated Loan Agreement with Bank of America, N.A. (“BofA”) to replenish cash used to make the acquisition of substantially all of the assets of Sunset West (which closed at the beginning of the first quarter of fiscal 2023) (the “Sunset Acquisition”). The Second Amended and Restated Loan Agreement dated as of September 29, 2017, had previously been amended by a First Amendment to Second Amended and Restated Loan Agreement dated as of January 31, 2019, a Second Amendment to Second Amended and Restated Loan Agreement dated as of November 4, 2020, and a Third Amendment to Second Amended and Restated Loan Agreement dated as of January 27, 2021 (as so amended, the “Existing Loan Agreement”). Details of the individual credit facilities provided for in the Amendment are as follows:
| ■ | Unsecured Revolving Credit Facility. Under the Amendment, the expiration date of the existing $ |
| ■ | 2022 Secured Term Loan. The Amendment provided us with an $ |
| ■ | 2022 Unsecured Term Loan. The Amendment provided us with a $ |
We may prepay any outstanding principal amounts borrowed under either the Secured Term Loan or the Unsecured Term Loan at any time, without penalty provided that any payment is accompanied by all accrued interest owed. As of October 27, 2024, $
We incurred $
The Amendment also included customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:
| ■ | Maintain a ratio of funded debt to EBITDA not exceeding: |
|
o |
2.25:1.0 through July 30, 2024; and |
|
o |
2.00:1.00 thereafter. |
|
■ |
A basic fixed charge coverage ratio of at least 1.25:1.00; and |
|
■ |
Limit capital expenditures to no more than $15.0 million during any fiscal year. |
The Existing Loan Agreement also limits our right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions. The Existing Loan Agreement does not restrict our ability to pay cash dividends on, or repurchase, shares of our common stock, subject to our compliance with the financial covenants discussed above if we are not otherwise in default under the Existing Loan Agreement.
Due to our first nine months results, we were not in compliance with the Existing Loan Agreement’s basic fixed charge ratio covenant in the first three fiscal 2025 quarterly periods. Additionally, we were not in compliance with the Funded Debt to EBITDA Ratio in the third quarter. However, subsequent to the end of all three quarterly periods, we obtained covenant waivers from BofA. Subsequent to the fiscal 2025 third quarter end, we finalized a new credit facility with BofA in December 2024. Consequently, we expect to be in compliance with our revised financial covenants in our fiscal 2025 fourth quarter and for the foreseeable future. We refer you to the discussion in Note 14 Subsequent Events.
As of October 27, 2024, we had $
11. Earnings Per Share
We refer you to the discussion of Earnings Per Share in Note 1. Summary of Significant Accounting Policies, in the financial statements included in our 2024 Annual Report, for additional information concerning the calculation of earnings per share (EPS).
All stock awards are designed to encourage retention and to provide an incentive for increasing shareholder value. We have issued restricted stock awards to non-employee members of the board of directors since 2006 and to certain non-executive employees since 2014. We have issued restricted stock units (“RSUs”) to certain senior executives since fiscal 2012 under the Company’s Stock Incentive Plan. Each RSU entitles an executive to receive one share of the Company’s common stock if the executive remains continuously employed with the Company subject to a three-year vesting schedule. The RSUs may be paid in shares of our common stock, cash or both at the discretion of the Compensation Committee of our board of directors. We have issued Performance-based Restricted Stock Units (“PSUs”) to certain senior executives since fiscal 2019 under the Company’s Stock Incentive Plan. Each PSU entitles the executive officer to receive one share of our common stock based on the achievement of two specified performance conditions if the executive officer remains continuously employed through the end of the three-year performance period. Historically, one target is based on our annual average growth in our EPS over the performance period and the other target is based on EPS growth over the performance period compared to our peers. For the PSUs issued under the Company’s 2024 Stock Incentive Plan in fiscal 2025, one target is the Company’s annual EPS growth over the performance period and the other target is the Company’s total shareholder return during the performance period compared to the Company’s peer group. The payout or settlement of the PSUs will be made in shares of our common stock.
|
October 27, |
January 28, |
|||||||
|
2024 |
2024 |
|||||||
|
Restricted shares |
||||||||
|
RSUs and PSUs |
||||||||
All restricted shares, RSUs and PSUs awarded that have not yet vested are considered when computing diluted earnings per share.
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
|||||||||||||||
|
October 27, |
October 29, |
October 27, |
October 29, |
|||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
Net (loss) / income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
|
Less: Unvested participating restricted stock dividends |
||||||||||||||||
|
Net earnings allocated to unvested participating restricted stock |
||||||||||||||||
|
(Loss) / Earnings available for common shareholders |
( |
) | ( |
) | ||||||||||||
|
Weighted average shares outstanding for basic earnings per share |
||||||||||||||||
|
Dilutive effect of unvested restricted stock, RSU and PSU awards |
||||||||||||||||
|
Weighted average shares outstanding for diluted earnings per share |
||||||||||||||||
|
Basic (loss) / earnings per share |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
|
Diluted (loss) / earnings per share |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Due to net losses in the fiscal 2025 third quarter and nine-month period, approximately
12. Income Taxes
We recorded income tax benefit of $
No material and non-routine positions have been identified as uncertain tax positions.
Tax years ending January 31, 2021 through January 28, 2024 remain subject to examination by federal and state taxing authorities.
13. Segment Information
As a public entity, we are required to present disaggregated information by segment using the management approach. The objective of this approach is to allow users of our financial statements to see our business through the eyes of management based upon the way management reviews performance and makes decisions. The management approach requires segment information to be reported based on how management internally evaluates the operating performance of the company’s business units or segments. The objective of this approach is to meet the basic principles of segment reporting as outlined in ASC 280 Segments (“ASC 280”), which are to allow the users of our financial statements to:
|
■ |
better understand our performance; |
|
■ |
better assess our prospects for future net cash flows; and |
|
■ |
make more informed judgments about us as a whole. |
We define our segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources. We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income, as determined by the information regularly reviewed by the CODM.
For financial reporting purposes, we are organized into
|
■ |
Hooker Branded, consisting of the operations of our imported Hooker Casegoods and Hooker Upholstery businesses; |
|
■ |
Home Meridian, is a stand-alone, mostly autonomous business that serves a different type or class of customer than do our other operating segments and at much lower margins; |
|
■ |
Domestic Upholstery, which includes the domestic upholstery manufacturing operations of Bradington-Young, HF Custom (formerly Sam Moore), Shenandoah Furniture and Sunset West; and |
|
■ |
All Other, consisting of H Contract, Lifestyle Brands and BOBO Intriguing Objects. None of these operating segments were individually reportable; therefore, we combined them in “All Other” in accordance with ASC 280. |
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
|||||||||||||||||||||||||||||||
|
October 27, |
October 29, |
October 27, |
October 29, |
|||||||||||||||||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||||||||||||||||||
|
% Net |
% Net |
% Net |
% Net |
|||||||||||||||||||||||||||||
|
Net Sales |
Sales |
Sales |
Sales |
Sales |
||||||||||||||||||||||||||||
|
Hooker Branded |
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
|
Home Meridian |
% | % | % | % | ||||||||||||||||||||||||||||
|
Domestic Upholstery |
% | % | % | % | ||||||||||||||||||||||||||||
|
All Other |
% | % | % | % | ||||||||||||||||||||||||||||
|
Consolidated |
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
|
Gross Profit |
||||||||||||||||||||||||||||||||
|
Hooker Branded |
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
|
Home Meridian |
% | % | % | % | ||||||||||||||||||||||||||||
|
Domestic Upholstery |
% | % | % | % | ||||||||||||||||||||||||||||
|
All Other |
( |
) | - |
% | % | % | % | |||||||||||||||||||||||||
|
Consolidated |
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
|
Operating (Loss) / Income |
||||||||||||||||||||||||||||||||
|
Hooker Branded |
$ | ( |
) | - |
% | $ | % | $ | ( |
) | - |
% | $ | % | ||||||||||||||||||
|
Home Meridian |
( |
) | - |
% | % | ( |
) | - |
% | ( |
) | - |
% | |||||||||||||||||||
|
Domestic Upholstery |
( |
) | - |
% | % | ( |
) | - |
% | % | ||||||||||||||||||||||
|
All Other |
( |
) | - |
% | ( |
) | - |
% | ( |
) | - |
% | ( |
) | - |
% | ||||||||||||||||
|
Consolidated |
$ | ( |
) | - |
% | $ | % | $ | ( |
) | - |
% | $ | % | ||||||||||||||||||
|
Capital Expenditures (net of disposals) |
||||||||||||||||||||||||||||||||
|
Hooker Branded |
$ | $ | $ | $ | ||||||||||||||||||||||||||||
|
Home Meridian |
||||||||||||||||||||||||||||||||
|
Domestic Upholstery |
||||||||||||||||||||||||||||||||
|
All Other |
||||||||||||||||||||||||||||||||