MARTINSVILLE, Va. — The furniture industry is under pressure from high interest rates and a sluggish housing market, and that was seen in the first quarter of 2025 results from the century-old Hooker Furnishings, which had what it called a "rare operating loss."

"This morning we reported consolidated net sales of $93.6 million for the fiscal 2025 first quarter, a decrease of $28 million for 23 percent as compared to last year's first quarter," said Paul A. Huckfeldt, senior vice president and CFO. "All three reporting segments experienced sales decreases due to lower demand for home furnishings, which is adversely affecting much of the home furnishings industry."

Huckfeldt's comments reflected the sentiment expressed by analyst Mark Laferriere. assurance partner at Smith Leonard, which produces the monthly Furniture Insights report on the residential furniture industry.

"Consumers continue to be anxious about future prospects despite certain positive economic trends (e.g. employment), and this seems to be negatively impacting discretionary spending on items such as home furnishings," he said. "In addition, it now seems unlikely that the Fed will make any meaningful rate cuts in the next 6 months that would potentially drive additional housing activity and furniture purchases, with inflation still a focus and the elections looming large."

Despite these challenging times, Hooker management feels that the losses are a result of consumer demand and that once that turns around occurs, their financial fortunes will reverse themselves. "Year over year industry-wide U.S. furniture store sales compared to the prior year same months have fallen for 14 consecutive months as reported by the U.S. Census Bureau," said CEO Jeremy Hoff. "Our first quarter was disappointing as the industry-wide weak demand, which began last year, persisted. While we are disappointed to report a rare operating loss this quarter, the loss was almost entirely driven by the sales reductions in each segment, and we strongly believe we'll return to profitability once demand and revenue rebound, although there may be some short-term volatility in earnings."

One of the rationales for this optimism is the cost reduction strategy the company has put into place. "Given the current macroeconomic uncertainty, while we expect to be profitable for the current fiscal year and beyond, we're taking a hard look at our spending and our fixed cost structure," said Huckfeldt, "and we expect to finalize and implement cost reduction plans in the fiscal 2025 second quarter. We expect to realize a 10 % reduction in fixed costs beginning in the second half of fiscal 2025."

These costs reduction plans are still being finalized, said Hoff, but current planned actions include consolidating Bobo Intriguing Objects, the company purchased in 2023 that sells a unique collection of eclectic furniture into Hooker branded, further reducing our Georgia warehouse footprint and redeploying space at the warehouse to support its Sunset West company as it expands into the East Coast, consolidating certain other operations and additional fixed cost reductions. The company said it plans to implement the cost reduction plans in the fiscal 2025 second quarter and expects to realize a 10% reduction in fixed costs beginning in the second half of fiscal 2025.

The company did not state if that would entail closure or reduction in manufacturing capability. Currently, the FDMC300 listed company, which ranks #25 on the list of top North American wood products manufacturers, operates seven manufacturing plants with a total square footage of 2.5 million square feet.

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