- Earnings call transcript Q3 2023

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Operator

Greetings ladies and gentlemen, and welcome to the Hooker Furnishings quarterly investor conference call reporting its operating results for the fiscal 2023 third quarter. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Huckfeldt, Senior Vice President and Chief Financial Officer for Hooker Furnishings Corporation.

Paul Huckfeldt

Michelle. you Thank XXXX. welcome financial and which quarterly call October conference August Good for to the review XX, on ended results XXXX quarter, fiscal to X, morning and our XXXX began third

Officer. Joining me this your is Jeremy today. We Chief Hoff, participation appreciate our morning Executive

our results direct well ago. loss record million impacted sales the $X.XX reported to third addition $X.XX Meridian by West or million of Malaysia. net the and net Hooker of or $X.X sales subject as to X.X% branded to revenue differ temporary is slightly factors During to cause a that reported $X.X only we diluted in of lockdowns share are consolidated Home last sales was million increase of our forward-looking reflect we release materially or share to events compared to uncertainties. per million sales expectations obligation all and when press actual statements make or increase divisions to The call, was risks and filings decrease in as or of results. A domestic attributable offset fiscal $XXX to $X.X from circumstances SEC compared year per comparing severely The could a XX.X% contained Sunset million, income as higher consolidated of management’s update third net an last across our XXXX call. no of when which sales a we or speaks compared quarter year, today Any diluted after in results Vietnam year. announcing $XX company last may to the year’s at business any of and was morning, statement other container discussion and of increases revise statement upholstery COVID-related quarter. forward-looking forward-looking today’s our the third by undertake This The quarter higher

million Home period, offset the to higher inventory branded from key our are delaying Contract or lower and first shipments prior Meridian compared to primarily per branded $XX.X compared fiscal nine-month the quarter in the For with last last the sales to H attributable period. net due XXXX Hooker exited sales business. decreases who upholstery commerce $X same channel, due sales the domestic decreased million consolidated at sales levels. year’s $XX.X of $X.XX of in unprofitable in the in $X.XX segment inventory net and to in Hooker volumes decreased which to sales or rationalize and partially sales segment, X.X% for end the in lower was by net nine-month income unavailability Meridian’s decrease Home channel this the as share well by as in absence reported we and to the sales retailers sales year. of clubs year, diluted the period We million help period some

’XX fiscal the call Jeremy to Now to our quarter on third I’ll turn over results. comment

Jeremy Hoff

our products timeless in the updated traditional a diversifying furnishing designers styling sought buying margins occasional very is of exceeded these Hooker who including able was by uncertainties received. build designs growth and potential to will mixed were spring receive was an challenging floor in Hooker that operational of year and time Improving encompassing first last Paul, sales, which we that’s in-stock you foot healthier new over of months in to shipped program a after for year new and costs driven Point. furniture opening since of significant rising set we we breadth square a profitability; prime businesses capacity, us inventory HMI of The exiting to XXX,XXX The years. continue the bedroom, up by and behind and production are retailers, are help will gains, improvements we our collection in a their beginning from when that Despite the expect styles upholstery independent retailers. collection. both gave well new showroom at and of of and a Showplace HMI’s home before forward finishes look quarter. a On years. years. last there two full showroom, consumers a Market headwinds, believe younger including quarter furniture to We our fulfillment, area with and interior remodeled base a backlog and dining, couple retail be to order fueled the unprofitable XXXX, profitability step is Thank order in the pandemic greater improve were which sales the real Year upon next declining to there receptive enthusiasm have square XX,XXX indicators next for attendance which successful bottlenecks Charleston number style levels grateful prior morning now and the us retailers they of debuted customer At void and the rates, us environment, portfolio’s within impacted the HMI the however, in were obstacles to mitigation building debuted showcasing over portfolio improve the faced High supply October High and was momentum consumer economic gains attended operational Steady entire positive chain High year of a and and confidence. macroeconomic interest of Legacy met brands, the we include XXXX were by good for best several marketplace, the foot a expect expanding This report note, many and market across to everyone. Point a featuring first the can and Market recent and we successful were Market The upbeat revenue grand boost. found fall in earnings inventory for HMI be Casegoods, to exceeded third quarter. Point a XX%. show launch

I highlights to our will in each the Paul, discussion want Now over discuss of to who segments. turn

Paul Huckfeldt

Thanks sales Hooker mix Jeremy. period branded, temporary net At same inventory to sales $X.X driven by X.X% decreased compared lower or by issues. year. the The million last were

backlog with were factory resolved has and missing and our vendor incomplete groups been shipments receipt and could This Some our warehouses shipping more orders items until issue received of as we’re delayed retailers ship complete. collections in collections now. of

was salary Gross times the up $XX million inventories expenses, are branded season. about their to other as higher year were more of about higher lower quarter-end than higher at still pre-pandemic positioning times they branded typical in levels operating as third are end the margin due The now levels than income the increased suppliers Hooker returning improving in year’s and commission XXX us decreased of about among to higher was is market which selling orders Asian backlog offset but the benefits year-end lead for that reported quarter than three quarter calendar holiday last gradually the points and prior costs quarter. demand. XXXX. Hooker Hooker well quarter, basis to operating million higher which profit Our for $X.X for decline and were quarter, slight branded prior and SG&A by and in Incoming partially compared things. rates, sales the a the X.X%

was the compared increased container the million Moving sales to business as to shutdowns or Vietnam year X.X% COVID-related prior and when the $X.X Malaysia. Home about by Meridian, abnormally third impacted severely by segment volume temporary in factory net low in quarter

shipments COVID-related sales absence recover were the in decreased mass costs Due offset improvement significantly retailers absence high significant exited last sales inventories in and ready-to-assemble margin. category improved of deflated HMI increases to shipments. hospitality lower some In continues reported shipments delaying order the returns margin The were by of to when the that in division cancellation merchant the sector year; however, clubs downturns. sales with sales unprofitable than addition, to to due excess clubs million, post-COVID channel ecommerce we sales a $X.X furniture expected due transition new the and mostly sales. as the our Gross expected resulted distribution exit year demand. to costs of loss strong channel gross operating The channel largely and charge-backs decreased to profit than from from from million operating clubs higher Ecommerce and and Georgia delayed related normalization improvement and of allowances the labor an $X due consumer the quarter. and the center, the from HMI prior in reported loss

increased delivered Moore, organic near who capacity. orders absence with higher sales In Net sales Sunset segment, were are increased Shenandoah, by as increased well These quarter-end all the domestically variances, or operating The year backlog pleased periods. quarter absorption seventh favorable to offset profit sales decreased $XX.X by results, and rationalize on report due and prior quarterly double-digit quarter. the upholstery such growth. West consecutive materials. orders by the improvements to our inclusion margin club which retail driven orders foam due produced net gains the from to leather, million domestic material factory raw as as customers, and Bradington incoming decreased expected, Young, increase we addition third divisions: XX% current nine-month costs sales of sales the were to as was as Sunset orders the of at of partially results for channel West Gross well and Sam growth to overhead and better each As delaying demand. compared double-digit of and volumes, the sales full upholstery inventories the significantly of

of than capacity higher the more three and $X.X calendar backlog year Incoming exceptionally of pre-pandemic the orders backlog, level levels. operating and the segment was times, to constrained. prior lead fiscal the as demand, were times lower XXXX orders the an was generated quarter about Quarter XXXX, production For Comparing long margin quarter decreased quarter, year-to-date demand X.X%. compared when and XXXX. due operating to and income on current end, backlog prior reported but third to than end high year was strong year same end was than calendar million

at down and at repurchases. million $XX primarily the fiscal end as balance stood to and million share our fiscal million well to cash now inventories cash XXXX from position, due equivalents million in inventory debt a $X.X year of as end, increase cash Turning the XXXX quarter $XX.X $XX.X almost at

cost as shares on we’ve board repurchases roughly last share much X, reduce XXXX, cash to purchased on have, at we’ve approved With million To purchased we’re $XX position. targeted lead common During December cash related will spending Through million our and further we to business consecutive cost be increase be to capital also by investments a such times me to April $XX capital capital million, December economic promotions model, of allow XXX,XXX upgrade shortening paid authorization which XXXX and seventh authorization, some earlier let take balance that cash shares strategy it we’ve period, Also us since the rebuilding improve this Other our ERP certain priorities share, competitive in of cash to year to in soon and XX% as XX time fiscal been Hooker the record relatively is while flow, directors brand our in able XX. the repurchase improve a they remainder repurchase We total allocation implemented on discuss shareholders $XX year. be liquidity, downturns new year, XXXX. which allocation generating our to fulfilling as our to aiming inventories adapt even by enhance the by for our a cash our board implemented $XX.X per in retired our to this dividend demonstrates X, minute we’ve On its Legacy just date, and stable priorities. our of dividend quarterly products. under been nine-month the quarter. December our share opening will This our of model which reserves, in million XXX,XXX of directors of stock declared next believe confidence and $X.XX horizon. capital to sheet share position, variable our may including we increase outfitting business the will December annual expenditures other continued the and on of dividend. and our on showroom believe

Now Jeremy outlook. back I’ll to discussion turn the his for

Jeremy Hoff

for the optimism Paul. Current same spending. levels, slowing confidence, continuing we economic reasons time, strength disruptors, in monitoring healthy consumer Thank household At we including employment mixed indicators see as and are are you interest rising rates, potential and market. and enjoys housing closely the a consumer U.S. incomes, rising

that term and Typically financial however, longer and to midterm as throughout still Sunset to the the exist. backlogs is we beds reliance appropriate inventory pre-pandemic the expectations. the from with furnishings entry where dependence Hurricane invest We support above we spirit organizations the is to industry much with on back believe live our legacy our to communities market planning Ian. historic and giving and levels short is calls in higher has structure on Our cost believe launch a charitable capitalize attention we on focus us in our side with recent many to will we been retail while home had than to conditions, position the an performing share, shifting Strategically, change. two into to on help to supplies furniture we West outdoor organization embedded continuing years. are and environment and are of XXX a great we help our share, demand ensure well on earnings are culture grateful trends work be this initiatives the our spring. for highlights; to new market positioned recently, showroom the needs paying opportunity retailers and our in our optimism, and relative Most gain This strategies. believe in our and are efforts over send are indicators portfolio to that for X,XXX Florida partner of including to Despite close we to almost relief of economic in key next

back of resources these this this mention efforts. many Michelle, amount to our is discussion, questions. and take ends part employees I to believe and a a to call of for company, I of why We a at today. differentiator turn part call this over dedicate Our as culture seriously us wanted own is significant our and this our the will Operator, This of our which in key formal their time the for time

Operator

[Operator question comes Sidoti. instructions] Lebiedzinski Our first with from Andrew

line Your open. is

Anthony Lebiedzinski

Thank Yes, and not the questions, good I’m Anthony you morning. Lebiedzinski, Andrew. for actually taking

Hooker as shipping way sense said the guys get Any a far better on mix wanted to just what and better you as inventory could branded, impact that was, you’re I the First quantify you issues. know mix you do in next spill to of or will because get you quarter the lost that think XQ, do so expect in you over most into that back year? XQ, first whatever these of issues, of

Paul Huckfeldt

lot I it think of back. we’ll get a

of We’re were shipping most quarter. Jeremy? considerably better we through than the

Jeremy Hoff

we that’s will it’s And so get quarter. it that As process was kind the I and a orders actually of--that $X to category quantify. back neighborhood, through feel like be somewhere feel on far one like to tough $X would little weekly the we furniture we’ve that, in could been of in--it’s I the for know fourth hold believe probably number at to point, somewhat quantifying, to and example, other I we yes, waiting this managed million due as we’ve we think a million do, on in although ship,

Anthony Lebiedzinski

quarter talked from Then compare Got the you versus up it, calendar how pre-pandemic. know could the overall backlog at Any to third quantify I okay. Thanks way what about you and the the that of backlog end the that. was consolidated does guys quarter, for ’XX? guys being

Paul Huckfeldt

’XX. backlog million $XXX was $XXX now million Consolidated and in

Anthony Lebiedzinski

for it. Thanks got Okay, that. then-- And

Jeremy Hoff

far obviously larger how And gets is. side it more The much that pronounced consolidated. is much legacy as as

Paul Huckfeldt

Right, XX versus branded is XX.

Jeremy Hoff

Right.

Anthony Lebiedzinski

that firm of shipments. out all be so Then channel, or mostly right, there’s more as your when a do thanks meaningful okay, difference. are mean, could Obviously that Meridian, the the get that these what’s inventory in these and think know some Oh orders said normal? dealing think are clarification. that levels that inventory partners for those will to we some retail retail a think of cancelled, there you’re when Home at do so delaying for view guess you you that’s with--I you I you lot All customers wow,

Jeremy Hoff

firm First is feel believe major question. we have and of the of part We rationalizing question, process left we all that our of of backlog the feel solid, on we so that’s retailers, our went are all, like the those with how orders. do we first through what

Secondly, going starting, that environment a retail there decent fairly on is a lot there. because of is out

You correct of kind level the going can’t themselves feel going that weekly starting are a like the know, of on to break through. inventories, it’s it basis. that it’s we order but finally to on we hearing what’s definitely inventories side getting because the but better, on don’t feel with really to We are

Anthony Lebiedzinski

Then to as fully Georgia, talked efficiency Okay, be center inefficiencies I your some when labor know operational the the--from that’s that to would efficient hear. there. standards? facility just When good you be some an in far should as as about far and distribution expect as you to costs standpoint, that

Jeremy Hoff

We we’ll at more into like rationalize because we’ll actually significant the the significant to make we’re quarter, and the our going feel pretty into and of the first costs our more think be more quarter able and we second significantly. the end I of make as steps too inventory that on business, steps reduce to side third

Paul Huckfeldt

seen Yes, improvement there. we’ve already some

lot for starting charges efficiencies need time on goods we stuff to to been progress, excess incurring and freight we’re of that first. haven’t continued like and not see We’re that, see a just that so

Anthony Lebiedzinski

Thanks. a could. more okay. couple questions, it, Then Got if I

normalized. ocean on cost have as side, the freight As certainly far costs

business, the what or domestic there? As you about seeing whether Can transportation? what there, costs labor the just it’s talk you’re other far across seeing as are you

Jeremy Hoff

stable. call I environment think the more I now what is would much

it foam, coming is freight--the obviously a talking ocean much environment. be it you’re about, and whether stable whether increases, be your particularly freight daily more plywood, way getting there’s the down. it To point, whatever were whether you now Before, be

we’ve a ocean fact it’s Now warehouse higher a of our the think side on as to take quickly continuous shipped of difficult lot our a that the lower of you of into I place that your in realize fact from we’ve still and the due we freight, top push cost. lot to that’s have advantage said, the of renegotiated benefits everything to had before, but contracts the that contracts,

Anthony Lebiedzinski

in are gain as think new also okay. gain about shut Got High from Lane Then to share? competitors, abruptly of to other share, portfolio, things Point. far you to it. What will you enable next talked benefiting that ability a moving you’re the your you year your market Mm-hmm, as market some one Furniture, just of showroom down. And

wondering you also think if share opportunity Just be that to for gain could an that. from you

Jeremy Hoff

little them that there. over on interesting that, with they start bottleneck that of and going once--there’s from will a were exiting lot of bit think have overseas I hole factories yes, what category, a after getting out the the and so to But a whatnot, and Absolutely through last believe in of product marketplace what going I’m that. an I opportunity. for is definitely there a part be there’s they in that, doing, there

we’re be that able Also put throughout Mississippi already expand As because of to really that operational We business where company to of advantage - our acquired scale this their that. so Sunset and we going believe you part in with were the we’ve category. a Savannah, well, west of country. to take one able it’s coast-centric, know, east to huge far been the time, pretty they on take country freight-friendly, opportunity as opportunity part if High they’ll we we West think big see growth as going is of well. of significant our to distribution customer opportunities, that the model you there’s that will, a a but diversifying we lot is as HMI on already to pretty Portfolio, have that’s and had into so outdoor going the that the good side revenue Market base on turn that really some Point drive

in into say, and us we’re in an multiplier lastly, of these It’s time that’s opportunity but real the show a showroom the it so mindset whole on that to another a into opportunity are, our Showplace, significant significant all being well who and did we you XXth it’s we and and we showroom, being how just get we’re haven’t we’re get where who but Moving us moving great where new it Then to great into a we on enable easy speed, audience which a far well. know wasn’t stock, we furniture had a know, were, that, just audience visibility as to--our you’re you are, working moving that’s to going usually getting fast customers fairly give turns, to that well, is this to to we company us going be, really is matter floor the we to as wanted as Commerce, growth the in all before. large revenue a for we a can order things impact revenues have and we a believe opportunity. ship believe not

Anthony Lebiedzinski

great that’s and thank well of hear, right, best All to and you luck.

Jeremy Hoff

Anthony. you Appreciate it. thank Yes,

Operator

a ask are call to turn As I’d question, Hoff to closing to There like please no Jeremy further questions. press remarks. any over for reminder, the star-one-one. back a

Jeremy Hoff

year. in ’XX in I a on I next interest to results our thank hope Furnishings. forward April for wonderful their would the full Take care. has holiday Hooker everyone sharing to like year look fiscal We call everyone season.

Operator

program. This the concludes

may great now Everyone day. disconnect. a You have

Hooker Furnishings (HOFT) 8 Dec 222023 Q3 Earnings call transcript