Three key takeaways from Hooker Furnishings’ Q3 earnings report

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MARTINSVILLE, Va. — Hooker Furnishings had a strong third quarter, reporting $151.6 million in sales, a 13.6% increase over the same period last year. The company reported optimism in its recent earnings report, with many pandemic-related issues easing.

Here are three takeaways:

1. The supply chain is stabilizing

“Global supply chain dynamics are stabilizing,” the company wrote in its earnings release. “Product flow and lead times have improved, production levels are at full capacity, and ocean freight costs have lowered significantly.”

“Year-over-year sales gains were driven by sales growth and successful mitigation of supply chain bottlenecks that have impacted us for over the past two years,” said CEO Jeremy Hoff.

The company did say, however, that it’s not out of the woods yet, as lower freight costs have not yet positively impacted its profitability “due to most of our warehouse inventory still carrying the higher costs.”

2. High Point Market attendance was up by double digits

“The fall High Point Market was the best attended market since the pandemic and gave us a real momentum boost,” said Hoff. “The market attendance exceeded October 2019 by 12%. We found retailers to be upbeat and receptive to new products that they can now expect to receive in several months of order for the first time in a couple of years.”

The company commented on its remodeled 100,000-square-foot HMI showroom, which includes a 10,000-square-foot area showcasing new in-stock warehouse program bestsellers across brands.

3. The economy is a chief worry

“Economic indicators are mixed, and we are closely monitoring potential disrupters including rising interest rates, consumer confidence and a slowing housing market,” said Hoff. “We’re paying close attention to economic indicators and retail trends to ensure that our inventory planning and cost structure are appropriate to short-to-mid-term conditions, while continuing to invest in our longer-term strategies.

“At the same time, we see reasons for optimism as the U.S. enjoys strong levels of employment, rising household incomes and continuing strength in consumer spending,” he continued. “Our backlogs on the legacy side are still much higher than pre-pandemic levels and our recent entry into outdoor furniture with Sunset West is performing above our expectations.

“Additionally, we expect to begin to see the benefits of recent reductions in ocean freight costs beginning in the first quarter of calendar 2023. We believe the environment in the home furnishings industry is shifting from a reliance on historic demand to a dependence on market share gains. Strategically, we believe we are well-positioned for this change in landscape,” Hoff said.

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