Hooker Furniture Net Falls 13.1 Percent in Q3

Hooker FurnitureMARTINSVILLE, Va.-Increased discounting of casegoods and start-up costs for new programs resulted in a shortfall of 13.1 percent for Hooker Furniture’s third-quarter net income, which totaled $2.1 million.

The company began the casegoods discounting to dispose of slow-moving inventory, according to Paul B. Toms Jr., Hooker’s chairman and CEO. The new programs at the H Contract and Homeware brands, for which Hooker anticipated that start-up costs would come before revenues. In addition, the company’s Sam Moore division experienced profitability problems related to the ramp-up of production and higher labor costs to meet recent sharp increases in demand, Toms said.

Net sales in the quarter, which ended on Nov. 3, rose 4.1 percent to $59.1 million, marking the fifth consecutive quarter in which Hooker reported increased sales. However, the casegoods discounting, along with higher costs of sales in the upholstery segment, had an impact on gross margin, which fell 87 basis points to 23 percent. Selling, general and administrative expenses gained 6.8 percent in dollars and 44 basis points as a percentage of sales, to 17.7 percent.

Toms said Hooker demand for casegoods and upholstery continues to rise, but that casegoods inventories remain an issue and discounting will continue through the fourth quarter. “We have adjusted our ordering, but expect that it will be the first quarter of our next fiscal year before we experience the impact of those adjustments,” he said.