Hooker Furniture Corporation (NASDAQ-GS: HOFT) today reported
consolidated net sales of $130.5 million and net income of $5.8
million, or $0.48 per diluted share, for its fiscal 2021 second
quarter ended August 2, 2020.
Net sales decreased by 14.3%, or $21.7 million,
compared to the prior year period, while net income increased
38.8%, or $1.6 million. Earnings per diluted share for the quarter
increased 37.1% from $0.35 a year ago.
“While the COVID-19 pandemic continued to impact
the economy and our operations, our business began to rebound in
mid-May and hasn’t let up since,” said Paul B. Toms Jr. chairman
and chief executive officer. “Fiscal July consolidated incoming
orders were up 34% compared to a year ago, and backlogs were
up 35%. Based on this unusually robust order rate for the summer
months, we continue to believe that furniture is an advantaged
sector during the pandemic-related economic downturn and
‘safer-at-home’ practices, due to pent-up demand, a robust housing
market and less competition from other discretionary spending such
as travel, dining out and sporting events.”
“Some HFC divisions were able to capitalize on
the surge in demand sooner than others,” Toms said. “We were able
to better capitalize on the exceptional demand for our products in
those divisions that ship stock from our warehouses, including
Hooker Branded Casegoods and Upholstery and some Home Meridian
(HMI) divisions such as Accentrics Home,” he said. The positive
impact of higher demand was not felt as immediately in the Domestic
Upholstery segment and in the HMI units that service customers via
direct container. “After our upholstery factories shut down for
four weeks in the spring, production slowly ramped up during the
summer to near capacity by the end of Q2,” Toms said. “Sales will
also lag demand in our container-direct businesses at HMI.
Container-direct orders cancelled by large customers in March and
April were reinstated in the summer months and will have more of a
positive impact on revenues in the second half of our fiscal year
as production begins to flow through the pipeline,” Toms said.
Consolidated operating income increased by $1.7
million or 30.2% as compared to the prior-year second quarter. The
Home Meridian segment reported $1.1 million in operating income
compared to a small operating loss in the prior year second
quarter. Hooker Branded segment operating margin performance
continued at a high level, and the Domestic Upholstery segment
reported essentially breakeven operating income for the second
quarter despite decreased net sales and inefficiencies from
operating at significantly reduced production volumes and lower
capacities early in the COVID-19 crisis.
“Reduction of spending in response to the
economic shutdown had a significant positive impact on
profitability in the quarter, as did lower costs of goods sold, as
we have steadily shifted offshore production to non-tariff
countries since last year,” Toms said. ”Year to date, approximately
22% of our casegoods and imported upholstery products have been
subject to the 25% tariff on finished goods imported from China, a
significant reduction compared to 35% of imported goods subject to
tariffs during the same period a year ago,” he said.
“Some of our cost-cutting was temporary, such as
furloughs and reductions in executives’ salaries and directors’
fees, which have now been reinstated. Other cuts will stay in place
until higher volume warrants more spending. The flexibility of our
variable cost model has been proven again during this crisis by our
ability to scale our business correctly to demand,” Toms said.
For the fiscal 2021 first-half, consolidated net
sales were $235.1 million, a decrease of 18.3% or $52.6 million
compared to last year, and net loss was $29.0 million, or $2.46 per
diluted share, compared to $0.52 earnings per diluted share in last
year’s first half.
The items driving the net loss for the 2021
first half occurred in the first quarter at the depth of the COVID
economic contraction, and nearly 60% of the first half sales
decrease occurred in the first quarter as well. Due to the material
impact of COVID-19 on the Company’s financial performance, market
valuations and other factors in the 2021 first quarter, the Company
determined that an intangibles asset valuation analysis was
appropriate when we reported 2021 first quarter results. As a
result, the first-half loss was driven by a $44 million ($33.7
million after tax), non-cash intangible asset impairment charge in
Q1 to write down goodwill and certain tradenames in the HMI
segment, and goodwill in the Shenandoah division of the Domestic
Upholstery segment.
During the fiscal 2021 second quarter, Home
Meridian segment net sales decreased by $16.0 million or 18.4%.
Domestic Upholstery segment net sales decreased by $5.2 million or
22.8%, and Hooker Branded segment net sales slightly decreased
1.5%, while All Other’s net sales increased 1.7%, all as compared
to the fiscal 2020 second quarter.
Segment Reporting: Hooker
Branded
“Q2 incoming orders increased by nearly 12%
year-over-year in the Hooker Branded segment, and the segment
finished the quarter with an order backlog over 45% higher than the
comparable period a year ago,” said Jeremy Hoff, president of
Hooker Legacy Brands. “Backlogs are currently higher as production
ramps up in Asia to meet strong demand.” Net sales for the
segment were essentially flat compared to a year ago, dipping
slightly by $584,000, or 1.5% in the fiscal 2021 second quarter.
Most traditional furniture stores and small or regional chains that
closed during the economic shutdown reopened during the fiscal 2021
second quarter, leading to increased demand from the segment’s
largest distribution channel.
“Because of the disruption of the industry’s
product introduction cycle due to the cancellation of Spring High
Point Market, our team has developed creative ways to keep interest
high in new products and stay top-of-mind with customers,” Hoff
said. “We have done this through digital marketing with upscale
photography and 360-degree videos in a virtual showroom on our
website showcasing four new collections. We also participated in a
3-day ‘Mini-Market’ held in High Point showrooms during June. We
were gratified to receive solid orders on the collections and
expect to begin shipping them to retail stores by October,” he
said.
The dynamics of the interrupted product
introduction cycle, along with pent-up retailer and consumer demand
for new furniture styles, has significantly increased the
importance of the upcoming mid-September High Point Premarket, Hoff
said. “While we typically see around 40 retail customers at
Premarket, we expect to see over 100 this time,” he said. According
to industry reports, approximately 235 exhibitors plan to show at
the market preview, compared to the approximately 25 exhibitors
typical in past years. “We intend to introduce a major home office
program at Premarket in response to the surge in demand for
multi-functional furniture that facilitates more home-based work,”
Hoff said, adding that Hooker Casegoods will also display the four
new collections, first introduced virtually, at the upcoming
Premarket.
Segment Reporting: Home
Meridian
During the quarter, HMI sales were $71.2
million, down 18.4% from prior year. Operating profit
improved to $1.1 million from the near break-even Q2 performance a
year ago. HMI’s gross profit decreased in absolute terms but
improved as a percentage of net sales, as some of the issues
negatively impacting the segment last year, including excess tariff
and higher warehousing and distribution costs were mostly
resolved.
“Our profitability for the quarter benefitted
from cost cuts and spending reductions that were implemented in Q1
to combat the effects of the pandemic,” said Lee Boone,
co-president of HMI. “In addition, most of the significant unusual
charges we experienced in the prior year did not reoccur.”
“The sales decline was partially the result of a
near $7 million sales decrease in the Samuel Lawrence Hospitality
(SLH) division that services hotels and motels, which have been
severely impacted by the pandemic. In addition, the disruptions of
Covid-19 on our suppliers, many of which struggled to rebuild
production capacity to pre-COVID levels, impacted product
availability,” he said. “Fortunately, HMI was in a strong inventory
position prior to the pandemic, which enabled us to ship
significant quantities from our warehouse inventory.” Boone added,
“These warehouse inventories were significantly reduced in Q2,
which will impact our near-term warehouse shipments until we can
replenish inventories for the fall selling season, which we expect
to do over the next sixty days.”
“Incoming orders were extremely strong in Q2,
exceeding prior year orders by 37%. Brisk demand was driven by
strong e-commence business, as well as surprisingly strong demand
from our brick and mortar retailers as they reopened their stores
following 4-6 weeks of pandemic shut-downs,” Boone said. E-commerce
and Club sales, which were less impacted by retail shutdowns during
the COVID-19 pandemic, continued the strong performance, with sales
increasing by about 20% in the Accentrics Home and HMidea
divisions.
“Order backlog continued to build in the
quarter, the result of continuing strong incoming demand from our
customers, many of whom are placing orders for product well into
the future,” Boone said. “We finished the quarter with
backlogs up 32% over prior year. Looking forward, our
order backlog continues to build, and we are working diligently to
maximize production and shipments to satisfy remarkable current
demand.”
Several HMI divisions will participate in the
upcoming September High Point Premarket. “While Premarket is
normally a small-scale dress rehearsal a month in advance of the
international High Point Market, we expect our retail attendance to
be up four to five-fold,” Boone said. “We are booking advance
appointments, and initial indications are for an exceptionally
well-attended event. Our sales teams, samples and showrooms are
ready.”
Segment Reporting: Domestic
Upholstery
Net sales decreased by $5.2 million or 22.8% in
the fiscal 2021 second quarter as compared to the same prior-year
period. At the end of second quarter, Domestic Upholstery’s backlog
was about 45% higher than the prior year second quarter, due to the
ramp up from reduced operating schedules in the second quarter and
the receipt of programmed orders that are expected to ship later in
the Fall. Incoming orders decreased by 5.9% as compared to the
comparable prior year period.
In response to the COVID-19 pandemic as well as
reduced orders, Bradington-Young’s and Shenandoah’s manufacturing
plants were temporarily closed in April, and Sam Moore operated at
reduced capacity. Upholstery production facilities gradually
resumed operations during the second quarter and as of early
September, all three divisions were operating near capacity as they
continue to ramp up from reduced operating schedules. Segment
management implemented cost reduction measures earlier in the year
to mitigate expected operating inefficiencies and operating results
were within $10,000 of break-even for the quarter.
Segment Reporting: All
Other
All Other net sales stayed essentially flat
versus the prior year period and it reported an operating income of
$350,000 due to continued solid performance at H Contract. However,
H Contract incoming orders decreased 9% in the second quarter from
the prior year period, as senior-living facilities, the focus of
this division’s business, felt the impact of the COVID-19
pandemic.
Cash, Debt and Inventory
The net loss recorded for the six-month period,
was driven by impairment charges, which had no impact on cash flow
for the year. During the six-month period, the Company generated
$53.2 million in cash from operating activities, distributed $3.8
million in cash dividends to shareholders, and paid $3.2 million in
principal and interest on its term loans. Cash and cash equivalents
stood at $82.2 million at fiscal 2021 second quarter-end, an
increase of $46.2 million compared to the balance at the end of
fiscal 2020. Additionally, the Company had access to $24.9 million
in cash surrender value of Company-owned life insurance policies.
Along with an aggregate $25.7 million available under its existing
revolver to fund working capital, the Company is confident that its
strong financial condition can weather the expected short-term
impacts of COVID-19; however, an extended impact may continue to
materially and adversely affect its sales, earnings and
liquidity. The Company had $27.2 million in acquisition-related
debt as of the end of the fiscal 2021 second quarter and its
consolidated inventories stood at $67.7 million, compared to $92.8
million at the end of fiscal 2020 on February 2, 2020.
“In order to meet the brisk demand for our
products following a time of production shutdowns by our vendors
and our own upholstery facilities, we have been revisiting our
sales forecasts weekly and adjusting production orders based on
incoming demand,” said Toms. “We have experienced some stock-outs
on bestsellers but expect to remedy that in the next sixty days as
our vendors ramp up their production. In transit inventories are
already growing. Both HMI and Hooker are in a good position to be
prioritized by major vendors, in that we are typically the largest
customers to all our major vendors,” he concluded.
Outlook
“Given the robust housing market, strong demand
since mid-May, and order backlogs up 35% at the end of the second
quarter, we enter the fall with momentum and optimism,” said Toms.
“We used the shutdown period to improve efficiencies and
effectiveness in our business, from cost-cutting to long-range
strategic planning to focusing our efforts and resources on the
items driving our business. We believe all of these initiatives
will yield long-term positive results.”
“We are concerned about the human and economic
toll of COVID, both currently, and the future possibility of
additional surges of the virus that may delay re-openings and have
adverse effects in certain regions or states. However, we have a
very strong team, and are in excellent financial condition. We
weathered the disruption of tariffs last year and the pandemic this
year. We are well-prepared to face an uncertain future, and
well-positioned to benefit from furniture’s current emergence as an
advantaged category,” Toms concluded.
Dividends
On September 2, 2020, the Company’s board of
directors declared a quarterly cash dividend of $0.16 per share,
payable on September 30, 2020, to shareholders of record at
September 18, 2020.
Conference Call Details
Hooker Furniture will present its fiscal 2021
second quarter financial results via teleconference and live
internet web cast on Thursday morning, September 3, 2020 at 9:00 AM
Eastern Time. The dial-in number for domestic callers is
877.665.2466 and the number for international callers is
678.894.3031. The conference ID number is 6511379. The call will be
simultaneously web cast and archived for replay on the Company's
web site at www.hookerfurniture.com in the Investor Relations
section.
Hooker Furniture Corporation, in its 97th year
of business, is a designer, marketer and importer of casegoods
(wooden and metal furniture), leather-and fabric-upholstered
furniture for the residential, hospitality and contract markets.
The Company also domestically manufactures premium residential
custom leather and custom fabric-upholstered furniture. It is
ranked among the nation’s largest publicly traded furniture
sources, based on 2019 shipments to U.S. retailers, according to a
2020 survey by a leading trade publication. Major casegoods product
categories include home entertainment, home office, accent, dining
and bedroom furniture in the upper-medium price points sold under
the Hooker Furniture brand. Hooker’s residential upholstered
seating product lines include Bradington-Young, a specialist in
upscale motion and stationary leather furniture, Sam Moore
Furniture, a specialist in upscale occasional chairs, settees,
sofas and sectional seating with an emphasis on cover-to-frame
customization, Hooker Upholstery, imported upholstered furniture
targeted at the upper-medium price-range and Shenandoah Furniture,
an upscale upholstered furniture company specializing in private
label sectionals, modulars, sofas, chairs, ottomans, benches, beds
and dining chairs in the upper-medium price points for lifestyle
specialty retailers. The H Contract product line supplies
upholstered seating and casegoods to upscale senior living
facilities. The Home Meridian division addresses more moderate
price points and channels of distribution not currently served by
other Hooker Furniture divisions or brands. Home Meridian’s brands
include Accentrics Home, home furnishings centered around an
eclectic mix of unique pieces and materials that offer a fresh take
on home fashion, Pulaski Furniture, casegoods covering the complete
design spectrum in a wide range of bedroom, dining room, accent and
display cabinets at medium price points, Samuel Lawrence Furniture,
value-conscious offerings in bedroom, dining room, home office and
youth furnishings, Prime Resources, value-conscious imported
leather upholstered furniture, Samuel Lawrence Hospitality, a
designer and supplier of hotel furnishings and HMidea, a 2019
start-up that provides better-quality, ready-to-assemble furniture
to mass marketers and e-commerce customers. Hooker Furniture
Corporation’s corporate offices and upholstery manufacturing
facilities are located in Virginia and North Carolina, with
showrooms in High Point, N.C. and Ho Chi Minh City, Vietnam. The
company operates eight distribution centers in North Carolina,
Virginia, California and Vietnam. Please visit our websites
hookerfurniture.com, bradington-young.com, sammoore.com,
hcontractfurniture.com, homemeridian.com, pulaskifurniture.com,
accentricshome.com and slh-co.com.
Certain statements made in this release, other
than those based on historical facts, may be forward-looking
statements. Forward-looking statements reflect our reasonable
judgment with respect to future events and typically can be
identified by the use of forward-looking terminology such as
“believes,” “expects,” “projects,” “intends,” “plans,” “may,”
“will,” “should,” “would,” “could” or “anticipates,” or the
negative thereof, or other variations thereon, or comparable
terminology, or by discussions of strategy. Forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those in the
forward-looking statements. Those risks and uncertainties
include but are not limited to: (1) The effect and consequences of
the coronavirus (COVID-19) pandemic or future pandemics on a wide
range of matters including U.S. and local economies; our business
operations and continuity; the health and productivity of our
employees; the impact on our supply chain, the retail environment
and our customer base; the possible impairment of our intangible
assets as a result of adverse economic or other market conditions;
(2) general economic or business conditions, both domestically and
internationally, and instability in the financial and credit
markets, including their potential impact on our (i) sales and
operating costs and access to financing or (ii) customers and
suppliers and their ability to obtain financing or generate the
cash necessary to conduct their respective businesses; (3) adverse
political acts or developments in, or affecting, the international
markets from which we import products, including duties or tariffs
imposed on those products by foreign governments or the U.S.
government, such as the current U.S. administration imposing a 25%
tariff on certain goods imported into the United States from China,
including almost all furniture and furniture components
manufactured in China, with the potential for additional or
increased tariffs in the future; (4) sourcing transitions away from
China, including the lack of adequate manufacturing capacity and
skilled labor and longer lead times, due to competition and
increased demand for resources in those countries; (5) risks
associated with our reliance on offshore sourcing and the cost of
imported goods, including fluctuation in the prices of purchased
finished goods, ocean freight costs and warehousing costs and the
risk that a disruption in our offshore suppliers could adversely
affect our ability to timely fill customer orders; (6) changes in
U.S. and foreign government regulations and in the political,
social and economic climates of the countries from which we source
our products; (7) disruptions involving our vendors or the
transportation and handling industries, particularly those
affecting imported products from Vietnam and China, including
customs issues, labor stoppages, strikes or slowdowns and the
availability of shipping containers and cargo ships; (8)
difficulties in forecasting demand for our imported products; (9)
risks associated with product defects, including higher than
expected costs associated with product quality and safety, and
regulatory compliance costs related to the sale of consumer
products and costs related to defective or non-compliant products,
including product liability claims and costs to recall defective
products; (10) disruptions and damage (including due to weather)
affecting our Virginia, North Carolina or California warehouses,
our Virginia or North Carolina administrative facilities or our
representative offices or warehouses in Vietnam and China; (11)
risks associated with domestic manufacturing operations, including
fluctuations in capacity utilization and the prices and
availability of key raw materials, as well as changes in
transportation, warehousing and domestic labor costs, availability
of skilled labor, and environmental compliance and remediation
costs; (12) the risks specifically related to the concentrations of
a material part of our sales and accounts receivable in only a few
customers; (13) our inability to collect amounts owed to us or
significant delays in collecting such amounts; (14) the
interruption, inadequacy, security breaches or integration failure
of our information systems or information technology
infrastructure, related service providers or the internet or other
related issues including unauthorized disclosures of confidential
information or inadequate levels of cyber-insurance or risks not
covered by cyber insurance; (15) achieving and managing growth and
change, and the risks associated with new business lines,
acquisitions, restructurings, strategic alliances and international
operations; (16) higher than expected employee medical and workers’
compensation costs that may increase the cost of our
high-deductible healthcare and workers compensation plans; (17)
product liability claims; (18) risks related to our other
defined benefit plans; (19) the possible impairment of our
long-lived assets, which can result in reduced earnings and net
worth; (20) capital requirements and costs, including the servicing
of our floating-rate term loans; (21) risks associated with
distribution through third-party retailers, such as non-binding
dealership arrangements; (22) the cost and difficulty of marketing
and selling our products in foreign markets; (23) changes in
domestic and international monetary policies and fluctuations in
foreign currency exchange rates affecting the price of our imported
products and raw materials; (24) the cyclical nature of the
furniture industry, which is particularly sensitive to changes in
consumer confidence, the amount of consumers’ income available for
discretionary purchases, and the availability and terms of consumer
credit; (25) price competition in the furniture industry; (26)
competition from non-traditional outlets, such as internet and
catalog retailers; (27) changes in consumer preferences, including
increased demand for lower-quality, lower-priced furniture due to,
among other things, fluctuating consumer confidence, amounts of
discretionary income available for furniture purchases and the
availability of consumer credit; and (28) other risks and
uncertainties described under Part I, Item 1A. "Risk Factors" in
the Company’s Annual Report on Form 10-K for the fiscal year ended
February 2, 2020. Any forward-looking statement that we make speaks
only as of the date of that statement, and we undertake no
obligation, except as required by law, to update any
forward-looking statements whether as a result of new information,
future events or otherwise and you should not expect us to do
so.
|
Table
I |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands,
except per share data) |
(Unaudited) |
|
|
For
the |
|
|
Thirteen
Weeks Ended |
|
Twenty-Six
Weeks Ended |
|
|
Aug
2, |
|
Aug 4, |
|
Aug
2, |
|
Aug 4, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
130,537 |
|
|
$ |
152,248 |
|
|
$ |
235,134 |
|
|
$ |
287,766 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
103,537 |
|
|
|
123,422 |
|
|
|
188,480 |
|
|
|
233,423 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
27,000 |
|
|
|
28,826 |
|
|
|
45,654 |
|
|
|
54,343 |
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses |
|
18,892 |
|
|
|
22,462 |
|
|
|
38,070 |
|
|
|
44,478 |
|
Goodwill impairment charges |
|
- |
|
|
|
- |
|
|
|
39,568 |
|
|
|
- |
|
Trade name impairment charges |
|
- |
|
|
|
- |
|
|
|
4,750 |
|
|
|
- |
|
Intangible asset amortization |
|
596 |
|
|
|
596 |
|
|
|
1,192 |
|
|
|
1,192 |
|
|
|
|
|
|
|
|
|
|
Operating income/(loss) |
|
7,512 |
|
|
|
5,768 |
|
|
|
(37,926 |
) |
|
|
8,673 |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
10 |
|
|
|
32 |
|
|
|
51 |
|
|
|
94 |
|
Interest expense, net |
|
118 |
|
|
|
328 |
|
|
|
327 |
|
|
|
669 |
|
|
|
|
|
|
|
|
|
|
Income/(loss) before income taxes |
|
|
7,384 |
|
|
|
5,408 |
|
|
|
(38,304 |
) |
|
|
7,910 |
|
|
|
|
|
|
|
|
|
|
Income tax expense/(benefit) |
|
1,610 |
|
|
|
1,248 |
|
|
|
(9,259 |
) |
|
|
1,763 |
|
|
|
|
|
|
|
|
|
|
Net income/(loss) |
$ |
5,774 |
|
|
$ |
4,160 |
|
|
$ |
(29,045 |
) |
|
$ |
6,147 |
|
|
|
|
|
|
|
|
|
|
Earnings/(Loss) per share |
|
|
|
|
|
|
|
Basic |
$ |
0.49 |
|
|
$ |
0.35 |
|
|
$ |
(2.46 |
) |
|
$ |
0.52 |
|
Diluted |
$ |
0.48 |
|
|
$ |
0.35 |
|
|
$ |
(2.46 |
) |
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
Basic |
|
11,824 |
|
|
|
11,787 |
|
|
|
11,811 |
|
|
|
11,778 |
|
Diluted |
|
11,853 |
|
|
|
11,810 |
|
|
|
11,811 |
|
|
|
11,811 |
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share |
$ |
0.16 |
|
|
$ |
0.15 |
|
|
$ |
0.32 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
|
Table
II |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) |
(In thousands) |
(Unaudited) |
|
|
For
the |
|
|
Thirteen
Weeks Ended |
|
Twenty-Six
Weeks Ended |
|
|
Aug
2, |
|
Aug 4, |
|
Aug
2, |
|
Aug 4, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net income/(loss) |
|
$ |
5,774 |
|
|
$ |
4,160 |
|
|
$ |
(29,045 |
) |
|
$ |
6,147 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Amortization of actuarial loss |
|
|
84 |
|
|
|
37 |
|
|
|
168 |
|
|
|
74 |
|
Income tax effect on amortization |
|
|
(20 |
) |
|
|
(9 |
) |
|
|
(40 |
) |
|
|
(18 |
) |
Adjustments to net periodic benefit cost |
|
|
64 |
|
|
|
28 |
|
|
|
128 |
|
|
|
56 |
|
|
|
|
|
|
|
|
|
|
Total
Comprehensive Income/(Loss) |
|
$ |
5,838 |
|
|
$ |
4,188 |
|
|
$ |
(28,917 |
) |
|
$ |
6,203 |
|
|
|
|
|
|
|
|
|
|
|
Table
III |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In thousands) |
|
|
|
|
|
As
of |
|
August 2, |
|
February 2, |
|
|
2020 |
|
2020 |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
82,210 |
|
|
$ |
36,031 |
|
Trade accounts receivable, net |
|
|
67,115 |
|
|
|
87,653 |
|
Inventories |
|
|
67,707 |
|
|
|
92,813 |
|
Income tax recoverable |
|
|
- |
|
|
|
751 |
|
Prepaid expenses and other current assets |
|
|
6,331 |
|
|
|
4,719 |
|
Total current assets |
|
|
223,363 |
|
|
|
221,967 |
|
Property,
plant and equipment, net |
|
|
28,271 |
|
|
|
29,907 |
|
Cash
surrender value of life insurance policies |
|
|
24,904 |
|
|
|
24,888 |
|
Deferred
taxes |
|
|
14,044 |
|
|
|
2,880 |
|
Operating
leases right-of-use assets |
|
|
37,987 |
|
|
|
39,512 |
|
Intangible
assets, net |
|
|
27,429 |
|
|
|
33,371 |
|
Goodwill |
|
|
490 |
|
|
|
40,058 |
|
Other
assets |
|
|
1,190 |
|
|
|
1,125 |
|
Total non-current assets |
|
|
134,315 |
|
|
|
171,741 |
|
Total assets |
|
$ |
357,678 |
|
|
$ |
393,708 |
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Current portion of term loans |
|
$ |
27,200 |
|
|
$ |
5,834 |
|
Trade accounts payable |
|
|
24,143 |
|
|
|
25,493 |
|
Accrued salaries, wages and benefits |
|
|
4,206 |
|
|
|
4,933 |
|
Income tax payable |
|
|
975 |
|
|
|
- |
|
Customer deposits |
|
|
4,328 |
|
|
|
3,351 |
|
Current portion of lease liabilities |
|
|
6,844 |
|
|
|
6,307 |
|
Other accrued expenses |
|
|
3,344 |
|
|
|
4,211 |
|
Total current liabilities |
|
|
71,040 |
|
|
|
50,129 |
|
Long term
debt |
|
|
- |
|
|
|
24,282 |
|
Deferred
compensation |
|
|
11,235 |
|
|
|
11,382 |
|
Lease
liabilities |
|
|
32,411 |
|
|
|
33,794 |
|
Other
long-term liabilities |
|
|
538 |
|
|
|
- |
|
Total
long-term liabilities |
|
|
44,184 |
|
|
|
69,458 |
|
Total liabilities |
|
|
115,224 |
|
|
|
119,587 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
Common stock, no par value, 20,000 shares
authorized, |
|
|
|
|
11,890 and 11,838 shares issued and outstanding on
each date |
|
52,628 |
|
|
|
51,582 |
|
Retained earnings |
|
|
190,411 |
|
|
|
223,252 |
|
Accumulated other comprehensive loss |
|
|
(585 |
) |
|
|
(713 |
) |
Total shareholders’ equity |
|
|
242,454 |
|
|
|
274,121 |
|
Total liabilities and shareholders’ equity |
|
$ |
357,678 |
|
|
$ |
393,708 |
|
|
|
|
|
|
|
|
|
|
|
|
Table
IV |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In thousands) |
(Unaudited) |
|
|
For
the |
|
|
Twenty-Six
Weeks Ended |
|
|
Aug
2, |
|
Aug 4, |
|
|
2020 |
|
2019 |
Operating Activities: |
|
|
|
|
Net (loss)/income |
|
$ |
(29,045 |
) |
|
$ |
6,147 |
|
Adjustments
to reconcile net income to net cash |
|
|
|
|
provided by
operating activities: |
|
|
|
|
Goodwill and intangible asset impairment charges |
|
|
44,318 |
|
|
|
- |
|
Depreciation and amortization |
|
|
3,365 |
|
|
|
3,471 |
|
Gain on disposal of assets |
|
|
- |
|
|
|
(285 |
) |
Deferred income tax (benefit) / expense |
|
|
(10,665 |
) |
|
|
2,155 |
|
Noncash restricted stock and performance awards |
|
|
1,046 |
|
|
|
558 |
|
Provision for doubtful accounts and sales allowances |
|
|
3,396 |
|
|
|
1,053 |
|
Gain on life insurance policies |
|
|
(651 |
) |
|
|
(624 |
) |
Changes in assets and liabilities: |
|
|
|
|
Trade accounts receivable |
|
|
17,142 |
|
|
|
25,206 |
|
Inventories |
|
|
25,106 |
|
|
|
(8,389 |
) |
Income tax recoverable |
|
|
751 |
|
|
|
(3,856 |
) |
Prepaid expenses and other current assets |
|
|
(1,261 |
) |
|
|
(3,191 |
) |
Trade accounts payable |
|
|
(1,391 |
) |
|
|
(9,058 |
) |
Accrued salaries, wages, and benefits |
|
|
(726 |
) |
|
|
(2,856 |
) |
Accrued income taxes |
|
|
973 |
|
|
|
(3,159 |
) |
Customer deposits |
|
|
977 |
|
|
|
2,475 |
|
Operating lease liabilities |
|
|
678 |
|
|
|
187 |
|
Other accrued expenses |
|
|
(867 |
) |
|
|
1,033 |
|
Deferred compensation |
|
|
20 |
|
|
|
145 |
|
Net cash provided by operating activities |
|
$ |
53,168 |
|
|
$ |
11,012 |
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
Purchases of property and equipment |
|
|
(484 |
) |
|
|
(3,659 |
) |
Proceeds received on notes from sale of assets |
|
|
- |
|
|
|
1,459 |
|
Premiums paid on life insurance policies |
|
|
(453 |
) |
|
|
(489 |
) |
Proceeds received on life insurance policies |
|
|
673 |
|
|
|
- |
|
Net cash used in investing activities |
|
|
(264 |
) |
|
|
(2,689 |
) |
|
|
|
|
|
Financing Activities: |
|
|
|
|
Payments for long-term debt |
|
|
(2,929 |
) |
|
|
(2,928 |
) |
Cash dividends paid |
|
|
(3,796 |
) |
|
|
(3,541 |
) |
Cash used in financing activities |
|
|
(6,725 |
) |
|
|
(6,469 |
) |
|
|
|
|
|
Net increase
in cash and cash equivalents |
|
|
46,179 |
|
|
|
1,854 |
|
Cash and
cash equivalents - beginning of year |
|
|
36,031 |
|
|
|
11,435 |
|
Cash and
cash equivalents - end of quarter |
|
$ |
82,210 |
|
|
$ |
13,289 |
|
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
Cash paid
for income taxes |
|
$ |
220 |
|
|
$ |
6,622 |
|
Cash paid
for interest, net |
|
|
295 |
|
|
|
599 |
|
|
|
|
|
|
Non-cash
transactions: |
|
|
|
|
Decrease in
lease liabilities arising from obtaining right-of-use assets |
|
$ |
1,987 |
|
|
$ |
266 |
|
Increase in
property and equipment through accrued purchases |
|
|
41 |
|
|
|
49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
V |
HOOKER
FURNITURE CORPORATION AND SUBSIDIARIES |
NET SALES AND
OPERATING INCOME/(LOSS) BY SEGMENT |
(In thousands) |
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen
Weeks Ended |
|
Twenty-Six
Weeks Ended |
|
|
August 2, 2020 |
|
|
August 4, 2019 |
|
|
August 2, 2020 |
|
|
August 4, 2019 |
|
|
|
|
%
Net |
|
% Net |
|
|
%
Net |
|
% Net |
Net
Sales |
|
|
Sales |
|
Sales |
|
|
Sales |
|
Sales |
Hooker Branded |
|
$ |
38,820 |
|
29.7 |
% |
$ |
39,405 |
|
25.9 |
% |
|
$ |
65,982 |
|
28.1 |
% |
$ |
79,004 |
|
27.5 |
% |
Home Meridian |
|
|
71,168 |
|
54.6 |
% |
|
87,188 |
|
57.3 |
% |
|
|
128,833 |
|
54.7 |
% |
|
154,818 |
|
53.8 |
% |
Domestic Upholstery |
|
|
17,507 |
|
13.4 |
% |
|
22,663 |
|
14.8 |
% |
|
|
34,290 |
|
14.6 |
% |
|
47,987 |
|
16.7 |
% |
All Other |
|
|
3,042 |
|
2.3 |
% |
|
2,992 |
|
2.0 |
% |
|
|
6,029 |
|
2.6 |
% |
|
5,957 |
|
2.0 |
% |
Consolidated |
|
$ |
130,537 |
|
100 |
% |
$ |
152,248 |
|
100 |
% |
|
$ |
235,134 |
|
100 |
% |
$ |
287,766 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating income/(loss) |
|
|
|
|
|
|
|
|
|
Hooker Branded |
|
$ |
6,090 |
|
15.7 |
% |
$ |
4,088 |
|
10.4 |
% |
|
$ |
7,423 |
|
11.2 |
% |
$ |
9,265 |
|
11.7 |
% |
Home Meridian |
|
|
1,083 |
|
1.5 |
% |
|
(66 |
) |
-0.1 |
% |
|
|
(29,265 |
) |
-22.7 |
% |
|
(5,059 |
) |
-3.3 |
% |
Domestic Upholstery |
|
|
(10 |
) |
-0.1 |
% |
|
1,260 |
|
5.6 |
% |
|
|
(16,820 |
) |
-49.1 |
% |
|
3,552 |
|
7.4 |
% |
All Other |
|
|
349 |
|
11.5 |
% |
|
486 |
|
16.3 |
% |
|
|
736 |
|
12.2 |
% |
|
915 |
|
15.4 |
% |
Consolidated |
|
$ |
7,512 |
|
5.8 |
% |
$ |
5,768 |
|
3.8 |
% |
|
$ |
(37,926 |
) |
-16.1 |
% |
$ |
8,673 |
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Prior-Year amounts have been restated to reflect a change in the
Company’s reportable segments.
For more information, contact:Paul B.
Toms Jr.Chairman and Chief Executive
OfficerPhone: (276) 632-2133,
orPaul A. Huckfeldt, Senior Vice President,
Finance & Accounting & Chief Financial
OfficerPhone: (276) 666-3949
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