Hooker Furnishings Corporation (NASDAQ: HOFT) reported its operating results for the fiscal 2027 second quarter ended August 2, 2026. The company reported consolidated net income of $1.7 million for the quarter, marking its third consecutive quarter of profitability and a $4.9 million improvement over the prior-year period. For the first six months of fiscal 2027, operating income was $2.9 million, compared to an operating loss of $1.0 million in the prior year.
The company noted that a significant adverse impact from tariffs imposed under the International Emergency Economic Powers Act (IEEPA) affected fiscal year 2026 results. Following a U.S. Supreme Court ruling in February 2026 that invalidated certain IEEPA tariffs, the company received $7.9 million in tariff recoveries during the second quarter. Of this amount, $4.3 million was recognized as a reduction in cost of sales, $0.2 million was recorded as interest income, and $0.5 million was recorded as a reduction in revenue due to customer credits. The company does not expect material additional recoveries.
Consolidated net sales decreased by $6.0 million, or 8.7%, in the second quarter and $7.7 million, or 5.5%, in the first six months. This decline was driven by lower volume and higher promotional discounts in the Hooker Branded segment, as well as softer hospitality industry demand in the All Other segment. Despite the sales pressure, the company reported improved gross margins across segments, supported by tariff recoveries and operational efficiencies.
Hooker Branded net sales declined 4.5% in the second quarter, but the segment reported operating income of $870,000, compared to breakeven in the prior year. Domestic Upholstery net sales decreased 5.3% in the quarter, but the segment reported operating income of $833,000, compared to an operating loss of $408,000 in the prior year. The All Other segment, which includes hospitality, reported a second-quarter operating loss driven by lower shipments, though it remained profitable for the first six months.
Financial position strengthened during the quarter. Cash and cash equivalents increased to $18.7 million, with no outstanding term loan balance. The company generated $24.0 million in cash from operations, which was used to repay $3.6 million of principal on loans, distribute $2.5 million in dividends, and repurchase $1.3 million in shares under a $5 million authorization. Inventory levels decreased by $5.3 million to $43.4 million. The company maintains $51.8 million in available borrowing capacity under its loan agreement.
Looking ahead, management stated that consumer spending remains selective and housing turnover is weak. The company does not expect meaningful near-term improvement in market conditions but believes its cost structure and portfolio adjustments position it to deliver improved results compared to the prior year.
