UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~August 2,~~November 1, 2020

Commission file number 000-25349

HOOKER FURNITURE CORPORATION

(Exact name of registrant as specified in its charter)

Virginia	54-0251350
(State or other jurisdiction of incorporation or organization)	(IRS employer identification no.)

440 East Commonwealth Boulevard, Martinsville, VA 24112

(Address of principal executive offices, zip code)

(276) 632-2133

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated Filer ☐	Accelerated filer ☒
Non-accelerated Filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	HOFT	NASDAQ Global Select Market

As of ~~September~~December 4, 2020, there were ~~11,889,968~~11,887,272 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3435

Item 4.	Controls and Procedures	3536

PART II. OTHER INFORMATION

Item 6.	Exhibits	3637

Signature		3738

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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
0 751
    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 0
    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
0 24,282
Deferred compensation
11,235 11,382
Lease liabilities
32,411 33,794
Other long-term liabilities
538 0
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

As of	November 1,			February 2,
	2020			2020
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	93,874		$	36,031
Trade accounts receivable, net		75,297			87,653
Inventories		64,083			92,813
Income tax recoverable		0			751
Prepaid expenses and other current assets		4,543			4,719
Total current assets		237,797			221,967
Property, plant and equipment, net		27,315			29,907
Cash surrender value of life insurance policies		25,104			24,888
Deferred taxes		14,152			2,880
Operating leases right-of-use assets		36,322			39,512
Intangible assets, net		26,833			33,371
Goodwill		490			40,058
Other assets		1,244			1,125
Total non-current assets		131,460			171,741
Total assets	$	369,257		$	393,708

Liabilities and Shareholders’ Equity
Current liabilities
Current portion of term loans	$	25,741		$	5,834
Trade accounts payable		28,452			25,493
Accrued salaries, wages and benefits		4,491			4,933
Income tax payable		2,015			0
Customer deposits		4,319			3,351
Current portion of lease liabilities		6,772			6,307
Other accrued expenses		3,045			4,211
Total current liabilities		74,835			50,129
Long term debt		0			24,282
Deferred compensation		11,162			11,382
Lease liabilities		30,937			33,794
Other long-term liabilities		1,187			0
Total long-term liabilities		43,286			69,458
Total liabilities		118,121			119,587

Shareholders’ equity
Common stock, no par value, 20,000 shares authorized, 11,887 and 11,838 shares issued and outstanding on each date		53,055			51,582
Retained earnings		198,601			223,252
Accumulated other comprehensive loss		(520	)		(713	)
Total shareholders’ equity		251,136			274,121
Total liabilities and shareholders’ equity	$	369,257		$	393,708

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

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
103,537 123,422 189,480 233,423

      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
0 0 39,568 0
Trade name impairment charges
0 0 4,750 0
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

	For the
	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	Nov 1,		Nov 3,		Nov 1,			Nov 3,
	2020		2019		2020			2019

Net sales	$	149,687	$	158,176	$	384,821		$	445,942

Cost of sales		116,204		129,777		305,684			363,201

Gross profit		33,483		28,399		79,137			82,741

Selling and administrative expenses		19,850		22,810		57,920			67,286
Goodwill impairment charges		0		0		39,568			0
Trade name impairment charges		0		0		4,750			0
Intangible asset amortization		596		596		1,788			1,788

Operating income / (loss)		13,037		4,993		(24,889	)		13,667

Other income, net		158		309		107			215
Interest expense, net		106		316		433			986

Income/(loss) before income taxes		13,089		4,986		(25,215	)		12,896

Income tax expense / (benefit)		2,996		1,066		(6,263	)		2,829

Net income/(loss)	$	10,093	$	3,920	$	(18,952	)	$	10,067

Earnings/(Loss) per share
Basic	$	0.85	$	0.33	$	(1.61	)	$	0.85
Diluted	$	0.84	$	0.33	$	(1.61	)	$	0.85

Weighted average shares outstanding:
Basic		11,833		11,789		11,818			11,782
Diluted		11,939		11,816		11,818			11,821

Cash dividends declared per share	$	0.16	$	0.15	$	0.48		$	0.45

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands)

(Unaudited)

	For the
	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	Nov 1,			Nov 3,			Nov 1,			Nov 3,
	2020			2019			2020			2019

Net income/(loss)	$	10,093		$	3,920		$	(18,952	)	$	10,067
Other comprehensive income (loss):
Gain on pension plan settlement		0			(520	)		0			(520	)
Income tax effect on settlement		0			124			0			124
Amortization of actuarial loss		84			37			253			111
Income tax effect on amortization		(20	)		(9	)		(60	)		(27	)
Adjustments to net periodic benefit cost		64			(368	)		193			(312	)

Total Comprehensive Income/(Loss)	$	10,157		$	3,552		$	(18,759	)	$	9,755

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME/(LOSS)~~CASH FLOWS

(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

	For the
	Thirty-Nine Weeks Ended
	Nov 1,			Nov 3,
	2020			2019
Operating Activities:
Net (loss)/income	$	(18,952	)	$	10,067
Adjustments to reconcile net income to net cash provided by operating activities:
Goodwill and intangible asset impairment charges		44,318			0
Depreciation and amortization		5,052			5,260
Gain on pension settlement		0			(520	)
Gain on disposal of assets		0			(271	)
Deferred income tax (benefit) / expense		(10,143	)		1,461
Noncash restricted stock and performance awards		1,473			891
Provision for doubtful accounts and sales allowances		4,527			1,365
Gain on life insurance policies		(1,750	)		(715	)
Changes in assets and liabilities:
Trade accounts receivable		7,829			18,589
Inventories		28,730			1,589
Income tax recoverable		751			(2,348	)
Prepaid expenses and other current assets		620			(638	)
Trade accounts payable		2,947			(13,456	)
Accrued salaries, wages, and benefits		(441	)		(2,553	)
Accrued income taxes		2,015			(3,159	)
Customer deposits		967			10,006
Operating lease liabilities		797			536
Other accrued expenses		(1,165	)		350
Deferred compensation		32			156
Net cash provided by operating activities	$	67,607		$	26,610

Investing Activities:
Purchases of property and equipment		(642	)		(4,745	)
Proceeds received on notes from sale of assets		0			1,465
Premiums paid on life insurance policies		(519	)		(558	)
Proceeds received on life insurance policies		1,489			0
Net cash provided by/(used in) investing activities		328			(3,838	)

Financing Activities:
Payments for long-term debt		(4,393	)		(4,393	)
Cash dividends paid		(5,699	)		(5,316	)
Cash used in financing activities		(10,092	)		(9,709	)

Net increase in cash and cash equivalents		57,843			13,063
Cash and cash equivalents - beginning of year		36,031			11,435
Cash and cash equivalents - end of quarter	$	93,874		$	24,498

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	2,301		$	6,754
Cash paid for interest, net		365			852

Non-cash transactions:
Increase in lease liabilities arising from obtaining right-of-use assets	$	2,103		$	272
Increase in property and equipment through accrued purchases		12			25

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In thousands)~~

~~(Unaudited)~~

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except per share data)

(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 0
Depreciation and amortization
3,365 3,471
Gain on disposal of assets
0 (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
975 (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
0 1,459
Premiums paid on life insurance policies
(453 ) (489 )
Proceeds received on life insurance policies
673 0
              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

								Accumulated
								Other			Total
	Common Stock				Retained			Comprehensive			Shareholders'
	Shares		Amount		Earnings			Income (loss)			Equity
Balance at February 3, 2019		11,785	$	49,549	$	213,380		$	247		$	263,176
Net income						10,067						10,067
Gain on pension settlement, net of tax of $124									(396	)		(396	)
Unrealized loss on defined benefit plan, net of tax of $27									84			84
Cash dividends paid and accrued ($0.15 per share)						(5,316	)					(5,316	)
Restricted stock grants, net of forfeitures		53		344								344
Restricted stock compensation cost				600								600
Recognition of PSUs as equity-based awards				684								684
Balance at November 3, 2019		11,838	$	51,177	$	218,131		$	(65	)	$	269,243



Balance at February 2, 2020		11,838	$	51,582	$	223,252		$	(713	)	$	274,121
Net loss						(18,952	)					(18,952	)
Unrealized loss on defined benefit plan, net of tax of $60									193			193
Cash dividends paid and accrued ($0.16 per share)						(5,699	)					(5,699	)
Restricted stock grants, net of forfeitures		49		169								169
Restricted stock compensation cost				651								651
Performance-based restricted stock units cost				653								653
Balance at November 1, 2020		11,887	$	53,055	$	198,601		$	(520	)	$	251,136

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

~~Table of Contents~~

~~HOOKER FURNITURE CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

Accumulated

Other

Total

Common Stock

Retained

Comprehensive

Shareholders'

Shares

Amount

Earnings

Income (loss)

Equity

      Balance at February 3, 2019
11,785 $ 49,549 $ 213,380 $ 247 $ 263,176
Net income
6,147 6,147
Unrealized loss on defined benefit plan, net of tax of $18
56 56
Cash dividends paid and accrued ($0.15 per share)
(3,541 ) (3,541 )
Restricted stock grants, net of forfeitures
53 344 344
Restricted stock compensation cost
367 367
Recognition of PSUs as equity-based awards
584 584
      Balance at August 4, 2019
11,838 $ 50,844 $ 215,986 $ 303 $ 267,133

      Balance at February 2, 2020
11,838 $ 51,582 $ 223,252 $ (713 ) $ 274,121
Net loss
(29,045 ) (29,045 )
Unrealized loss on defined benefit plan, net of tax of $40
128 128
Cash dividends paid and accrued ($0.16 per share)
(3,796 ) (3,796 )
Restricted stock grants, net of forfeitures
52 169 169
Restricted stock compensation cost
442 442
Performance-based restricted stock units cost
435 435
      Balance at August 2, 2020
11,890 $ 52,628 $ 190,411 $ (585 ) $ 242,454

~~The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.~~

Table of Contents

HOOKER FURNITURE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar and share amounts in tables, except per share amounts, in thousands unless otherwise indicated)

(Unaudited)

For the ~~Twenty-Six~~Thirty-Nine Weeks Ended ~~August 2,~~November 1, 2020

1. Preparation of Interim Financial Statements

The condensed consolidated financial statements of Hooker Furniture Corporation and subsidiaries (referred to as “we,” “us,” “our,” “Hooker” or the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these statements include all adjustments necessary for a fair statement of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) are condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of our results of operations and financial position. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended February 2, 2020 (“2020 Annual Report”). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect both the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates. Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year.

The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the 2021 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” ~~“second~~“third quarter” or “quarterly period”) that began ~~May 4,~~August 3, 2020, and the ~~twenty-six~~thirty-nine week period (also referred to as ~~“six~~“nine months”, ~~“six-month~~“nine-month period” or ~~“first half”~~“year-to-date period”) that began February 3, 2020, which both ended ~~August 2,~~November 1, 2020. This report discusses our results of operations for this period compared to the 2020 fiscal year thirteen-week period that began ~~May 6,~~August 5, 2019 and the ~~twenty-six~~thirty-nine week period that began February 4, 2019, which both ended ~~August 4,~~November 3, 2019; and our financial condition as of ~~August 2,~~November 1, 2020 compared to February 2, 2020.

References in these notes to the condensed consolidated financial statements of the Company to:

■

the 2021 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began February 3, 2020 and will end January 31, 2021; and

■

the 2020 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began February 4, 2019 and ended February 2, 2020.

2. Recently Adopted Accounting Policies

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). This update seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We adopted the provisions of Topic 326 on February 3, 2020, the first day of our 2021 fiscal year. The adoption of this standard did not have a material effect on our condensed consolidated financial statements or results of operations. We will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses.

Table of Contents

In December 2019, the FASB issued ASU 2019-12, Income Tax (Topic 740) – Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions for intra-period tax allocation, the recognition of deferred tax liabilities after an investment in a foreign entity transitions to or from the equity method, and the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments also introduce new guidance on determining how to apply the income tax guidance to franchise taxes that are partially based on income, clarifying the accounting for transactions that result in a step-up in the tax basis of goodwill, and the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We elected to adopt ASU 2019-12 on February 3, 2020, the first day of our 2021 fiscal year. The adoption of this standard ~~impacted our condensed consolidated balance sheets and statements~~resulted in additional $4.0 million of ~~operations by $5.4 million.~~income tax benefit upon adoption. See Note 12 Income Taxes for additional details.

3. Accounts Receivable

August 2,

February 2,

2020

2020

Trade accounts receivable
$ 75,198 $ 91,261
Receivable from factor
0 788
Other accounts receivable allowances
(6,526 ) (3,493 )
Allowance for doubtful accounts
(1,557 ) (903 )
Accounts receivable
$ 67,115 $ 87,653

	November 1,			February 2,
	2020			2020

Trade accounts receivable	$	84,467		$	91,261
Receivable from factor		0			788
Other accounts receivable allowances		(7,503	)		(3,493	)
Allowance for doubtful accounts		(1,667	)		(903	)
Accounts receivable	$	75,297		$	87,653

“Receivable from factor” represented amounts due with respect to factored accounts receivable. The agreement was discontinued in early fiscal 2021.

4. Inventories

August 2,

February 2,

2020

2020

Finished furniture
$ 80,770 $ 106,495
Furniture in process
1,278 1,304
Materials and supplies
8,151 8,479
Inventories at FIFO
90,199 116,278
Reduction to LIFO basis
(22,492 ) (23,465 )
Inventories
$ 67,707 $ 92,813

	November 1,			February 2,
	2020			2020
Finished furniture	$	76,943		$	106,495
Furniture in process		1,297			1,304
Materials and supplies		7,585			8,479
Inventories at FIFO		85,825			116,278
Reduction to LIFO basis		(21,742	)		(23,465	)
Inventories	$	64,083		$	92,813

Table of Contents

5. Property, Plant and Equipment

Depreciable Lives

August 2,

February 2,

(In years)

2020

2020

Buildings and land improvements
15 - 30 $ 31,316 $ 31,316
Computer software and hardware
3 - 10 19,243 19,166
Machinery and equipment
10 9,317 9,271
Leasehold improvements

Term of lease
9,785 9,737
Furniture and fixtures
3 - 10 2,603 2,597
Other
5 651 651
   Total depreciable property at cost
72,915 72,738
Less accumulated depreciation
46,250 44,089
   Total depreciable property, net
26,665 28,649
Land
1,077 1,077
Construction-in-progress
529 181
   Property, plant and equipment, net
$ 28,271 $ 29,907

	Depreciable Lives	November 1,		February 2,
	(In years)	2020		2020

Buildings and land improvements	15 - 30	$	31,316	$	31,316
Computer software and hardware	3 - 10		19,294		19,166
Machinery and equipment	10		9,348		9,271
Leasehold improvements	Term of lease		9,882		9,737
Furniture and fixtures	3 - 10		2,617		2,597
Other	5		651		651
Total depreciable property at cost			73,108		72,738
Less accumulated depreciation			47,335		44,089
Total depreciable property, net			25,773		28,649
Land			1,077		1,077
Construction-in-progress			465		181
Property, plant and equipment, net		$	27,315	$	29,907

6. Fair Value Measurements

Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability (an exit price) in an orderly transaction between market participants on the applicable measurement date. We use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

■

Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities;

■

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

■

Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of ~~August 2,~~November 1, 2020 and February 2, 2020, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs. The fair value of the Company-owned life insurance is determined by inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change in fair value is reflected in income for that period.

Our assets measured at fair value on a recurring basis at ~~August 2,~~November 1, 2020 and February 2, 2020, were as follows:

Fair value at August 2, 2020

Fair value at February 2, 2020

Description

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

(In thousands)

Assets measured at fair value

Company-owned life insurance
$ 0 $ 24,904 $ 0 $ 24,904 $ 0 $ 24,888 $ 0 $ 24,888

	Fair value at November 1, 2020								Fair value at February 2, 2020
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Assets measured at fair value
Company-owned life insurance	$	0	$	25,104	$	0	$	25,104	$	0	$	24,888	$	0	$	24,888

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7. Intangible Assets

The adverse economic effects brought on by the COVID-19 pandemic, including reductions in our sales, earnings and market value, as well as other changing market dynamics, required that we perform a valuation of our intangible assets.

The calculation methodology for the fair value of our Home Meridian segment and the Shenandoah division of our Domestic Upholstery segment included three approaches: the Discounted Cash Flow Method (DCF) which was given the largest weighting, the Guideline Public Company Method (GPCM) based on the consideration of the facts of the Company’s peer competitors and the Guideline Transaction Method (GTM) based on consideration of transactions with varying risk profiles, geographies and market conditions.

The income approach, specifically the relief from royalty method, was used as the valuation methodology for our trade names and trademarks, based on cash flow projections and growth rates for each trade name for five years in the future provided by management, and a royalty rate benchmark for companies with similar activities.

As a result of our intangible asset valuation analysis, in the first quarter of fiscal 2021, we recorded $44.3 million non-cash impairment charges including $23.2 million to Home Meridian goodwill, $16.4 million to Shenandoah goodwill and $4.8 million to certain of Home Meridian segment’s trade names.

Twenty-Six Weeks Ended
August 2, 2020

February 2, 2020

Non-amortizable Intangible Assets

Segment

Beginning Balance

Impairment Charges

Net Book Value

Beginning Balance

Impairment Charges

Net Book Value

Goodwill

Home Meridian
$ 23,187 $ (23,187 ) $ 0 $ 23,187 $ 0 $ 23,187
Goodwill

Domestic Upholstery
16,871 (16,381 ) 490 16,871 0 16,871
   Total Goodwill
40,058 (39,568 ) 490 40,058 0 40,058

Trademarks and trade names - Home Meridian

Home Meridian
11,400 (4,750 ) 6,650 11,400 0 11,400
Trademarks and trade names - Bradington-Young

Domestic Upholstery
861 0 861 861 0 861
Trademarks and trade names - Sam Moore

Domestic Upholstery
396 0 396 396 0 396
   Total Trademarks and trade names
$ 12,657 $ (4,750 ) $ 7,907 $ 12,657 $ 0 $ 12,657

   Total non-amortizable assets
$ 52,715 $ (44,318 ) $ 8,397 $ 52,715 $ 0 $ 52,715

		Thirty-Nine Weeks Ended
		November 1, 2020							February 2, 2020
Non-amortizable Intangible Assets	Segment	Beginning Balance		Impairment Charges			Net Book Value		Beginning Balance		Impairment Charges		Net Book Value
Goodwill	Home Meridian	$	23,187	$	(23,187	)	$	0	$	23,187	$	0	$	23,187
Goodwill	Domestic Upholstery		16,871		(16,381	)		490		16,871		0		16,871
Total Goodwill			40,058		(39,568	)		490		40,058		0		40,058

Trademarks and trade names - Home Meridian	Home Meridian		11,400		(4,750	)		6,650		11,400		0		11,400
Trademarks and trade names - Bradington-Young	Domestic Upholstery		861		0			861		861		0		861
Trademarks and trade names - Sam Moore	Domestic Upholstery		396		0			396		396		0		396
Total Trademarks and trade names		$	12,657	$	(4,750	)	$	7,907	$	12,657	$	0	$	12,657

Total non-amortizable assets		$	52,715	$	(44,318	)	$	8,397	$	52,715	$	0	$	52,715

Our amortizable intangible assets are recorded in our Home Meridian and Domestic Upholstery segments. The carrying amounts and changes therein of those amortizable intangible assets were as follows:

Amortizable Intangible Assets

Customer

Relationships

Trademarks

Totals

Balance at February 2, 2020
$ 19,996 $ 718 $ 20,714
Amortization
(1,162 ) (30 ) (1,192 )
Balance at August 2, 2020
$ 18,834 $ 688 $ 19,522

	Amortizable Intangible Assets
	Customer
	Relationships			Trademarks			Totals

Balance at February 2, 2020	$	19,996		$	718		$	20,714
Amortization		(1,743	)		(45	)		(1,788	)
Balance at November 1, 2020	$	18,253		$	673		$	18,926

For the remainder of fiscal 2021, amortization expense is expected to be approximately ~~$1.2 million.~~$596,000.

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8. Leases

In fiscal 2020, we adopted Accounting Standards Codification Topic 842 Leases. We recognized sub-lease income of $144,000 for the three-month period and ~~$288,000~~$432,000 for the ~~six-month~~nine-month period, both ended ~~August 2,~~November 1, 2020. The components of lease cost and supplemental cash flow information for leases for the ~~three-months~~three-month and ~~six-months~~nine-month ended ~~August 2,~~November 1, 2020 were:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 2, 2020

August 4, 2019

August 2, 2020

August 4, 2019

Operating lease cost
$ 2,153 $ 2,123 $ 4,253 $ 4,200
Variable lease cost
22 0 69 0
Short-term lease cost
67 178 186 291
Total operating lease cost
$ 2,242 $ 2,301 $ 4,508 $ 4,491

Operating cash outflows
$ 1,931 $ 1,948 $ 3,833 $ 4,334

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	November 1, 2020		November 3, 2019		November 1, 2020		November 3, 2019
Operating lease cost	$	2,061	$	2,090	$	6,319	$	6,289
Variable lease cost		37		0		105		0
Short-term lease cost		70		173		272		467
Total operating lease cost	$	2,168	$	2,263	$	6,696	$	6,756


Operating cash outflows	$	2,056	$	1,918	$	5,908	$	6,255

The right-of-use assets and lease liabilities recorded on our Condensed Consolidated Balance Sheets as of ~~August 2,~~November 1, 2020 were:

August 2, 2020

February 2, 2020

Real estate
$ 36,909 $ 38,175
Property and equipment
1,078 1,337
Total operating leases right-of-use assets
$ 37,987 $ 39,512

Current portion of operating lease liabilities
$ 6,844 $ 6,307
Long term operating lease liabilities
32,411 33,794
Total operating lease liabilities
$ 39,255 $ 40,101

	November 1, 2020		February 2, 2020
Real estate	$	35,374	$	38,175
Property and equipment		948		1,337
Total operating leases right-of-use assets	$	36,322	$	39,512


Current portion of operating lease liabilities	$	6,772	$	6,307
Long term operating lease liabilities		30,937		33,794
Total operating lease liabilities	$	37,709	$	40,101

The weighted-average remaining lease term is ~~7.0~~6.8 years. We used our incremental borrowing rate which is LIBOR plus 1.5% at the adoption date. The weighted-average discount rate is ~~2.75%~~2.3%. Due to the COVID-19 pandemic, we received concessions on several of our leases, including changes in lease terms and deferred rent payments. We accounted for the concessions as lease modifications and used current LIBOR plus 1.5% for those leases. The weighted-average discount rate decreased due to a decrease in LIBOR.

None of the modifications had a material effect on our condensed consolidated financial statements or results of operations.

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on ~~August 2,~~November 1, 2020:

Undiscounted Future Operating Lease Payments

Remainder of 2020
$ 3,947
2021
7,451
2022
5,671
2023
5,726
2024
5,280
2025 and thereafter
15,205
Total lease payments
$ 43,280
Less: impact of discounting
(4,025 )
Present value of lease payments
$ 39,255

	Undiscounted Future Operating Lease Payments
Remainder of 2020	$	1,949
2021		7,329
2022		5,557
2023		5,629
2024		5,253
2025 and thereafter		15,145
Total lease payments	$	40,862
Less: impact of discounting		(3,153	)
Present value of lease payments	$	37,709

~~As of August 2, 2020, we did not have any additional operating or finance leases that had not yet commenced.~~

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As of November 1, 2020, the Company has an additional lease for a warehouse in Georgia that had not yet commenced with estimated future minimum rental commitments of approximately $28 million. This lease is expected to commence in December 2021 with lease term of up to 10 years. Since the lease has not commenced, the undiscounted amounts are not included in the table above.

9. Debt

As of ~~August 2,~~November 1, 2020, we had an aggregate $25.7 million available under the Existing Revolver to fund working capital needs. Standby letters of credit in the aggregate amount of $4.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of ~~August 2,~~November 1, 2020. There were no additional borrowings outstanding under the Existing Revolver as of ~~August 2,~~November 1, 2020.

We currently have one unsecured term loan and one secured term loan outstanding and a revolving credit facility. The term loans are related to the Home Meridian acquisition. The full remaining principal amounts of ~~$27.2~~$25.7 million on our term loans are due on or before February 1, 2021. We expect to pay off our term loans in full and enter into a new credit facility on or before the expiration of the current agreement.

Subsequent to the end of the fiscal 2021 third quarter, the Existing Revolver was amended to increase the sublimit of the facility available for the issuance of letters of credit from $4 million to $10 million in order to support import purchases.

10. Employee Benefit Plans

We maintain two “frozen” retirement plans, which are paying benefits and may include active employees among the participants. We do not expect to add participants to these plans in the future. The two plans include:

■

a supplemental retirement income plan (“SRIP”) for certain former and current executives of Hooker Furniture Corporation; and

■

the Pulaski Furniture Corporation Supplemental Executive Retirement Plan (“SERP”) for certain former executives.

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 2,

August 4,

August 2,

August 4,

2020

2019

2020

2019

Net periodic benefit costs

      Service cost
32 26 64 52
      Interest cost
74 204 148 409
      Actuarial loss
84 37 169 74
      Expected return on pension plan assets
0 (101 ) 0 (202 )
      Expected administrative expenses
0 98 0 195

Consolidated net periodic benefit costs
$ 190 $ 264 $ 381 $ 528

	Thirteen Weeks Ended					Thirty-Nine Weeks Ended
	November 1,		November 3,			November 1,		November 3,
	2020		2019			2020		2019
Net periodic benefit costs
Service cost		32		26			96		78
Interest cost		74		204			222		613
Actuarial loss		84		37			253		111
Expected return on pension plan assets		0		(101	)		0		(304	)
Pension plan administrative expenses		0		98			0		293
Consolidated net periodic benefit costs	$	190	$	264		$	571	$	791

The SRIP and SERP plans are unfunded plans. In fiscal 2021, we paid ~~$181,000~~$179,000 in the ~~second~~third quarter and ~~$359,000~~$538,000 in the first ~~half~~nine months and expect to pay a total of approximately ~~$370,000~~$191,000 in benefit payments from our general assets during the remainder of fiscal 2021 to fund SRIP and SERP payments.

11. Earnings Per Share

We refer you to the discussion of Earnings Per Share in Note 2. Summary of Significant Accounting Policies, in the financial statements included in our 2020 Annual Report, for additional information concerning the calculation of earnings per share.

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All stock awards are designed to encourage retention and to provide an incentive for increasing shareholder value. We have issued restricted stock awards to non-employee members of the board of directors since 2006 and to certain non-executive employees since 2014. We have issued restricted stock units (“RSUs”) to certain senior executives since fiscal 2012 under the Company’s Stock Incentive Plan. Each RSU entitles an executive to receive one share of the Company’s common stock if the executive remains continuously employed with the Company through the end of a three-year service period. The RSUs may be paid in shares of our common stock, cash or both at the discretion of the Compensation Committee of our board of directors. We have issued Performance-based Restricted Stock Units (“PSUs”) to certain senior executives since fiscal 2019 under the Company’s Stock Incentive Plan. Each PSU entitles the executive officer to receive one share of our common stock based on the achievement of two specified performance conditions if the executive officer remains continuously employed through the end of the three-year performance period. One target is based on our annual average growth in our EPS over the performance period and the other target is based on EPS growth over the performance period compared to our peers. The payout or settlement of the PSUs will be made in shares of our common stock.

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We expect to continue to grant these types of awards annually in the future. The following table sets forth the number of outstanding restricted stock awards and RSUs and PSUs, net of forfeitures and vested shares, as of the fiscal period-end dates indicated:

The number of outstanding restricted shares increased due primarily to grants of restricted shares to a larger population of our non-executive employees as an incentive for retention and alignment of individual performance to our goals.

All restricted shares, RSUs and PSUs awarded that have not yet vested are considered when computing diluted earnings per share. The following table sets forth the computation of basic and diluted earnings per share:

*Due to the fiscal 2021 year-to-date net loss, approximately ~~31,000~~92,000 shares would have been antidilutive and are therefore excluded from the calculation of earnings per share for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020.

We recorded income tax expense of ~~$1.6~~$3.0 million for the fiscal 2021 ~~second~~third quarter compared to ~~$1.2~~$1.1 million for the comparable prior year period. The effective tax rates for the fiscal 2021 and 2020 ~~second~~third quarters were ~~21.8%~~22.9% and ~~23.1%~~21.4%, respectively. We recorded income tax benefit of ~~$9.3~~$6.3 million for the fiscal 2021 first ~~half,~~nine months, of which income tax benefit of $10.7 million was recorded related to goodwill and trade name impairment charges, compared to ~~$1.8~~$2.8 million income tax expense for the comparable prior year period. ~~respectively.~~ The effective tax rates for the first ~~half~~nine months of fiscal 2021 and 2020 were ~~24.2%~~24.8% and ~~22.3%.~~21.9%, respectively.

An entity is required to make its best estimate of the annual effective tax rate for the full fiscal year at the end of each interim period and to use this rate to calculate its income taxes on a year-to-date basis. Under the current income tax guidance, there is an exception that when the year-to-date loss for an interim period exceeds the projected loss for the full fiscal year, the income tax benefit recognized year-to-date is limited to the amount of benefit that would be recognized if the year-to-date loss were the anticipated loss for the full fiscal year. ASU 2019-12 removes this exception and no longer limits the computed benefit. We elected to early adopt ASU 2019-12 in the first quarter of fiscal 2021 and recognized an additional ~~$5.4~~$4.0 million of ~~tax benefit that exceeds our anticipated annual~~ income tax ~~benefit in~~benefits upon adoption. In the ~~fiscal 2021 first half.~~nine months period, we recognized additional $2.4 million of income tax benefit.

The net unrecognized tax benefits as of ~~August 2,~~November 1, 2020 and February 2, 2020, which, if recognized, would affect our effective tax rate are $3,000.

Tax years ending January 29, 2017 through February 2, 2020 remain subject to examination by federal and state taxing authorities.

As a public entity, we are required to present disaggregated information by segment using the management approach. The objective of this approach is to allow users of our financial statements to see our business through the eyes of management based upon the way management reviews performance and makes decisions. The management approach requires segment information to be reported based on how management internally evaluates the operating performance of the company’s business units or segments. The objective of this approach is to meet the basic principles of segment reporting as outlined in ASC 280 Segments (“ASC 280”), which are to allow the users of our financial statements to:

We define our segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources. We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income, as determined by the information regularly reviewed by the CODM.

We continually monitor our reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. In the fourth quarter of fiscal 2020, we updated our reportable segments as follows: domestic upholstery producers Bradington-Young, Sam Moore and Shenandoah Furniture were moved from All Other and aggregated into a new reportable segment called “Domestic Upholstery.” All Other now consists of H Contract and Lifestyle Brands. Lifestyle Brands is a business in its start-up phase targeted at the interior design channel. The Hooker Branded and Home Meridian segments were unchanged. Therefore, for financial reporting purposes, we are organized into 3 reportable segments and “All Other”, which includes the remainder of our businesses:

The following table presents segment information for the periods, and as of the dates, indicated. Prior-year information has been recast to reflect the changes in segments discussed above:

On November 4, 2020, we entered the Second Amendment to the Second Amended and Restated Loan Agreement (the “Agreement”) to amend certain provisions of the Existing Loan Agreement. The Agreement was amended to increase the sublimit of the facility available for the issuance of letters of credit from $4 million to $10 million in order to support import purchases.

On ~~September~~December 2, 2020, our board of directors declared a quarterly cash dividend of ~~$0.16~~$0.18 per share, payable on ~~September 30,~~December 31, 2020 to shareholders of record at ~~September 18,~~December 16, 2020. This represents a 12.5% increase over the previous quarterly dividend and the fifth consecutive annual dividend increase.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All references to the “Company,” “we,” “us” and “our” in this document refer to Hooker Furniture Corporation and its consolidated subsidiaries, unless specifically referring to segment information. All references to the “Hooker”, “Hooker Division”, “Hooker Legacy Brands” or “traditional Hooker” divisions or companies refer to the current components of our Hooker Branded segment, the Domestic Upholstery Segment including Bradington-Young, Sam Moore, and Shenandoah Furniture, and All Other which includes H Contract and Lifestyle Brands.

References to the “Shenandoah acquisition” refer to the acquisition of substantially all of the assets of Shenandoah Furniture, Inc. on September 29, 2017. References to the “HMI acquisition” refer to the acquisition of substantially all of the assets of Home Meridian International, Inc. on February 1, 2016.

Certain statements made in this report, including statements under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the notes to the consolidated financial statements included in this report, are not based on historical facts, but are forward-looking statements. These 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 negatives thereof, or other variations thereof, 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:

Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in this report could turn out to be materially different. Any forward-looking statement 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.

Also, our business is subject to a number of significant risks and uncertainties any of which can adversely affect our business, results of operations, financial condition or future prospects. For a discussion of risks and uncertainties that we face, see the Forward-Looking Statements detailed above and Item 1A, “Risk Factors” in our 2020 annual report on Form 10-K (the “2020 Annual Report”).

Investors should also be aware that while we occasionally communicate with securities analysts and others, it is against our policy to selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, investors should not assume that we agree with any projection, forecast or report issued by any analyst regardless of the content of the statement or report, as we have a policy against confirming information issued by others.

This quarterly report on Form 10-Q includes our unaudited condensed consolidated financial statements for the 2021 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” ~~“second~~“third quarter” or “quarterly period”) that began ~~May 4,~~August 3, 2020, and the ~~twenty-six~~thirty-nine week period (also referred to as ~~“six~~“nine months”, ~~“six-month~~“nine-month period” or ~~“first half”~~“year-to-date period”) that began February 3, 2020, which both ended ~~August 2,~~November 1, 2020. This report discusses our results of operations for this period compared to the 2020 fiscal year thirteen-week period that began ~~May 6,~~August 5, 2019 and the ~~twenty-six~~thirty-nine week period that began February 4, 2019, which both ended ~~August 4,~~November 3, 2019; and our financial condition as of ~~August 2,~~November 1, 2020 compared to February 2, 2020.

Dollar amounts presented in the tables below are in thousands except for per share data.

In the discussion below we reference changes in sales orders or “orders” and sales order backlog (unshipped orders at a point in time) or “backlog” over and compared to certain periods of time and changes discussed are in sales dollars and not units of inventory, unless stated otherwise. WeIn a normal environment, we believe orders are generally good current indicators of sales momentum and business conditions. However, except for custom or proprietary products, orders may be cancelled before shipment. If the items ordered are in stock and the customer has requested immediate delivery, we generally ship products in about 7 days or less from receipt of order; however, orders may be shipped later if they are out of stock or there are production or shipping delays or the customer has requested the order to be shipped at a later date. ~~For~~In a normal environment, for the Hooker Branded segment, Domestic Upholstery segment and All Other, we generally consider unshipped order backlogs to be one helpful indicator of sales for the upcoming 30-day period, but because of our relatively quick delivery and our cancellation policies, we do not consider order backlogs to be a reliable indicator of expected long-term sales. WeIn a normal environment, we generally consider the Home Meridian segment’s backlog to be one helpful indicator of that segment’s sales for the upcoming 90-day period. Due to (i) Home Meridian’s sales volume, (ii) the average sales order sizes of its mass, club and mega account channels of distribution, (iii) the proprietary nature of many of its products and (iv) the project nature of its hospitality business, for which average order sizes tend to be larger and consequently, its order backlog tends to be larger. There are exceptions to the general predictive nature of our orders and backlogs noted in this paragraph due to current demand and supply chain challenges related to the COVID-19 Pandemic. They are discussed in greater detail below and are essential to understanding our prospects.

The following discussion should be read in conjunction with the condensed consolidated financial statements, including the related notes, contained elsewhere in this quarterly report. We also encourage users of this report to familiarize themselves with all of our recent public filings made with the Securities and Exchange Commission (“SEC”), especially our 2020 Annual Report. Our 2020 Annual Report contains critical information regarding known risks and uncertainties that we face, critical accounting policies and information on commitments and contractual obligations that are not reflected in our condensed consolidated financial statements, as well as a more thorough and detailed discussion of our corporate strategy and new business initiatives.

Our 2020 Annual Report and our other public filings made with the SEC are available, without charge, at www.sec.gov and at http://investors.hookerfurniture.com.

Hooker Furniture Corporation, incorporated in Virginia in 1924, is a designer, marketer and importer of case goods (wooden and metal furniture), leather-and fabric-upholstered furniture for the residential, hospitality and contract markets. We also domestically manufacture premium residential custom leather and custom fabric-upholstered furniture. We are ranked among the nation’s top five largest publicly traded furniture sources, based on 2019 shipments to U.S. retailers, according to a 2020 survey by a leading trade publication.

We believe that consumer tastes and buying habits are evolving at a rapid pace and we continue to change to meet these demands.

Our strategy is to leverage the financial strength afforded us by Hooker’s slower-growing but highly profitable traditional businesses in order to boost revenues and earnings both organically and by acquiring companies selling in faster-growing channels of distribution in which our traditional businesses are under-represented. Consequently, Hooker acquired the business of Home Meridian on February 1, 2016 and Shenandoah Furniture on September 29, 2017.

We believe our acquisition of Home Meridian has better positioned us in some of the fastest growing and advantaged channels of distribution, including e-commerce, warehouse membership clubs and hospitality furniture. While growing faster than industry average, these channels tend to operate at lower margins.

We also believe our acquisition of Shenandoah Furniture, a North Carolina-based domestic upholsterer, has better positioned us in the “lifestyle specialty” retail distribution channel. In that channel, domestically- produced, customizable upholstery is viable product preferred by the end consumers who shop at retailers in that channel.

During the fiscal 2021 first quarter, COVID-19 was recognized as a global pandemic. Federal, state and local governments in the U.S and elsewhere have imposed restrictions on travel and business operations and have advised or required individuals to limit or eliminate time outside of their homes. Temporary closures of certain businesses were also ordered in certain jurisdictions and other businesses temporarily closed voluntarily. Consequently, the COVID-19 outbreak severely restricted the level of economic activity in the U.S. and around the world and demand for our products plummeted, and orders decreased 40.5% in the fiscal 2021 first quarter as compared to the same prior-year period. Cancellations of stock orders by large customers and deferred orders from retailers who closed their stores during the shutdown partially drove the steep declines in the fiscal 2021 first quarter.

To address the financial impact of the virus felt in the first quarter, we delayed non-essential capital spending and implemented other cost-cutting measures, including abbreviated shifts, furloughs, the temporary closure of our domestic manufacturing plants, staff reductions, temporary fee reductions for our Board of Directors, temporary salary reductions for officers and other managers, rationalizing current import purchase orders and collaborating with our vendors to cut costs and extend payment terms where possible.

While we continue to spend cautiously, business has improved steadily beginning in May 2020 and we’ve seen greatly increased demand for our products compared to the prior-year period and the first quarter of fiscal 2021. ~~Cancellations of stock orders by large customers and deferred orders from retailers who closed their stores during the shutdown partially drove the steep declines in the fiscal 2021 first quarter.~~ Fiscal 2021 ~~second~~third quarter consolidated orders increased ~~nearly 24%~~34% compared to the same prior-year period and year-to-date orders ~~as of the end of the fiscal 2021 second quarter were down only 6.5%~~increased 8.3% as compared to the same prior-year period, despite abysmal first quarter orders. ~~(The favorable trend continued into fiscal August as orders increased over 50% which brought year-to-date orders up 3% as compared to~~All three domestic upholstery divisions were operating at current full capacity at the ~~same prior-year period.) Consequently, during~~end of the ~~2021 second quarter, our domestic manufacturing plants reopened and are currently operating near capacity.~~third quarter. Most furloughs of our associates have ended, and temporary salary and fee reductions have been rescinded. We are in the process of re-building inventory to meet increased customer demand.

We monitor information on COVID-19 from the Centers for Disease Control and Prevention (“CDC”) and believe we are adhering to their recommendations regarding the health and safety of our personnel. To address the potential human impact of the virus, most of our administrative staff are still telecommuting. For those administrative staff not telecommuting and our warehouse and domestic manufacturing employees, we have implemented social distancing and mask policies, instituted daily temperature checks and have stepped-up facility cleaning at each location. Non-essential domestic travel for our employees has ceased and international travel has been prohibited outright. Testing and treatment for COVID-19 is covered 100% under our medical plan and counseling is available through our employee assistance plan to assist employees with financial, mental and emotional stress related to the virus and other issues. In addition, for employees diagnosed with the virus (and those associates with another diagnosed person or persons in their household) we are offering work-from-home arrangements where feasible and are working to accommodate associates with child-care issues related to school or day-care closures and anticipated re-openings. The safety and health of our employees remains a top priority.

~~Table~~

As of ~~Contents~~

early December 2020, the average daily cases of COVID-19 and associated hospitalizations and deaths have been increasing since September. Governments have been implementing a range of measures in response to the second round of the pandemic. The extent to which these recent developments may adversely affect our sales, earnings and liquidity during the remainder of fiscal 2021 and into fiscal 2022 is unknown.

Executive Summary-Results of Operations

~~We began to recover~~Consolidated net sales for fiscal 2021 third quarter decreased by $8.5 million or 5.4%, partially recovering from ~~the depths of the initial COVID-19 crisis~~22.8% and 14.3% net sales decreases, respectively, in the first and second quarters of fiscal 2021, ~~second quarter. Our results~~all compared to their respective prior year periods. The net sales declines were ~~greatly improved~~principally driven by decreased sales at Home Meridian due to inventory availability challenges partially offset by increased Hooker Branded sales. Consolidated operating income increased by $8.0 million or 161% versus the prior year period with our three reportable segments and All Other reporting operating profit for the third quarter of fiscal 2021. Increased operating income was driven by the non-recurrence of certain expenses at Home Meridian in the current year, lower overall consolidated spending due to COVID-19 and increased sales in the Hooker Branded segment.

For the first nine months, consolidated net sales decreased $61.1 million or 13.7% from $445.9 million to $384.8 million as compared to the ~~first quarter of fiscal 2021, which was our worst quarterly performance recorded in over a decade. While second quarter net sales were lower than the~~ prior ~~year-quarter~~year period due to sales decreases in all three reportable segments as well as All Other driven by significantly reduced sales volume during the ~~lagging effects of the crisis,~~COVID-19 pandemic.

Consolidated net income ~~was up 39%~~during the current quarter increased by $6.2 million or 158% and quarterly earnings per share was ~~$0.48~~$0.84 as compared to ~~$0.35~~$0.33 in the prior year ~~second~~third quarter. Fiscal 2021 first half results clearly show the adverse economic effects brought on by the initial severity of COVID-19 crisis conditions, which caused demand for our products to plummet. First half sales were down over 18% with nearly 60% of the consolidated net sales decrease occurring in the first quarter of fiscal 2021. The net loss reported in the ~~first half~~year-to-date period was due principally to $44.3 million non-cash impairment charges on our goodwill and trade names, ~~($33.7~~$33.7 million net of ~~tax),~~tax, driven largely by our depressed stock price which occurred at the depth of the crisis and which was a primary input in the valuation analysis that necessitated the write-off. ~~First-half~~First nine months of fiscal 2021 loss per share was ~~$2.46~~$1.61 as compared to earnings per share of ~~$0.52~~$0.85 in the comparable period.

Our fiscal 2021 ~~second~~third quarter and ~~first-half~~first nine months performance is discussed in greater detail below under “Review” and “Results of Operations.”

Review

~~Although the COVID-19 pandemic continued to impact current economic conditions and our business, we~~We are pleased to report encouraging results for the ~~second~~third quarter of fiscal ~~2021. Consolidated operating income increased by $1.7 million or 30.2% as compared to~~2021, which showed solid improvements from the ~~prior year second quarter. The Home Meridian segment reported $1.1 million in operating income compared to a small operating loss~~initial pandemic conditions encountered earlier in the ~~prior year second quarter. Our Hooker Branded segment reported $6.1 million in operating income, with an increased operating margin~~fiscal year. We believe that higher levels of ~~15.7% of net~~consumer confidence and home sales compared to ~~10.4% net sales~~earlier in the ~~comparable prior-year period. The Domestic Upholstery segment reported essentially break-even operating results for the second quarter despite decreased net sales~~year and ~~inefficiencies from operating~~more time spent at ~~reduced production volumes and lower capacities, which is a much better performance than initially expected under crisis conditions.~~home have led to increased spending on home furnishings.

The Hooker Branded segment’s net sales ~~slightly decreased~~increased by ~~$584,000~~$3.6 million or ~~1.5% as~~8.2% compared to the prior year ~~second~~third quarter ~~while increasing nearly $12 million or 43% as~~and diminished the year-to-date sales decrease to 7.7%, compared to 16.5% decrease for the ~~fiscal 2021 first quarter. Most of our customers’ stores reopened during the second quarter, leading to~~six-month period. Incoming orders have been trending upward for five consecutive months driven by increased demand for our products. ~~Incoming~~Hooker Casegoods incoming orders increased by ~~11.8% as~~over 30% and Hooker Upholstery incoming orders increased by over 50%, both compared to the prior year ~~second quarter~~third quarter. This segment reported $7.7 million operating income or 16.3% operating margin and ~~over 50% as compared to the first quarter. The Hooker Branded segment~~ finished the quarter with an order backlog ~~47% higher than~~1.5 times the comparable prior year ~~period and 45% higher than the fiscal 2021 first quarter.~~period.

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The Home Meridian segment’s net sales decreased ~~$16~~$12 million or ~~18.4%~~14% in the fiscal 2021 ~~second~~third quarter as compared to the prior year ~~second quarter~~period due ~~primarily~~ to decreases in ~~the Samuel Lawrence Hospitality~~Accentrics Home (“~~SLH”~~ACH”), Pulaski Furniture (“PFC”) and Samuel Lawrence ~~Furniture~~Hospitality (“~~SLF”~~SLH”) ~~divisions,~~, partially offset by increased sales in the ~~Accentrics Home~~Prime Resources International (“~~ACH”~~PRI”) and HMidea divisions. Samuel Lawrence Furniture (“SLF”) net sales stayed flat for the quarter. ACH, the division focused on e-commerce channels with a shorter selling cycle, PFC and SLF all experienced inventory availability issues due to container availability and production capacity constraints with import suppliers. These issues led to reduced net sales at ACH and PFC, especially with large furniture chains and e-commerce customers. We are in the process of re-building our inventory and we have large orders in production to fulfill expected demand in the Winter selling season and beyond. The COVID-19 pandemic severely impacted the hospitality business beginning in the fiscal 2021 second quarter and, consequently, SLH’s sales ~~decreased. PFC’s and SLF’s sales decreases were mostly due~~decreased significantly. Division management is exploring new channels of distribution as the hospitality industry is expected to cancelled and delayed orders early in the pandemic that delayed the normal flow of product. Most customers in this channel were closed or their operations severely limited in the fiscal 2021 first quarter and were slower toonly partially recover in ~~the~~ fiscal ~~2021 second quarter. However, incoming orders in this channel~~2021. On a more positive note, PRI and HMidea net sales saw double-digit increases as compared to prior year third quarter driven by increased in the fiscal 2021 second quarter as these customers responded to better than expected business following the initial shutdowns. ACH’s and HMidea’s sales increased by about 20% and accounted for 34% of Home Meridian’s total sales in the ~~quarter. These divisions concentrate on~~mass merchant and clubs channels. Despite decreased net sales, the ~~e-commerce and Clubs channels, which were less seriously impacted by the COVID-19 crisis. Four out of six divisions~~segment reported $2.5 million in operating income compared to a $4.0 million operating loss in the prior year third quarter due principally to chargebacks with one major customer, excess inventory carrying costs due to customer returns and excess inventory, and inventory write-downs – all of which did not repeat in the current year. Home Meridian ~~segment reported operating income for the quarter and~~incoming orders increased by 36% with four out of six divisions ~~reported improved operating margin~~reporting increases compared to the prior year period and the segment finished the quarter with backlog 80% higher than prior year quarter end. However, current order backlog may not be a helpful indicator of sales for the fourth quarter and the first half of fiscal 2022 due to supply chain challenges discussed above.

The Domestic Upholstery segment’s net sales increased $321,000 or 1.3% in the fiscal 2021 third quarter as compared to the prior year period, which we believe was attributable to the reduced occurrence of cost-related issues which negatively impacted Home Meridian’s sales and profitability in the prior year, such as excess tariffs, higher freight costs and warehousing and distribution expenses.

~~The Domestic Upholstery segment’s~~represented solid recovery after two quarters with double-digit percentage net sales ~~decreased by $5.2 million or 22.8% in the fiscal 2021 second quarter as compared to the fiscal 2020 second quarter. Second~~declines. Third quarter incoming orders ~~decreased~~increased by ~~5.9%~~over 30% as compared to the prior year period. In response to the COVID-19 pandemic and reduced orders early this year, we temporarily closed our manufacturing plants at Bradington-Young and Shenandoah in April and significantly reduced production at Sam Moore. We gradually resumed their operations in the second quarter. AtBy the end of ~~July,~~the third quarter, all three divisions were operating ~~near~~at current full capacity and their order backlogs had fully recovered and increased substantially over the prior year. Bradington-Young, Shenandoah, and Sam Moore order backlog was 251%, 74%, and 57% higher than the prior year third quarter end, respectively. However, given the current circumstances, the unshipped order backlog may not be a helpful indicator of this segment’s sales for the fourth quarter and beyond due to production delays including labor shortages and scarcity of some raw materials and components. This segment has incurred higher labor costs as ~~they continue~~division management has increased capacity by hiring new associates to ramp up ~~from reduced operating schedules.~~production in order to reduce backlogs. Domestic Upholstery ~~management implemented cost reduction measures~~reported $2.4 million in operating income or 9.6% operating margin in the third quarter of fiscal 2021, improvements compared to ~~mitigate unabsorbed fixed costs resulting from~~both prior year and operating losses experienced at the ~~lower production volumes. At the end~~heights of the ~~second quarter, Domestic Upholstery’s backlog was about 45% higher than both the fiscal 2021 first quarter and prior year second quarter, due to the ramp up from reduced operating schedules~~initial COVID crisis in the first and second ~~quarter and~~quarters of the ~~receipt of programmed orders scheduled to ship later in the fall.~~current fiscal year.

~~Table of Contents~~

All ~~Other’s~~Other net sales ~~increased slightly~~decreased by 9.4% compared to prior year ~~second quarter. Both~~third quarter due primarily to sales declines at H ~~Contract and Lifestyle Brands reported small sales increases. However, H Contract’s incoming~~Contract. Incoming orders decreased by 9%over 30% in the ~~second~~third quarter, as senior-living facilities, which comprise the majority of ~~this division’s~~H Contract’s business, ~~felt the impact of~~have decreased project spending due to the COVID-19 pandemic. ~~Although orders were below the prior year, thanks~~Postponement of new facility construction, lower occupancy rates, and increased operating expenses related to ~~strong first quarter incoming orders,~~COVID-19 resulted in reduced spending on furnishings. H Contract’s backlog was ~~over 30% higher~~9.1% lower than the prior year ~~second~~third quarter. All Other reported ~~$350,000~~$420,000 in operating income in the fiscal 2021 ~~second~~third quarter which was attributable to H Contract’s performance, despite unfavorable product mix having a modest adverse impact on the gross margin.

We are very encouraged by the current historic levels of orders and backlogs; however, due to the current supply chain issues orders are not converting to shipments as quickly as could be expected in the pre-Pandemic environment and we expect that to continue at least into the fiscal 2022 first quarter. In a normal environment, we’d expect backlog to be one helpful indicator of sales for the Hooker Branded, Domestic Upholstery and All Other for the upcoming 30-day period and for the upcoming 90-day period for the Home Meridian segment. However, the current logistics challenges are slowing order fulfillment, particularly for Home Meridian whose average order sizes tend to be larger and more episodic versus orders for the traditional Hooker businesses, which tend to be smaller and more predictable. Additionally, Home Meridian orders are programmed out and scheduled for delivery to its larger accounts further into the future than usual, which is also contributing to the increased backlog. We expect these challenges will continue to negatively impact us and our sales in the fiscal 2021 fourth quarter, with steady improvements beginning in mid-February 2021 after the new year holidays in China and Vietnam.

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To address the financial impact of the COVID-19 pandemic, ~~during the fiscal 2021 first half~~ we implemented certain measures to preserve cash and reduce operating expenses. ~~We strategically monitored~~Despite the operating loss for the nine-month period, which was driven by the non-cash impairment charges, we generated $67.6 million in cash from operating activities, distributed $5.7 million in cash dividends to our ~~inventory levels by focusing~~shareholders, and paid $4.8 million in principal and interest on ~~best-selling products.~~our term loans. Cash and cash equivalents stood at $93.9 million at fiscal 2021 third quarter-end, an increase of $57.8 million compared to the balance at fiscal 2020 year-end. We are in the process of re-building our inventories to meet current demand and given current lead times with our Asian partners, we have and may continue to experience out-of-stocks with respect to certain imported products. Despite the operating loss for the six-month period, we generated $53.2 million in cash from operating activities, distributed $3.8 million in cash dividends to our shareholders, and paid $3.2 million in principal and interest on our 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 fiscal 2020 year-end. Along with an aggregate $25.7 million available under our existing revolver to fund working capital, weWe are confident that our strong financial condition can weather the expected short-term impacts of COVID-19; however, an extended impact may continue to materially and adversely affect our sales, earnings and liquidity.

Results of Operations

The following table sets forth the percentage relationship to net sales of certain items included in the condensed consolidated statements of income included in this report.

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 2,

August 4,

August 2,

August 4,

2020

2019

2020

2019

Net sales
100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales
79.3 81.1 80.6 81.1
Gross profit

20.7
18.9 19.4 18.9
Selling and administrative expenses
14.5 14.8 16.2 15.5
Goodwill impairment charges
- - 16.8 -
Trade name impairment charges
- - 2.0 -
Intangible asset amortization
0.5 0.4 0.5 0.4
Operating (loss)/income
5.8 3.8 (16.1 ) 3.0
Interest expense, net
0.1 0.2 0.1 0.2
Income/(loss) before income taxes
5.7 3.6 (16.3 ) 2.7
Income tax expense/(benefit)
1.2 0.8 (3.9 ) 0.6
Net (loss)/income
4.4 2.7 (12.4 ) 2.1

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	November 1,			November 3,			November 1,			November 3,
	2020			2019			2020			2019
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		77.6			82.0			79.4			81.4
Gross profit		22.4			18.0			20.6			18.6
Selling and administrative expenses		13.3			14.4			15.1			15.1
Goodwill impairment charges		-			-			10.3			-
Trade name impairment charges		-			-			1.2			-
Intangible asset amortization		0.4			0.4			0.5			0.4
Operating income/(loss)		8.7			3.2			(6.5	)		3.1
Other income, net		0.1			0.2			-			-
Interest expense, net		0.1			0.2			0.1			0.2
Income/(loss) before income taxes		8.7			3.2			(6.6	)		2.9
Income tax expense/(benefit)		2.0			0.7			(1.6	)		0.6
Net income/(loss)		6.7			2.5			(4.9	)		2.3

Fiscal 2020 results have been recast based on the re-composition of our reportable segments during the fiscal 2020 fourth quarter. See Note 13 Segment Information for additional details regarding the re-composition of our operating segments.

Fiscal 2021 Third Quarter Compared to Fiscal 2020 Third Quarter

	Net Sales
	Thirteen Weeks Ended
	November 1, 2020					November 3, 2019					$ Change			% Change
			% Net Sales					% Net Sales
Hooker Branded	$	47,287		31.6	%	$	43,703		27.6	%	$	3,584			8.2	%
Home Meridian		73,727		49.3	%		85,776		54.2	%		(12,049	)		-14.0	%
Domestic Upholstery		25,350		16.9	%		25,029		15.9	%		321			1.3	%
All Other		3,323		2.2	%		3,668		2.3	%		(345	)		-9.4	%
Consolidated	$	149,687		100	%	$	158,176		100	%	$	(8,489	)		-5.4	%

Unit Volume	FY21 Q3 % Increase vs. FY20 Q3			Average Selling Price (ASP)	FY21 Q3 % Increase vs. FY20 Q3

Hooker Branded		6.2	%	Hooker Branded		0.9	%
Home Meridian		-20.7	%	Home Meridian		7.9	%
Domestic Upholstery		-3.0	%	Domestic Upholstery		4.7	%
All Other		-10.2	%	All Other		3.4	%
Consolidated		-16.3	%	Consolidated		12.3	%

Table of Contents

~~Fiscal 2021 Second Quarter Compared to Fiscal 2020 Second Quarter~~

Net Sales

Thirteen Weeks Ended

August 2,
2020

August 4,
2019

$ Change

% Change

% Net Sales % Net Sales
Hooker Branded
$ 38,820 29.7 % $ 39,405 25.9 % $ (585 ) -1.5 %
Home Meridian
71,168 54.6 % 87,188 57.3 % (16,020 ) -18.4 %
Domestic Upholstery
17,507 13.4 % 22,663 14.8 % (5,156 ) -22.8 %
All Other
3,042 2.3 % 2,992 2.0 % 50 1.7 %
Consolidated
$ 130,537 100 % $ 152,248 100 % $ (21,711 ) -14.3 %

Unit Volume

FY21 Q2 % Increase
vs. FY20 Q2

Average Selling Price (ASP)

FY21 Q2 % Increase
vs. FY20 Q2

Hooker Branded
-0.6 %
Hooker Branded
-1.4 %
Home Meridian
-14.1 %
Home Meridian
1.0 %
Domestic Upholstery
-17.9 %
Domestic Upholstery
-6.1 %
All Other
3.5 %
All Other
-2.2 %
Consolidated
-12.6 %
Consolidated
1.3 %

Consolidated net sales decreased due primarily to the sales decline in the Home Meridian ~~and Domestic Upholstery segments as a result of significantly reduced~~segment, partially offset by increased net sales ~~volume at those two segments.~~in the Hooker Branded segment.

■

Hooker Branded segment net sales ~~decreased slightly~~increased in the fiscal 2021 ~~second~~third quarter ~~driven by a mid-single digit sales percentage decease in Hooker Casegoods~~ as compared to the prior year period, ~~partially offset by a 12% sales increase at Hooker Upholstery,~~ due to increased unit volume ~~in this division. ASP decreased slightly in Hooker Casegoods division driven by higher discounting on e-commerce~~ and, ~~discontinued product sales. Hooker Upholstery ASP stayed essentially flat.~~to a lesser extent, increased ASP.

■

Net sales decreased in the Home Meridian segment due ~~primarily~~ to ~~sales declines~~inventory availability in the ~~SLH,~~ACH and PFC ~~and SLF~~ divisions, as well as sales decline in the hospitality business which ~~were more adversely~~has been severely impacted by the ~~pandemic,~~pandemic. The decreases were partially offset by increased sales in the ~~ACH and HMIdea divisions which are focused on the e-commerce~~mass merchants and Clubs sales channels. ~~The~~ ASP ~~increase was principally attributable to~~ increased ~~ASP~~ in ~~SLH due to the nature~~four of ~~its projects;~~six divisions; however, it was not ~~sufficient~~enough to offset the ~~severe~~ volume loss in ~~its hospitality business.~~these divisions.

■

Domestic Upholstery segment net sales ~~decreased~~increased due to net sales ~~decline~~increases in the Bradington-Young and Sam Moore divisions, partially offset by lower sales in the Shenandoah division due to reduced unit volume. During the fiscal 2021 third quarter, Bradington-Young and Sam Moore restored operations to full capacity. Shenandoah ramped up production and shipping at a slower pace but was at current full capacity at quarter-end. ASP increased due to increases in the Sam Moore and Shenandoah divisions as their manufacturing plants were temporarily idled in April and reopened at a slower pace in the fiscal 2021 second quarter. Net sales and unit volume decreased by over 20% in these two divisions. The Sam Moore division restored operations to 80% capacity and reported a lower single digit net sales decreasewell as ~~compared to the prior year period. Domestic Upholstery segment ASP decreased due to a lower ratio~~increased mix of higher-priced Bradington-Young leather products.

■

All Other net sales ~~increased 1.7%~~decreased by 9.4% in the fiscal 2021 ~~second quarter. Both H Contract and Lifestyle Brands reported increased net sales, driven by increased~~third quarter as compared to the prior year period due principally to decreased unit volume in ~~both divisions, partially offset by~~ H Contract, ~~decreased ASP.~~which was adversely impacted by the pandemic.

Gross Income and Margin

Thirteen Weeks Ended

August 2,
2020

August 4,
2019

$ Change

% Change

% Net Sales % Net Sales
Hooker Branded
$ 12,443 32.1 % $ 11,820 30.0 % $ 623 5.3 %
Home Meridian
10,510 14.8 % 10,951 12.6 % (441 ) -4.0 %
Domestic Upholstery
3,021 17.3 % 4,917 21.7 % (1,896 ) -38.6 %
All Other
1,026 33.7 % 1,138 38.0 % (112 ) -9.8 %
Consolidated
$ 27,000 20.7 % $ 28,826 18.9 % $ (1,826 ) -6.3 %

	Gross Income and Margin
	Thirteen Weeks Ended
	November 1, 2020					November 3, 2019					$ Change			% Change
			% Net Sales					% Net Sales
Hooker Branded	$	15,446		32.7	%	$	13,947		31.9	%	$	1,499			10.7	%
Home Meridian		11,169		15.1	%		7,286		8.5	%		3,883			53.3	%
Domestic Upholstery		5,751		22.7	%		5,847		23.4	%		(96	)		-1.6	%
All Other		1,117		33.6	%		1,319		36.0	%		(202	)		-15.3	%
Consolidated	$	33,483		22.4	%	$	28,399		18.0	%	$	5,084			17.9	%

~~Table of Contents~~

Consolidated gross profit ~~decreased~~increased in absolute terms and ~~increased~~ as a percentage of net sales due primarily to increased gross margin in the Home Meridian segment and to a lesser in the Hooker Branded segment in the fiscal 2021 ~~second~~third quarter as compared to the prior year period.

Consolidated selling and administrative (“S&A”) expenses decreased in absolute terms and as a percentage of net sales in the fiscal 2021 ~~second~~third quarter as compared to prior year period.

Intangible asset amortization expense stayed the same compared to the prior year ~~second~~third quarter.

Operating ~~income~~profit increased in absolute terms and as a percentage of net sales, due to the factors discussed above.

Consolidated interest expense decreased in fiscal 2021 ~~second~~third quarter primarily due to lower interest rates on our variable-rate term loans, as well as lower principal balances.

Consolidated net sales decreased due to significantly reduced sales volume in all three reportable segments as compared to the prior year period. Much of the unit volume decline in all segments is attributable to order cancelations and reduced ordering by our customers in immediate response to the COVID-19 pandemic, which caused many of our customers, particularly traditional furniture retailers which were deemed non-essential businesses, to face state-mandated temporary store closures to help reduce the spread of COVID-19.

Consolidated gross profit decreased in absolute terms ~~while~~but increased as a percentage of net sales in the fiscal 2021 first ~~half~~nine months versus the prior year period.

Consolidated S&A expenses decreased in absolute terms but ~~increased~~stayed unchanged as a percentage of net sales in the fiscal 2021 first ~~half~~nine months versus the prior year period.

In the first quarter of fiscal 2021, we recorded $23.2 million and $16.4 million in non-cash impairment charges to write down goodwill in the Home Meridian segment and the Shenandoah division ~~under~~of the Domestic Upholstery segment, respectively. We also recorded $4.8 million in non-cash impairment charges to write down tradenames in the Home Meridian segment.

Intangible asset amortization expense stayed the same compared to the prior year first ~~half.~~nine months.

Operating profitability decreased in absolute terms and as a percentage of net sales, due to the factors discussed above.

Consolidated interest expense decreased in the fiscal 2021 first ~~half~~nine months primarily due to lower interest rates on our variable-rate term loans, as well as lower principal balances.

We recorded income tax benefit of ~~$9.3~~$6.3 million for the fiscal 2021 first ~~half,~~nine months, of which $10.7 million was recorded related to goodwill and trade name impairment charges, compared to ~~$1.8~~$2.8 million income tax expense for the comparable prior year period. The effective tax rates for the fiscal 2021 and 2020 first ~~half~~nine months periods were ~~24.2%~~24.8% and ~~22.3%~~21.9%, respectively.

~~Given~~As we head into the ~~strong~~fourth quarter and next fiscal year, we are encouraged by our significant backlog and robust demand ~~we have seen since mid-May and with backlogs up 35% as~~from all residential channels. We believe that furniture will be an advantaged sector of the ~~end of the second quarter, we are entering the fall selling season with momentum and optimism. We believe there are several positive factors in play such as pent-up demand, more~~economy, benefitting from a renewed consumer focus on the home, ~~environments~~a strong housing market and less ~~competition for~~ discretionary ~~consumer~~ spending competition from travel, dining out and ~~sporting events. The factors noted above have currently positioned home furnishings~~entertainment.

Currently, supply chain bottlenecks in an environment of surging demand are our greatest business challenge. Limitations on supply include scarcity of some raw materials and components, limited availability of shipping containers and ocean vessel space and production delays from some import suppliers. We are making progress with these challenges, as ~~an advantaged category~~our overseas suppliers and own factories ramp up production to allow us to begin to meet the strong demand. However, we ~~are well-positioned~~expect short-term unfavorable impacts to ~~capitalize on that.~~our fiscal 2021 fourth quarter sales and earnings, especially in our Home Meridian segment.

We are concerned about the human and economic toll of COVID-19, both currently and prospectively, especially the recent surge in COVID infections and hospitalizations. We continue to maintain rigorous safety protocols in all our workplaces and are encouraged that we have had essentially no workplace spread in any location thus far.

Despite these challenges, as we look forward to the ~~possibility of additional surges of~~next two to three quarters, we are optimistic and believe we have the ~~virus may delay re-openings~~backlog, order velocity and ~~have adverse effects in certain regions or states and consequently on demand for~~momentum to deliver strong results when our ~~products. Barring a second nationwide or large-scale lock-down, we expect business to improve in the second half of the fiscal year.~~supply chain challenges subside. However, we have limited visibility of how the economic and health crises may fluctuate in the coming ~~months and face headwinds of substantial unemployment, continuing social unrest and general uncertainty.~~months.

We remain in exceptional financial condition with a strong balance sheet. As of the end of our fiscal 2021 ~~second~~third quarter, our cash position was ~~$82.2~~nearly $94 million, an increase of ~~$46~~about $58 million over the end of the 2020 fiscal year on February 2, 2020. Additionally, we have access to about $26 million under our existing revolver to fund working capital requirements and to an additional $25 million in cash surrender value of Company-owned life insurance policies. While we expect our cash balances to decline somewhat over the remainder of the year as we rebuild inventories and as trade receivables ~~increase-~~increase, both to accommodate increased ~~sales-~~sales, we expect our liquidity to be sufficient.

Discussions with lenders to refinance our credit facility which expires in February 2021 ~~have begun~~are nearing completion and we expect to be successful in refinancing our debt; however, we believe we have ~~sufficient~~enough financial resources to continue to operate effectively even without refinancing our debt. Due to our strong cash position and expected working capital needs, we expect to pay off the balance of our term loans on or before closing of the New Credit Facility. If we were unable to enter into the new credit facility, we believe we have enough cash on hand to pay off our term loans and fund our operations in the near future. We expect to continue managing cash and spending cautiously as we move through the coming months.

We face ~~a number of~~many significant risks and uncertainties, as more fully discussed in Item 1A, “Risk Factors” in our 2020 Annual Report.

During the ~~six~~nine months ended ~~August 2,~~November 1, 2020, we used a portion of the ~~$53.2~~$67.6 million cash generated from operations and ~~$673,000~~$1.5 million life insurance proceeds to pay ~~$3.8~~$5.7 million in cash dividends, ~~$3.2~~$4.8 million in principal and interest payments on our term loans, $642,000 to enhance our business systems and ~~$453,000~~facilities, and $519,000 in life insurance premiums on Company-owned life insurance policies.

In comparison, during the ~~six~~nine months ended ~~August 4,~~November 3, 2019, we used some of the ~~$11.0~~$26.6 million of cash generated from operations and $1.4 million of proceeds on a note receivable to pay for ~~$3.7~~$5.3 million in cash dividends, $4.7 million of capital expenditures to expand our domestic manufacturing capacities and to enhance our business systems and facilities, ~~$3.5~~$4.4 million in ~~cash dividends, $2.9 million in long-term debt~~term loans payments, and ~~$489,000~~$558,000 in life insurance premiums.

We believe these resources are sufficient to meet our business requirements through fiscal 2021 and for the foreseeable future, including:

We currently have one unsecured term loan and one secured term loan outstanding and a revolving credit facility. The term loans are related to the ~~Home Meridian~~HMI acquisition. Details of our loan agreements and revolving credit facility are outlined below.

On February 1, 2016, we entered into an amended and restated loan agreement (the “Original Loan Agreement”) with Bank of America, N.A. (“BofA”) in connection with the closing of the Home Meridian acquisition. Also, on February 1, 2016, we borrowed in full the amounts available under the Unsecured Term Loan (the “Unsecured Term Loan”) and the Secured Term Loan (the “Secured Term Loan”) in connection with the completion of the ~~Home Meridian~~HMI acquisition.

Details of the individual credit facilities referenced in the Original Loan Agreement are as follows:

On September 29, 2017, we entered into a second amended and restated loan agreement (the “New Loan Agreement”) with BofA in connection with the completion of the Shenandoah acquisition. The New Loan Agreement:

The New Loan Agreement also included customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:

The New Loan Agreement also limits our right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions. The New Loan Agreement does not restrict our ability to pay cash dividends on, or repurchase shares of our common stock, subject to our compliance with the financial covenants discussed above, if we are not otherwise in default under the New Loan Agreement. We paid off the New Unsecured Term Loan in fiscal 2019.

We were in compliance with each of these financial covenants at ~~August 2,~~November 1, 2020 and expect to remain in compliance with existing covenants for the foreseeable future. We believe we have the financial resources to weather the expected short-term impacts of COVID-19; however, an extended impact may materially and adversely affect our sales, earnings and liquidity.

As of ~~August 2,~~November 1, 2020, ~~$10.1~~$8.6 million was outstanding under the Unsecured Term Loan, and $17.1 million was outstanding under the Secured Term Loan.

As of ~~August 2,~~November 1, 2020, we had an aggregate $25.7 million available under our revolving credit facility to fund working capital needs. Standby letters of credit in the aggregate amount of $4.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of ~~August 2,~~November 1, 2020. There were no additional borrowings outstanding under the revolving credit facility as of ~~August 2,~~November 1, 2020.

On November 4, 2020, we entered the Second Amendment to the Second Amended and Restated Loan Agreement to amend certain provisions of the Existing Loan Agreement. The following provisions of the Existing Loan Agreement are amended as: the Bank may from time to time issue letters of credit for the Company; the amount of any letters of credit outstanding at any one time (including the drawn and unreimbursed amounts of the letters of credit) may not exceed $10 million in the aggregate.

Expected ~~Refinancing~~New Credit Facility and Term Loan Payoff in Fiscal 2021

All amounts outstanding on our term loans and revolving credit facility are due and payable on the first day of fiscal 2022, February 1, 2021 and discussions with lenders about refinancing are ~~underway.~~concluding. We expect to enter into a new credit facility on or before the expiration of the current agreement. Due to our strong cash position and expected working capital needs, we expect to pay off the balance of our term loans on or before closing of the New Credit Facility. In the unlikely event that we are unable to enter into the new credit facility as expected, we believe we have enough cash on hand to pay off our term loans and fund our operations in the near future.

Given current market dynamics, ~~we expect~~ credit tocould be more costly than our current lending arrangements. If the negative economic effects of COVID-19 persist or further deteriorate, it would likely have a material adverse effect on our sales, earnings and liquidity. Consequently, our credit rating may decrease, or the availability of loans may be limited and refinancing our debt may be more difficult and loans more costly. Irrespective of our success in refinancing these loans, we believe we could pay them off and have sufficient liquidity for working capital needs thanks to our strong cash position and access to cash surrender value of Company-owned life insurance.

Prior to the COVID-19 crisis, we expected to spend between $2.5 million to $4.5 million for capital projects in fiscal 2021 to maintain and enhance our operating systems and facilities. However, due to the negative economic effects of COVID-19, we have delayed indefinitely about $3 million in non-critical capital spending. We expect to spend ~~between~~about $500,000 ~~to $1.0 million in~~during the remainder of the 2021 fiscal year to maintain and enhance our operating systems and facilities.

During the fiscal 2021 first quarter, we initiated certain measures to reduce operating expenses and preserve cash which include temporary fee reductions for our Board of Directors, temporary salary reductions for officers and certain other managers, strategic staff reductions, the temporary closure of our domestic manufacturing plants and the furlough of manufacturing, warehouse and administrative associates. We also delayed all non-critical capital spending, rationalized our import purchase orders and accepted certain accommodations from our vendors to cut costs and extend payment terms where possible.

While we continue to spend cautiously, business has improved steadily beginning in May 2020 and we’ve seen greatly increased demand for our products. Consequently, during the 2021 second quarter, our domestic manufacturing plants reopened and are currently operating ~~near~~at current capacity. ~~Most~~During the fiscal 2021 third quarter, temporary salary and fee reductions were rescinded and as of early December 2020 furloughs of our associates have ~~ended and temporary salary and fee reductions have been rescinded.~~ended. We are in the process of re-building inventory to meet increased customer demand.

As of the end of our fiscal 2021 ~~second~~third quarter of ~~August 2,~~November 1, 2020, our cash position had increased by ~~$46.2~~about $58 million over the end of the 2020 fiscal year on February 2, 2020. We expect these cash balances to decrease as we build inventories to meet increased customer ~~demand.~~demand and pay off the balance of our term loans.

We expect our low fixed cost business model, which served us well during the Great Recession, to help us navigate the current disruption. Our cash position has remained strong and has continued to improve since our fiscal year-end in early February, with additional availability under our revolving credit facility if needed. Consequently, while we are confident in our future and are proud of our fifty-plus year history of consistently paying dividends, we have limited visibility into future economic conditions. The Board will continue to evaluate the appropriateness of the current dividend rate considering our performance and economic conditions in future quarters.

Except as discussed below, there have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2020 Annual Report.

On the first day of the current fiscal year, we adopted the accounting standards outlined in Part 1, Notes to Condensed Consolidated Financial Statements, “Note 2. Recently Adopted Accounting Policies” (“Note 2”). See Note 2 for additional information related to the impact of adopting these accounting standards.

We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes, raw materials price risk and changes in foreign currency exchange rates, which could impact our results of operations or financial condition. We manage our exposure to this risk through our normal operating activities.

Borrowings under our revolving credit facility and the Unsecured Term Loan bear interest based on LIBOR plus 1.5% and borrowings under the Secured Term Loan bear interest based on LIBOR plus 0.5%. As such, these debt instruments expose us to market risk for changes in interest rates. There was no outstanding balance under our revolving credit facility as of ~~August 2,~~November 1, 2020, other than standby letters of credit in the amount of $4.3 million; however, as of ~~August 2,~~November 1, 2020, ~~$27.2~~$25.7 million was outstanding under our term loans. A 1% increase in the LIBOR rate would result in an annual increase in interest expenses on our terms loans of approximately ~~$128,000.~~$62,000.

We are exposed to market risk from changes in the cost of raw materials used in our domestic upholstery manufacturing processes; principally, wood, leather, fabric and foam products. Increases in home construction activity could result in increases in wood and fabric costs. Additionally, the cost of petroleum-based foam products we utilize are sensitive to crude oil prices, which vary due to supply, demand and geo-political factors.

For imported products, we generally negotiate firm pricing denominated in U.S. Dollars with our foreign suppliers, typically for periods of at least one year. We accept the exposure to exchange rate movements beyond these negotiated periods. We do not use derivative financial instruments to manage this risk but could choose to do so in the future. Most of our imports are purchased from suppliers located in Vietnam and China. The Chinese currency floats within a limited range in relation to the U.S. Dollar, resulting in exposure to foreign currency exchange rate fluctuations.

Since we transact our imported product purchases in U.S. Dollars, a relative decline in the value of the U.S. Dollar could increase the price we pay for imported products beyond the negotiated periods. We generally expect to reflect substantially all of the effect of any price increases from suppliers in the prices we charge for imported products. However, these changes could adversely impact sales volume or profit margins during affected periods.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended ~~August 2,~~November 1, 2020. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective as of ~~August 2,~~November 1, 2020 to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There have been no changes in our internal control over financial reporting during the fiscal quarter ended ~~August 2,~~November 1, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	As of August 2,					As of February 2,
	2020		%Total			2020		%Total
Identifiable Assets			Assets					Assets
Hooker Branded	$	189,816		57.6	%	$	144,112		45.0	%
Home Meridian		93,216		28.3	%		138,313		43.2	%
Domestic Upholstery		45,485		13.7	%		36,085		11.3	%
All Other		1,242		0.4	%		1,769		0.5	%
Consolidated	$	329,759		100.0	%	$	320,279		100.0	%
Consolidated Goodwill and Intangibles		27,919					73,429
Total Consolidated Assets	$	357,678				$	393,708

	As of November 1,					As of February 2,
	2020		%Total			2020		%Total
Identifiable Assets			Assets					Assets
Hooker Branded	$	201,158		58.8	%	$	144,112		45.0	%
Home Meridian		91,547		26.8	%		138,313		43.2	%
Domestic Upholstery		47,775		14.0	%		36,085		11.3	%
All Other		1,454		0.4	%		1,769		0.5	%
Consolidated	$	341,934		100.0	%	$	320,279		100.0	%
Consolidated Goodwill and Intangibles		27,323					73,429
Total Consolidated Assets	$	369,257				$	393,708

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		0			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			0
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		0			24,282
Deferred compensation		11,235			11,382
Lease liabilities		32,411			33,794
Other long-term liabilities		538			0
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

	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		189,480			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		0		0		39,568			0
Trade name impairment charges		0		0		4,750			0
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

	Fair value at August 2, 2020								Fair value at February 2, 2020
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Assets measured at fair value
Company-owned life insurance	$	0	$	24,904	$	0	$	24,904	$	0	$	24,888	$	0	$	24,888

		Twenty-Six Weeks Ended August 2, 2020							February 2, 2020
Non-amortizable Intangible Assets	Segment	Beginning Balance		Impairment Charges			Net Book Value		Beginning Balance		Impairment Charges		Net Book Value
Goodwill	Home Meridian	$	23,187	$	(23,187	)	$	0	$	23,187	$	0	$	23,187
Goodwill	Domestic Upholstery		16,871		(16,381	)		490		16,871		0		16,871
Total Goodwill			40,058		(39,568	)		490		40,058		0		40,058

Trademarks and trade names - Home Meridian	Home Meridian		11,400		(4,750	)		6,650		11,400		0		11,400
Trademarks and trade names - Bradington-Young	Domestic Upholstery		861		0			861		861		0		861
Trademarks and trade names - Sam Moore	Domestic Upholstery		396		0			396		396		0		396
Total Trademarks and trade names		$	12,657	$	(4,750	)	$	7,907	$	12,657	$	0	$	12,657

Total non-amortizable assets		$	52,715	$	(44,318	)	$	8,397	$	52,715	$	0	$	52,715

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	August 2, 2020		August 4, 2019		August 2, 2020		August 4, 2019
Operating lease cost	$	2,153	$	2,123	$	4,253	$	4,200
Variable lease cost		22		0		69		0
Short-term lease cost		67		178		186		291
Total operating lease cost	$	2,242	$	2,301	$	4,508	$	4,491

Operating cash outflows	$	1,931	$	1,948	$	3,833	$	4,334

	Undiscounted Future Operating Lease Payments
Remainder of 2020	$	3,947
2021		7,451
2022		5,671
2023		5,726
2024		5,280
2025 and thereafter		15,205
Total lease payments	$	43,280
Less: impact of discounting		(4,025	)
Present value of lease payments	$	39,255

	Net Sales (in thousands)
	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	November 1, 2020		%Total			November 3, 2019		%Total			November 1, 2020		%Total			November 3, 2019		%Total
Casegoods	$	91,457		61	%	$	105,018		66	%	$	234,905		61	%	$	288,470		65	%
Upholstery		58,230		39	%		53,158		34	%		149,916		39	%		157,472		35	%
	$	149,687		100	%	$	158,176		100	%	$	384,821		100	%	$	445,942		100	%

	Net Sales
	Thirteen Weeks Ended
	August 2, 2020					August 4, 2019					$ Change			% Change
			% Net Sales					% Net Sales
Hooker Branded	$	38,820		29.7	%	$	39,405		25.9	%	$	(585	)		-1.5	%
Home Meridian		71,168		54.6	%		87,188		57.3	%		(16,020	)		-18.4	%
Domestic Upholstery		17,507		13.4	%		22,663		14.8	%		(5,156	)		-22.8	%
All Other		3,042		2.3	%		2,992		2.0	%		50			1.7	%
Consolidated	$	130,537		100	%	$	152,248		100	%	$	(21,711	)		-14.3	%

Unit Volume	FY21 Q2 % Increase vs. FY20 Q2			Average Selling Price (ASP)	FY21 Q2 % Increase vs. FY20 Q2

Hooker Branded		-0.6	%	Hooker Branded		-1.4	%
Home Meridian		-14.1	%	Home Meridian		1.0	%
Domestic Upholstery		-17.9	%	Domestic Upholstery		-6.1	%
All Other		3.5	%	All Other		-2.2	%
Consolidated		-12.6	%	Consolidated		1.3	%

	Selling and Administrative Expenses (S&A)
	Thirteen Weeks Ended
	August 2, 2020					August 4, 2019					$ Change			% Change
			% Net Sales					% Net Sales
Hooker Branded	$	6,353		16.4	%	$	7,732		19.6	%	$	(1,379	)		-17.8	%
Home Meridian		9,094		12.8	%		10,683		12.3	%		(1,589	)		-14.9	%
Domestic Upholstery		2,769		15.8	%		3,395		15.0	%		(626	)		-18.4	%
All Other		676		22.2	%		652		21.8	%		24			3.7	%
Consolidated	$	18,892		14.5	%	$	22,462		14.8	%	$	(3,570	)		-15.9	%

	Operating Profit / (loss) and Margin
	Thirteen Weeks Ended
	August 2, 2020						August 4, 2019						$ Change			% Change
				% Net Sales						% Net Sales
Hooker Branded	$	6,090			15.7	%	$	4,088			10.4	%	$	2,002			49.0	%
Home Meridian		1,083			1.5	%		(66	)		-0.1	%		1,149			1740.9	%
Domestic Upholstery		(10	)		-0.1	%		1,260			5.6	%		(1,270	)		-100.8	%
All Other		349			11.5	%		486			16.3	%		(137	)		-28.2	%
Consolidated	$	7,512			5.8	%	$	5,768			3.8	%	$	1,744			30.2	%

	Operating Profit/(Loss) and Margin
	Thirteen Weeks Ended
	November 1, 2020					November 3, 2019						$ Change			% Change
			% Net Sales						% Net Sales
Hooker Branded	$	7,686		16.3	%	$	6,188			14.2	%	$	1,498			24.2	%
Home Meridian		2,510		3.4	%		(3,955	)		-4.6	%		6,465			163.5	%
Domestic Upholstery		2,421		9.6	%		2,278			9.1	%		143			6.3	%
All Other		420		12.6	%		482			13.2	%		(62	)		-12.9	%
Consolidated	$	13,037		8.7	%	$	4,993			3.2	%	$	8,044			161.1	%

	Income taxes
	Thirteen Weeks Ended
	August 2, 2020						August 4, 2019						$ Change		% Change
				% Net Sales						% Net Sales
Consolidated income tax expense	$	1,610			1.2	%	$	1,248			0.8	%	$	362		29.0	%

Effective Tax Rate		21.8	%					23.1	%

Unit Volume	FY21 YTD % Increase vs. FY20 YTD			Average Selling Price (ASP)	FY21 YTD % Increase vs. FY20 YTD

Hooker Branded		-9.6	%	Hooker Branded		1.4	%
Home Meridian		-17.7	%	Home Meridian		4.1	%
Domestic Upholstery		-17.3	%	Domestic Upholstery		-1.2	%
All Other		-4.5	%	All Other		1.2	%
Consolidated		-16.5	%	Consolidated		4.1	%

Unit Volume	FY21 YTD % Increase vs. FY20 YTD			Average Selling Price (ASP)	FY21 YTD % Increase vs. FY20 YTD

Hooker Branded		-18.3	%	Hooker Branded		1.7	%
Home Meridian		-15.9	%	Home Meridian		2.0	%
Domestic Upholstery		-24.7	%	Domestic Upholstery		-5.4	%
All Other		-1.0	%	All Other		-0.1	%
Consolidated		-16.7	%	Consolidated		-0.5	%

	Goodwill impairment charges
	Twenty-Six Weeks Ended
	August 2, 2020					August 4, 2019					$ Change		% Change
			% Net Sales					% Net Sales
Home Meridian	$	23,187		18.0	%	$	-		0.0	%	$	23,187
Domestic Upholstery		16,381		47.8	%		-		0.0	%		16,381
Consolidated		39,568		16.8	%		-					39,568

	Operating (Loss)/Profit and Margin
	Twenty-Six Weeks Ended
	August 2, 2020						August 4, 2019						$ Change			% Change
				% Net Sales						% Net Sales
Hooker Branded	$	7,423			11.2	%	$	9,265			11.7	%	$	(1,842	)		-19.9	%
Home Meridian		(29,265	)		-22.7	%		(5,059	)		-3.3	%		(24,206	)		-478.5	%
Domestic Upholstery		(16,820	)		-49.1	%		3,552			7.4	%		(20,372	)		573.5	%
All Other		736			12.2	%		915			15.4	%		(179	)		-19.6	%
Consolidated	$	(37,926	)		-16.1	%	$	8,673			3.0	%	$	(46,599	)		-537.3	%

	Twenty-Six Weeks Ended
	August 2,			August 4,
	2020			2019
Net cash provided by operating activities	$	53,168		$	11,012
Net cash used in investing activities		(264	)		(2,689	)
Cash used in financing activities		(6,725	)		(6,469	)
Net increase in cash and cash equivalents	$	46,179		$	1,854

3.1	Amended and Restated Articles of Incorporation of the Company, as amended March 28, 2003 (incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q (SEC File No. 000-25349) for the quarter ended February 28, 2003)

3.2	Amended and Restated Bylaws of the Company, as amended December 10, 2013 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K (SEC File No. 000-25349) for the year ended February 2, 2014)

4.1	Amended and Restated Articles of Incorporation of the Company, as amended (See Exhibit 3.1)

4.2	Amended and Restated Bylaws of the Company, as amended (See Exhibit 3.2)

10.1	Second Amendment to the Second Amended and Restated Loan Agreement, dated as of November 4, 2020, between Bank of America, N.A. and Hooker Furniture Corporation, a Virginia corporation, Bradington-Young, LLC, a Virginia limited liability company, Sam Moore Furniture LLC, a Virginia limited liability company, and Home Meridian Group, LLC, a Virginia limited liability company.

31.1*	Rule 13a-14(a) Certification of the Company’s principal executive officer

31.2*	Rule 13a-14(a) Certification of the Company’s principal financial officer

32.1**	Rule 13a-14(b) Certification of the Company’s principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*	The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~August 2,~~November 1, 2020, formatted in Inline Extensible Business Reporting Language (“XBRL”): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statements of cash flows, and (v) the notes to the condensed consolidated financial statements

104	Cover page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

		HOOKER FURNITURE CORPORATION

Date: December 10, 2020
~~Date: September 9, 2020~~	By:	/s/Paul A. Huckfeldt
			Paul A. Huckfeldt Chief Financial Officer and Senior Vice President – Finance and Accounting