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 ~~April 30,~~October 29, 2023

Commission file number 000-25349

HOOKER FURNISHINGS 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 ~~June 2,~~December 1, 2023, there were ~~10,916,369~~10,671,812 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	1718

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2830

Item 4.	Controls and Procedures	2831

PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2932

Item 5.	Other Information	32

Item 6.	Exhibits	2933

Signature		3034

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

~~HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

As of	April 30,		January 29,		October 29,		January 29,
	2023		2023		2023		2023
	(unaudited)				(unaudited)
Assets
Current assets
Cash and cash equivalents	$	30,976	$	19,002	$	39,795	$	19,002
Trade accounts receivable, net		54,528		62,129		59,065		62,129
Inventories		73,188		96,675		65,156		96,675
Income tax recoverable		2,985		3,079		3,073		3,079
Prepaid expenses and other current assets		7,551		6,418		5,934		6,418
Total current assets		169,228		187,303		173,023		187,303
Property, plant and equipment, net		29,070		27,010		29,079		27,010
Cash surrender value of life insurance policies		27,899		27,576		28,264		27,576
Deferred taxes		14,208		14,484		11,959		14,484
Operating leases right-of-use assets		66,806		68,949		54,202		68,949
Intangible assets, net		30,895		31,779		29,547		31,779
Goodwill		14,952		14,952		15,036		14,952
Other assets		11,010		9,663		13,388		9,663
Total non-current assets		194,840		194,413		181,475		194,413
Total assets	$	364,068	$	381,716	$	354,498	$	381,716

Liabilities and Shareholders’ Equity
Current liabilities
Current portion of long-term debt	$	1,393	$	1,393	$	1,393	$	1,393
Trade accounts payable		15,991		16,090		23,294		16,090
Accrued salaries, wages and benefits		5,743		9,290		6,716		9,290
Customer deposits		6,582		8,511		5,033		8,511
Current portion of lease liabilities		7,363		7,316
Current portion of operating lease liabilities						7,045		7,316
Other accrued expenses		2,685		7,438		3,135		7,438
Total current liabilities		39,757		50,038		46,616		50,038
Long term debt		22,526		22,874		21,829		22,874
Deferred compensation		8,022		8,178		7,737		8,178
Operating lease liabilities		61,877		63,762		49,651		63,762
Other long-term liabilities		855		843		877		843
Total long-term liabilities		93,280		95,657		80,094		95,657
Total liabilities		133,037		145,695		126,710		145,695

Shareholders’ equity
Common stock, no par value, 20,000 shares authorized, 11,029 and 11,197 shares issued and outstanding on each date		50,067		50,770
Common stock, no par value, 20,000 shares authorized, 10,672 and 11,197 shares issued and outstanding on each date						49,503		50,770
Retained earnings		180,152		184,386		177,579		184,386
Accumulated other comprehensive income		812		865		706		865
Total shareholders’ equity		231,031		236,021		227,788		236,021
Total liabilities and shareholders’ equity	$	364,068	$	381,716	$	354,498	$	381,716

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

Table of Contents

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	For the				For the
	Thirteen Weeks Ended				Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	April 30,		May 1,		October 29,		October 30,		October 29,		October 30,
	2023		2022		2023		2022		2023		2022

Net sales	$	121,815	$	147,314	$	116,831	$	151,580	$	336,452	$	451,803

Cost of sales		93,909		117,855		83,121		119,572		251,495		359,281

Gross profit		27,906		29,459		33,710		32,008		84,957		92,522

Selling and administrative expenses		25,048		24,658		24,016		24,712		70,207		72,255
Intangible asset amortization		883		878		924		878		2,732		2,634

Operating income		1,975		3,923		8,770		6,418		12,018		17,633

Other income, net		56		278		659		191		1,071		425
Interest expense, net		179		28		364		434		1,197		546

Income before income taxes		1,852		4,173		9,065		6,175		11,892		17,512

Income tax expense		402		991		2,027		1,334		2,620		3,946

Net income	$	1,450	$	3,182	$	7,038	$	4,841	$	9,272	$	13,566

Earnings per share
Basic	$	0.13	$	0.27	$	0.66	$	0.42	$	0.85	$	1.16
Diluted	$	0.13	$	0.26	$	0.65	$	0.42	$	0.85	$	1.14

Weighted average shares outstanding:
Basic		10,976		11,866		10,536		11,465		10,748		11,736
Diluted		11,077		11,949		10,676		11,525		10,878		11,838

Cash dividends declared per share	$	0.22	$	0.20	$	0.22	$	0.20	$	0.66	$	0.60

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

Table of Contents

~~HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(In thousands)~~

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	For the						For the
	Thirteen Weeks Ended						Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	April 30,			May 1,			October 29,			October 30,			October 29,			October 30,
	2023			2022			2023			2022			2023			2022

Net income	$	1,450		$	3,182		$	7,038		$	4,841		$	9,272		$	13,566
Other comprehensive income:
Amortization of actuarial (loss) / gain		(70	)		(18	)
Amortization of actuarial (gain)/loss								(70	)		21			(209	)		62
Income tax effect on amortization		17			4			17			(5	)		50			(15	)
Adjustments to net periodic benefit cost		(53	)		(14	)		(53	)		16			(159	)		47

Total comprehensive income	$	1,397		$	3,168		$	6,985		$	4,857		$	9,113		$	13,613

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

Table of Contents

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the						For the
	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	April 30,			May 1,			October 29,			October 30,
	2023			2022			2023			2022
Operating Activities:
Net income	$	1,450		$	3,182		$	9,272		$	13,566
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation and amortization		2,147			2,287			6,626			6,578
Deferred income tax expense		293			1,838			2,575			1,650
Noncash restricted stock and performance awards		371			354			1,685			1,323
Provision for doubtful accounts and sales allowances		37			(349	)		(270	)		(3,831	)
Gain on life insurance policies		(634	)		(568	)		(784	)		(744	)
Loss/(Gain) on disposal of assets								29			-
Changes in assets and liabilities:
Trade accounts receivable		7,564			(7,386	)		3,334			3,069
Inventories		23,487			(30,082	)		33,264			(56,343	)
Income tax recoverable		93			(762	)		5			2,357
Prepaid expenses and other assets		(2,080	)		(4,145	)		(3,400	)		(5,863	)
Trade accounts payable		(240	)		10,493			7,169			(1,522	)
Accrued salaries, wages, and benefits		(3,547	)		(1,827	)		(2,574	)		936
Customer deposits		(1,928	)		(906	)		(3,477	)		(1,277	)
Operating lease assets and liabilities		305			(168	)		366			(238	)
Other accrued expenses		(4,743	)		(1,830	)		(4,400	)		(391	)
Deferred compensation		(225	)		(149	)		(650	)		(419	)
Net cash provided by/(used in) operating activities	$	22,350		$	(30,018	)	$	48,770		$	(41,149	)

Investing Activities:
Acquisitions		-			(25,912	)		(2,373	)		(25,912	)
Purchases of property and equipment		(3,158	)		(830	)		(5,718	)		(3,469	)
Premiums paid on life insurance policies		(107	)		(118	)		(378	)		(464	)
Proceeds received on life insurance policies								444			-
Net cash used in investing activities		(3,265	)		(26,860	)		(8,025	)		(29,845	)

Financing Activities:
Purchase and retirement of common stock		(4,317	)		-			(11,674	)		(9,359	)
Cash dividends paid								(7,228	)		(7,117	)
Payments for long-term loans		(350	)		-			(1,050	)		(350	)
Cash dividends paid		(2,444	)		(2,388	)
Cash used in financing activities		(7,111	)		(2,388	)
Proceeds from long-term loans								-			25,000
Proceeds from revolving credit facility								-			36,190
Payments for revolving credit facility								-			(36,190	)
Debt issuance cost								-			(38	)
Net cash (used in)/provided by financing activities								(19,952	)		8,136

Net increase/(decrease) in cash and cash equivalents		11,974			(59,266	)		20,793			(62,858	)
Cash and cash equivalents - beginning of year		19,002			69,366			19,002			69,366
Cash and cash equivalents - end of quarter	$	30,976		$	10,100		$	39,795		$	6,508

Supplemental disclosure of cash flow information:
Cash paid/(refund) for income taxes	$	16		$	(85	)	$	74		$	(1	)
Cash paid for interest, net		202			-			1,375			293

Non-cash transactions:
Increase in lease liabilities arising from changes in right-of-use assets	$	-		$	3,689
(Decrease)/Increase in lease liabilities arising from changes in right-of-use assets							$	(8,987	)	$	7,402
Increase in property and equipment through accrued purchases		145			47			35			112

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

Table of Contents

~~HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

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

HOOKER FURNISHINGS 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 January 30, 2022
11,922 $ 53,295 $ 207,884 $ (51 ) $ 261,128
Net income
3,182 3,182
Unrealized loss on defined benefit plan, net of tax of $4
(14 ) (14 )
Cash dividends paid and accrued ($0.20 per share)
(2,388 ) (2,388 )
Restricted stock grants, net of forfeitures
80 (96 ) (96 )
Restricted stock compensation cost
296 296
Performance-based restricted stock units costs
154 154
      Balance at May 1, 2022
12,002 $ 53,649 $ 208,678 $ (65 ) $ 262,262

      Balance at January 29, 2023
11,197 $ 50,770 $ 184,386 $ 865 $ 236,021
Net income
1,450 1,450
Unrealized loss on defined benefit plan, net of tax of $17
(53 ) (53 )
Cash dividends paid and accrued ($0.22 per share)
(2,444 ) (2,444 )
Purchase and retirement of common stock
(227 ) $ (1,081 ) (3,240 ) (4,321 )
Restricted stock grants, net of forfeitures
59 (150 ) (150 )
Restricted stock compensation cost
335 335
Performance-based restricted stock units costs
193 193
      Balance at April 30, 2023
11,029 $ 50,067 $ 180,152 $ 812 $ 231,031

Accumulated

Other

Total

Common Stock

Retained

Comprehensive

Shareholders'

Shares

Amount

Earnings

Income (loss)

Equity

Balance at July 31, 2022
11,959 $ 53,853 $ 210,994 $ (19 ) $ 264,828
Net income for the 13 weeks ended October 30, 2022
4,841 4,841
Unrealized loss on defined benefit plan, net of tax of $5
15 15
Cash dividends paid ($0.20 per share)
(2,323 ) (2,323 )
Purchase and retirement of common stock
(530 ) $ (2,436 ) (5,787 ) (8,223 )
Restricted stock grants, net of forfeitures
(8 ) - -
Restricted stock compensation cost
297 297
Performance-based restricted stock units cost
154 154
Balance at October 30, 2022
11,421 $ 51,868 $ 207,725 $ (4 ) $ 259,589

Balance at July 30, 2023
10,819 $ 49,561 $ 175,348 $ 759 $ 225,668
Net income for the 13 weeks ended October 29, 2023
7,038 7,038
Unrealized loss on defined benefit plan, net of tax of $17
(53 ) (53 )
Cash dividends paid ($0.22 per share)
(2,373 ) (2,373 )
Purchase and retirement of common stock
(147 ) $ (700 ) (2,434 ) (3,134 )
Restricted stock grants, net of forfeitures
-
Restricted stock compensation cost
449 449
Performance-based restricted stock units cost
193 193
Balance at October 29, 2023
10,672 $ 49,503 $ 177,579 $ 706 $ 227,788

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

7
Table of Contents

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONT.)
(In thousands, except per share data)
(Unaudited)

Accumulated

Other

Total

Common Stock

Retained

Comprehensive

Shareholders'

Shares

Amount

Earnings

Income (loss)

Equity

Balance at January 30, 2022
11,922 $ 53,295 $ 207,884 $ (51 ) $ 261,128
Net income for the 39 weeks ended October 30, 2022
13,566 13,566
Unrealized loss on defined benefit plan, net of tax of $15
47 47
Cash dividends paid ($0.60 per share)
(7,117 ) (7,117 )
Purchase and retirement of common stock
(598 ) (2,751 ) (6,608 ) (9,359 )
Restricted stock grants, net of forfeitures
97 (102 ) (102 )
Restricted stock compensation cost
963 963
Performance-based restricted stock units costs
463 463
Balance at October 30, 2022
11,421 $ 51,868 $ 207,725 $ (4 ) $ 259,589

Balance at January 29, 2023
11,197 $ 50,770 $ 184,386 $ 865 $ 236,021
Net income for the 39 weeks ended October 29, 2023
9,272 9,272
Unrealized loss on defined benefit plan, net of tax of $50
(159 ) (159 )
Cash dividends paid ($0.66 per share)
(7,228 ) (7,228 )
Purchase and retirement of common stock
(620 ) (2,952 ) (8,851 ) (11,803 )
Restricted stock grants, net of forfeitures
95 (150 ) (150 )
Restricted stock compensation cost
1,255 1,255
Performance-based restricted stock units costs
580 580
Balance at October 29, 2023
10,672 $ 49,503 $ 177,579 $ 706 $ 227,788
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
8
Table of Contents
HOOKER FURNISHINGS 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 ~~Thirteen~~Thirty-Nine Weeks Ended ~~April 30,~~October 29, 2023

1.         Preparation of Interim Financial Statements

The condensed consolidated financial statements of Hooker Furnishings 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 January 29, 2023 (“2023 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 2024 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” ~~“first~~“third quarter” or “quarterly period”) that began July 31, 2023, and the thirty-nine week period (also referred to as “nine months”, “nine-month period” or “year-to-date period”) that began January 30, 2023, ~~and~~which both ended ~~April 30,~~October 29, 2023. This report discusses our results of operations for ~~this period~~these periods compared to the 2023 fiscal year thirteen-week period that began August 1, 2022, and the thirty-nine-week period that began January 31, 2022, ~~and~~which both ended ~~May 1,~~October 30, 2022; and our financial condition as of ~~April 30,~~October 29, 2023 compared to January 29, 2023.

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

■
the 2024 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began January 30, 2023 and will end January 28, 2024; and

■
the 2023 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began January 31, 2022 and ended January 29, 2023.

2.         Recently Adopted Accounting Policies

No new accounting pronouncements have been adopted in the 2024 fiscal year. We reviewed newly issued accounting pronouncements and concluded they are either not applicable to our business or are not expected to have a material effect on our consolidated financial statements as a result of future adoption.

3.         Accounts Receivable

April 30,

January 29,

October 29,

January 29,

2023

2023

2023

2023

Gross accounts receivable
$ 59,941 $ 67,600 $ 62,770 $ 67,600
Customer allowances
(3,461 ) (3,702 ) (1,853 ) (3,702 )
Allowance for doubtful accounts
(1,952 ) (1,769 ) (1,852 ) (1,769 )
Trade accounts receivable
$ 54,528 $ 62,129 $ 59,065 $ 62,129

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4.         Inventories

April 30,

January 29,

October 29,

January 29,

2023

2023

2023

2023

Finished furniture
$ 89,658 $ 115,015 $ 78,037 $ 115,015
Furniture in process
1,766 1,943 1,561 1,943
Materials and supplies
13,391 13,509 12,737 13,509
Inventories at FIFO
104,815 130,467 92,335 130,467
Reduction to LIFO basis
(31,627 ) (33,792 ) (27,179 ) (33,792 )
Inventories
$ 73,188 $ 96,675 $ 65,156 $ 96,675

5.         Property, Plant and Equipment

Depreciable Lives

April 30,

January 29,

Depreciable Lives

October 29,

January 29,

(In years)

2023

2023

(In years)

2023

2023

Buildings and land improvements
15 - 30 $ 32,783 $ 32,723 15 - 30 $ 33,671 $ 32,723
Computer software and hardware
3 - 10 16,000 15,887 3 - 10 8,907 15,887
Machinery and equipment
10 11,335 11,013 10 11,651 11,013
Leasehold improvements

Term of lease
15,064 11,894
Term of lease
12,445 11,894
Furniture and fixtures
3 - 10 6,313 5,991 3 - 10 6,377 5,991
Other
5 695 694 5 697 694
Total depreciable property at cost
82,190 78,202 73,748 78,202
Less accumulated depreciation
(54,663 ) (53,427 ) (46,590 ) (53,427 )
Total depreciable property, net
27,527 24,775 27,158 24,775
Land
1,077 1,077 1,077 1,077
Construction-in-progress
466 1,158 844 1,158
Property, plant and equipment, net
$ 29,070 $ 27,010 $ 29,079 $ 27,010

6.         Cloud Computing Hosting Arrangement

We are in the process of implementing a common Enterprise Resource Planning system (ERP) across all divisions. The ERP system went live at Sunset West in December 2022 and ~~is expected to go-live~~ in ~~other~~the legacy Hooker divisions ~~during fiscal 2024, with~~in early September 2023. We expect the new ERP system to go live in the Home Meridian segment ~~following afterwards.~~during fiscal 2025.

Based on the provisions of ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software, we capitalize implementation costs associated with hosting arrangements that are service contracts. In addition, based on the provisions of ASC 835 Interest, we capitalize interest associated with this ERP project by applying the interest rate on our unsecured term loan to the amount of the accumulated expenditures for the ERP asset. Both these costs are recorded on the “Other ~~noncurrent~~ assets” line of our condensed consolidated balance sheets. Amortization expense commenced when the ERP system went live at Sunset West in the fourth quarter of fiscal 2023. Capitalized implementation costs and interest are amortized over ten years on a straight-line basis. The capitalized implementation costs and interest expenses at ~~April 30,~~October 29, 2023 and January 29, 2023 were as follows:

Capitalized Implementation Costs

Capitalized interest expenses

Capitalized
Implementation Costs

Capitalized
interest expenses

Balance at January 29, 2023
$ 8,598 $ 84 $ 8,598 $ 84
Costs capitalized during the period
1,298 66 3,818 225
Accumulated amortization
(19 ) (1 )
Balance at April 30, 2023
$ 9,877 $ 149
Accumulated amortization during the period
(187 ) (4 )
Balance at October 29, 2023
$ 12,229 $ 305

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7.         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 ~~April 30,~~October 29, 2023 and January 29, 2023, 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 ~~April 30,~~October 29, 2023 and January 29, 2023, were as follows:

Fair value at April 30, 2023

Fair value at January 29, 2023

Fair value at October 29, 2023

Fair value at January 29, 2023

Description

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

(In thousands)

(In thousands)

Assets measured at fair value

Company-owned life insurance
$ - $ 27,899 $ - $ 27,899 $ - $ 27,576 $ - $ 27,576 $ - $ 28,264 $ - $ 28,264 $ - $ 27,576 $ - $ 27,576

8.         Intangible Assets

Our intangible assets with indefinite lives consist ofof: goodwill related to the Shenandoah, ~~and~~ Sunset West ~~acquisitions~~and BOBO Intriguing Objects acquisitions; and trademarks and tradenames related to the acquisitions of Bradington-Young, ~~Sam Moore~~Home Meridian and ~~Home Meridian.~~ BOBO Intriguing Objects. During the fiscal 2024 second quarter, we recorded the preliminary estimates of $500,000 trademarks with indefinite lives and $124,000 goodwill as a result of the BOBO acquisition. The preliminary estimates of fair value of identifiable assets acquired and liabilities assumed are subject to revision, which may result in adjustments to the preliminary values presented below, when management’s appraisals and estimates are finalized. In the third quarter of fiscal 2024, we recorded additional fixed assets and revised goodwill to $84,000.
During the fiscal 2024 first quarter, we announced the rebranding of the Sam Moore product line to “HF ~~Custom”.~~Custom.” As a result, we reassessed the characteristics of the Sam Moore trade name and the roll-out process, and determined it qualified for ~~amortization. We will amortize~~amortization; consequently, we began amortizing the ~~value of~~ Sam Moore trade name over a 24-month period using the straight-line method ~~starting from mid-April.~~beginning mid-April 2023. Our intangible assets with definite lives are recorded in our Home Meridian and Domestic Upholstery segments. Details of our intangible assets are as follows:

April 30, 2023 January 29, 2023

October 29, 2023

January 29, 2023

Gross carrying amount

Accumulated Amortization

Gross carrying amount

Accumulated Amortization

Gross
carrying
amount

Accumulated
Amortization

Gross
carrying
amount

Accumulated
Amortization

Intangible assets with indefinite lives:

Goodwill

Domestic Upholstery - Shenandoah *
490 - 490 - 490 - 490 -
Domestic Upholstery - Sunset West
14,462 - 14,462 - 14,462 - 14,462 -
All Other - BOBO Intriguing Objects
84 - - -
Goodwill 14,952 - 14,952 - 15,036 - 14,952 -

Trademarks and Trade names *
7,511 - 7,907 - 8,011 - 7,907 -

Intangible assets with definite lives:

Customer Relations
38,001 (16,460 ) 38,001 (15,618 ) 38,001 (18,141 ) 38,001 (15,618 )
Trademarks and Trade names
2,334 (491 ) 1,938 (449 ) 2,334 (658 ) 1,938 (449 )

Intangible assets, net
47,846 (16,951 ) 47,846 (16,067 ) 48,346 (18,799 ) 47,846 (16,067 )

*: The amounts are net of impairment charges of $16.4 million related to Shenandoah goodwill and $4.8 million related to certain Home Meridian segment trade names, which were recorded in fiscal 2021.

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Amortization expenses for intangible assets with definite lives were ~~$883,000~~$924,000 and ~~$878,000~~$2.7 million for the ~~first quarters~~third quarter and nine-month period of fiscal 2024, respectively. Amortization expenses for intangible assets with definite lives were $878,000 and $2.6 million for the fiscal 2023 third quarter and nine-month period, respectively. For the remainder of fiscal 2024, amortization expense is expected to be approximately ~~$2.8 million.~~$924,000.

9.         Leases

We have operating leases for warehouses, showrooms, manufacturing facilities, offices and equipment. We recognized ~~sublease~~sub-lease income of ~~$29,000~~$27,000 and ~~$348,000 in~~$101,000 for the ~~first quarters~~third quarter and nine-month period of fiscal 2024, respectively. We recognized sub-lease income of $34,000 and $415,000 for the third quarter and nine-month period of fiscal 2023, respectively.

The components of lease cost and supplemental cash flow information for leases infor the ~~first quarters of fiscal 2024~~three-months and nine-months ended October 29, 2023 and October 30, 2022 were:

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30, 2023

May 1, 2022

October 29, 2023

October 30, 2022

October 29, 2023

October 30, 2022

Operating lease cost
$ 2,838 $ 2,527 $ 2,715 $ 2,291 $ 8,414 $ 7,089
Variable lease cost
82 55 50 62 202 172
Short-term lease cost
79 80 119 79 282 246
Total operating lease cost
$ 2,999 $ 2,662 $ 2,884 $ 2,432 $ 8,898 $ 7,507

Operating cash outflows
$ 2,694 $ 2,829 $ 2,668 $ 2,518 $ 8,033 $ 7,745

During fiscal 2024 second quarter, we reduced our footprint by 200,000 square feet in the Georgia warehouse. During the third quarter, we entered into an agreement to further reduce our footprint by 200,000 square feet by early calendar 2024. These modifications resulted in an approximate $13 million decrease in the lease right-of-use assets and liabilities. The right-of-use assets and lease liabilities recorded on our condensed consolidated balance sheets as of ~~April 30,~~October 29, 2023 and January 29, 2023 were as follows:

April 30, 2023

January 29, 2023

October 29, 2023

January 29, 2023

Real estate
$ 66,173 $ 68,212 $ 53,374 $ 68,212
Property and equipment
633 737 828 737
Total operating leases right-of-use assets
$ 66,806 $ 68,949 $ 54,202 $ 68,949

Current portion of operating lease liabilities
$ 7,363 $ 7,316 $ 7,045 $ 7,316
Long term operating lease liabilities
61,877 63,762 49,651 63,762
Total operating lease liabilities
$ 69,240 $ 71,078 $ 56,696 $ 71,078

For leases that commenced before July 2022, we used our incremental borrowing rate which was LIBOR plus 1.5%. When we entered into the new loan agreement (described in Note 10 below), our incremental borrowing rate ~~for unsecured term loan~~ became the current BSBY rate plus 1.40%. We use this rate as the discount rate for leases commenced in July 2022 and thereafter. The weighted-average discount rate is ~~4.01%~~5.05%. The weighted-average remaining lease term is ~~7.8~~7 years.

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Table of Contents
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 ~~April 30,~~October 29, 2023:

Undiscounted Future Operating Lease Payments

Remainder of fiscal 2024
$ 7,463
2025
10,102
2026
10,182
2027
10,267
2028
8,931
2029 and thereafter
35,130
Total lease payments
$ 82,075
Less: impact of discounting
(12,835 )
Present value of lease payments
$ 69,240
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~~Table of Contents~~
As of April 30, 2023, the Company had an additional lease for a showroom in Atlanta, Georgia. This lease commenced in May of calendar 2023 with an initial lease term of 3 years and estimated future minimum rental commitments of approximately $1.0 million. Since the lease had not yet commenced at quarter end, the undiscounted amounts are not included in the table above. Subsequent to the fiscal 2024 first quarter, we entered into an agreement to reduce our footprint in the Georgia warehouse. This amendment results in an approximate $6 million decrease in rental payments over the remaining lease term. Since the agreement had not yet commenced, the modification is not reflected in the table above.

Undiscounted Future
Operating Lease
Payments

Remainder of fiscal 2024
$ 2,424
2025
9,732
2026
9,797
2027
9,635
2028
8,010
2029 and thereafter
29,166
Total lease payments
$ 68,764
Less: impact of discounting
(12,068 )
Present value of lease payments
$ 56,696

10.         Long-Term Debt

On July 26, 2022, we entered into the Fourth Amendment (the “amendment”) to the Second Amended and Restated Loan Agreement with Bank of America, N.A. (“BofA”) to replenish cash used to make the acquisition of substantially all of the assets of Sunset West (which closed at the beginning of the first quarter of fiscal 2023) (the “Sunset Acquisition”). The Second Amended and Restated Loan Agreement dated as of September 29, 2017, had previously been amended by a First Amendment to Second Amended and Restated Loan Agreement dated as of January 31, 2019, a Second Amendment to Second Amended and Restated Loan Agreement dated as of November 4, 2020, and a Third Amendment to Second Amended and Restated Loan Agreement dated as of January 27, 2021 (as so amended, the “Existing Loan Agreement”). Details of the individual credit facilities provided for in the Amendment are as follows:

■
Unsecured Revolving Credit Facility. Under the Amendment, the expiration date of the existing $35 million Unsecured Revolving Credit Facility (the “Existing Revolver”) was extended to July 26, 2027. Any amounts outstanding will bear interest at a rate per annum, equal to the then current Bloomberg Short-Term Bank Yield Index (“BSBY”) (adjusted periodically) plus 1.00%. The interest rate will be adjusted on a monthly basis. The actual daily amount of undrawn letters of credit is subject to a quarterly fee equal to a per annum rate of 1%. We must also pay a quarterly unused commitment fee that is based on the average daily amount of the facility utilized during the applicable quarter;

■
2022 Secured Term Loan. The Amendment provided us with aan $18 million ~~term loan~~Secured Term Loan (the “Secured Term Loan”), which was disbursed to us on July 26, 2022. We are required to pay monthly interest only payments at a rate per annum equal to the then current BSBY rate (adjusted periodically) plus 0.90% on the outstanding balance until the principal is paid in full. The interest rate will be adjusted on a monthly basis. On July 26, 2027, the entire outstanding indebtedness is due in full, including all principal and interest. The Secured Term Loan is secured by certain company-owned life insurance policies under a Security Agreement (Assignment of Life Insurance Policy as Collateral) dated July 26, 2022, by and between the Company and BofA; and

■
2022 Unsecured Term Loan. The Amendment provided us with a $7 million ~~unsecured term loan~~Unsecured Term Loan (the “Unsecured Term Loan”), which was disbursed to us on July 26, 2022. We are required to pay monthly principal payments of $116,667 and monthly interest payments at a rate per annum equal to the then current BSBY (adjusted periodically) plus 1.40% on the outstanding balance until paid in full. The interest rate will be adjusted monthly. On July 26, 2027, the entire outstanding indebtedness is due in full, including all principal and interest.

We may prepay any outstanding principal amounts borrowed under either the Secured Term Loan or the Unsecured Term Loan at any time, without penalty provided that any payment is accompanied by all accrued interest owed. As of ~~April 30,~~October 29, 2023, ~~$5.9~~$5.2 million was outstanding under the Unsecured Term Loan, and $18 million was outstanding under the Secured Term Loan.

We incurred $37,500 in debt issuance costs in connection with our term loans. As of ~~April 30,~~October 29, 2023, unamortized loan costs of ~~$31,875~~$28,125 were netted against the carrying value of our term loans on our condensed consolidated balance sheets.

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Table of Contents
The Amendment also included customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:

■
Maintain a ratio of funded debt to EBITDA not exceeding:
o
~~2.50:1.0 through July 30, 2023;~~

o
2.25:1.0 through July 30, 2024; and

o
2.00:1.00 thereafter.

■
A basic fixed charge coverage ratio of at least 1.25:1.00; and

■
Limit capital expenditures to no more than $15.0 million during any fiscal year.

12

~~Table of Contents~~
The Existing 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 Existing 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 Existing Loan Agreement.

We were in compliance with each of these financial covenants at ~~April 30,~~October 29, 2023 and expect to remain in compliance with existing covenants for the foreseeable future.

As of ~~April 30,~~October 29, 2023, we had $27.2 million available under our $35 million Existing Revolver to fund working capital needs. Standby letters of credit in the aggregate amount of $7.8 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the Existing Revolver as of ~~April 30,~~October 29, 2023. There were no additional borrowings outstanding under the Existing Revolver as of ~~April 30,~~October 29, 2023.

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 2023 Annual Report, for additional information concerning the calculation of earnings per share (EPS).

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.

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:

April 30,

January 29,

October 29,

January 29,

2023

2023

2023

2023

Restricted shares
175 132 182 132
RSUs and PSUs
156 101 156 101
331 233 338 233

13

~~Table of Contents~~
All restricted shares, RSUs and PSUs awarded that have not yet vested are considered when computing diluted earnings per share.
14
Table of Contents
During the fiscal 2024 nine-month period, we purchased and retired 620,634 shares of our common stock (at an average price of $18.79 per share) under the $20 million share repurchase authorization approved by our board of directors in fiscal 2023 and the additional $5 million share repurchase authorization approved by our board of directors in the second quarter of this year. These repurchases reduced our total outstanding shares and, consequently, reduced the weighted outstanding shares used in our calculation of earnings per share for the fiscal 2024 third quarter and nine-month period shown below. The share repurchase program was completed during the fiscal 2024 third quarter.
The following table sets forth the computation of basic and diluted earnings per share:

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30,

May 1,

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

2023

2022

Net income
$ 1,450 $ 3,182 $ 7,038 $ 4,841 $ 9,272 $ 13,566
Less: Unvested participating restricted stock dividends
30 19 40 28 111 74
Net earnings allocated to unvested participating restricted stock
18 25 120 58 143 141
Earnings available for common shareholders
1,402 3,138 6,878 4,755 9,018 13,351

Weighted average shares outstanding for basic earnings per share
10,976 11,866 10,536 11,465 10,748 11,736
Dilutive effect of unvested restricted stock, RSU and PSU awards
101 83 140 60 130 102
Weighted average shares outstanding for diluted earnings per share
11,077 11,949 10,676 11,525 10,878 11,838

Basic earnings per share
$ 0.13 $ 0.27 $ 0.66 $ 0.42 $ 0.85 $ 1.16

Diluted earnings per share
$ 0.13 $ 0.26 $ 0.65 $ 0.42 $ 0.85 $ 1.14

12.Income Taxes

We recorded income tax ~~expenses~~expense of ~~$402,000 and $991,000~~$2.0 million for the fiscal 2024 ~~and fiscal 2023 first quarters, respectively.~~third quarter compared to $1.3 million for the comparable prior year quarter. The effective tax rates for the fiscal 2024 and 2023 ~~first~~third quarters were ~~21.7%~~22.4% and ~~23.7%~~21.6%, respectively. For the fiscal 2024 nine-month period, we recorded income tax expense of $2.6 million, compared to $3.9 million for the comparable prior year period. The effective tax rates for the fiscal 2024 and 2023 nine-month periods were 22.0% and 22.5%, respectively.

No material and non-routine positions have been identified that are uncertain tax positions.

Tax years ending February 2, 2020 through January 29, 2023 remain subject to examination by federal and state taxing authorities.

13.         Segment Information

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:

■
better understand our performance;

■
better assess our prospects for future net cash flows; and

■
make more informed judgments about us as a whole.

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.

15
Table of Contents
For financial reporting purposes, we are organized into three reportable segments and “All Other”, which includes the remainder of our businesses:

■
Hooker Branded, consisting of the operations of our imported Hooker Casegoods and Hooker Upholstery businesses;

■
Home Meridian, a business acquired at the beginning of fiscal 2017, is a stand-alone, mostly autonomous business that serves a different type or class of customer than do our other operating segments and at much lower margins;

■
Domestic Upholstery, which includes the domestic upholstery manufacturing operations of Bradington-Young, HF Custom (formerly Sam ~~Moore Furniture)~~Moore), Shenandoah Furniture and Sunset West, a business acquired at the beginning of fiscal 2023; and

■
All Other, consisting of H Contract, Lifestyle Brands and ~~Lifestyle Brands. Neither~~BOBO Intriguing Objects. None of these operating segments were individually reportable; therefore, we combined them in “All Other” in accordance with ASC 280.

14

~~Table~~
Changes to segment reporting for fiscal 2024
During the second quarter of ~~Contents~~
fiscal 2024, we acquired substantially all the assets of BOBO Intriguing Objects. Based on the requirements of ASC 280: Segment Reporting, BOBO’s results are included in All Other on a prospective basis.

We regularly monitor our reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. Before the fiscal 2024 third quarter, H Contract’s results included sales of products sourced from the Hooker Branded segment and Sunset West. Due to a change in the way management internally evaluates operating performance, beginning with fiscal 2024 third quarter, Hooker Branded and Domestic Upholstery segments’ results now include sales of products formerly included in H Contract’s results. Fiscal 2024 year-to-date period and fiscal 2023 results discussed below have been recast to reflect this change. The Home Meridian segment is unchanged.
The following table presents segment information for the periods, and as of the dates, indicated.

Thirteen Weeks Ended

April 30,

May 1,

2023

2022

% Net

% Net

Net Sales

Sales

Sales

   Hooker Branded
$ 41,891 34.4 % $ 42,230 28.7 %
   Home Meridian
41,921 34.4 % 62,085 42.1 %
   Domestic Upholstery
35,104 28.8 % 41,220 28.0 %
   All Other
2,899 2.4 % 1,779 1.2 %
Consolidated
$ 121,815 100 % $ 147,314 100.0 %

Gross Profit

   Hooker Branded
$ 13,091 31.3 % $ 13,240 31.4 %
   Home Meridian
6,713 16.0 % 6,305 10.2 %
   Domestic Upholstery
7,023 20.0 % 9,354 22.7 %
   All Other
1,079 37.2 % 560 31.5 %
Consolidated
$ 27,906 22.9 % $ 29,459 20.0 %

Operating Income/(Loss)

   Hooker Branded
$ 2,300 5.5 % $ 4,142 9.8 %
   Home Meridian
(2,119 ) -5.1 % (3,095 ) -5.0 %
   Domestic Upholstery
1,328 3.8 % 2,752 6.7 %
   All Other
466 16.1 % 124 7.0 %
Consolidated
$ 1,975 1.6 % $ 3,923 2.7 %

Capital Expenditures

   Hooker Branded
$ 2,787 $ 468
   Home Meridian
227 40
   Domestic Upholstery
116 322
   All Other
28 -
Consolidated
$ 3,158 $ 830

Depreciation & Amortization

   Hooker Branded
$ 491 $ 684
   Home Meridian
687 662
   Domestic Upholstery
947 938
   All Other
22 3
Consolidated
$ 2,147 $ 2,287

As of April 30,

As of
January 29,

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

2023

%Total

2023

%Total

October 29,

October 30,

October 29,

October 30,

Identifiable Assets

Assets

Assets

2023

2022

2023

2022

% Net

% Net

% Net

% Net

Net Sales

Sales

Sales

Sales

Sales

Hooker Branded
$ 172,499 54.2 % $ 174,523 52.1 % $ 39,122 33.5 % $ 56,632 37.4 % $ 118,936 35.4 % $ 154,133 34.1 %
Home Meridian
80,709 25.4 % 92,469 27.6 % 43,692 37.4 % 50,588 33.4 % 114,524 34.0 % 171,721 38.0 %
Domestic Upholstery
63,307 19.9 % 66,435 19.8 % 32,559 27.9 % 43,436 28.7 % 98,555 29.3 % 122,982 27.2 %
All Other
1,706 0.5 % 1,558 0.5 % 1,458 1.2 % 924 0.5 % 4,437 1.3 % 2,967 0.7 %
Consolidated
$ 318,221 100 % $ 334,985 100 % $ 116,831 100 % $ 151,580 100 % $ 336,452 100 % $ 451,803 100 %
Consolidated Goodwill and Intangibles
45,847 46,731
Total Consolidated Assets
$ 364,068 $ 381,716

Gross Profit

Hooker Branded
$ 17,823 45.6 % $ 16,156 28.5 % $ 43,840 36.9 % $ 45,357 29.4 %
Home Meridian
8,803 20.1 % 5,431 10.7 % 18,726 16.4 % 19,057 11.1 %
Domestic Upholstery
6,485 19.9 % 9,918 22.8 % 19,872 20.2 % 26,400 21.5 %
All Other
599 41.1 % 503 54.4 % 2,519 56.8 % 1,708 57.6 %
Consolidated
$ 33,710 28.9 % $ 32,008 21.1 % $ 84,957 25.3 % $ 92,522 20.5 %

Operating Income/(Loss)

Hooker Branded
$ 7,287 18.6 % $ 5,860 10.3 % $ 13,298 11.2 % $ 16,423 10.7 %
Home Meridian
923 2.1 % (3,205 ) -6.3 % (4,532 ) -4.0 % (7,290 ) -4.2 %
Domestic Upholstery
688 2.1 % 3,823 8.8 % 2,739 2.8 % 8,288 6.7 %
All Other
(128 ) -8.8 % (60 ) -6.5 % 513 11.6 % 212 7.1 %
Consolidated
$ 8,770 7.5 % $ 6,418 4.2 % $ 12,018 3.6 % $ 17,633 3.9 %

Capital Expenditures (net of disposals)

Hooker Branded
$ 747 $ 589 $ 4,156 $ 1,295
Home Meridian
827 589 1,065 1,221
Domestic Upholstery
179 344 436 953
All Other
- - 61 -
Consolidated
$ 1,753 $ 1,522 $ 5,718 $ 3,469

Depreciation
& Amortization

Hooker Branded
$ 467 $ 479 $ 1,461 $ 1,600
Home Meridian
670 724 2,047 2,110
Domestic Upholstery
1,100 963 3,092 2,860
All Other
17 3 26 8
Consolidated
$ 2,254 $ 2,169 $ 6,626 $ 6,578

1516
Table of Contents

As of October 29,

As of January 29,

2023

%Total

2023

%Total

Identifiable Assets

Assets

Assets

Hooker Branded
$ 178,435 57.6 % $ 174,523 52.1 %
Home Meridian
63,310 20.4 % 92,469 27.6 %
Domestic Upholstery
63,179 20.4 % 66,435 19.8 %
All Other
4,991 1.6 % 1,558 0.5 %
Consolidated
$ 309,915 100 % $ 334,985 100 %
Consolidated Goodwill and Intangibles
44,583 46,731
Total Consolidated Assets
$ 354,498 $ 381,716
Sales by product type are as follows:

Net Sales (in thousands)

Net Sales (in thousands)

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30, 2023

%Total

May 1, 2022

%Total

October 29, 2023

%Total

October 30, 2022

%Total

October 29, 2023

%Total

October 30, 2022

%Total

Casegoods
$ 67,975 56 % $ 74,192 50 % $ 71,787 61 % $ 86,717 57 % $ 191,825 57 % $ 253,748 56 %
Upholstery
53,840 44 % 73,122 50 % 45,044 39 % 64,863 43 % 144,627 43 % 198,055 44 %
$ 121,815 100 % $ 147,314 100 % $ 116,831 100 % $ 151,580 100 % $ 336,452 100 % $ 451,803 100 %

14. Subsequent Events

Dividends

On ~~June~~December 5, 2023, our board of directors declared a quarterly cash dividend of ~~$0.22~~$0.23 per share which will be paid on ~~June 30,~~December 29, 2023 to shareholders of record at ~~June 16,~~December 15, 2023.
~~Additional Share Repurchase Authorization~~
~~On June 5, 2023 our Board of Directors approved an additional $5 million for~~ This represents a $0.01 per share or 4.5% increase over the ~~repurchase of our common shares, adding to~~previous quarterly dividend and the ~~$20 million authorization it approved in June 2022. As of the filing date of this report, approximately $5.5 million remains available for the repurchase of our shares under these authorizations.~~eighth consecutive annual dividend increase.

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Table of Contents

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 Furnishings Corporation and its consolidated subsidiaries, unless specifically referring to segment information. All references to the “Hooker,” “Hooker Division(s),” “Hooker Legacy Brands” or “traditional Hooker” divisions or companies refer to all current business units and brands except for those in the Home Meridian segment. The Hooker Branded segment includes Hooker Casegoods and Hooker Upholstery. The Domestic Upholstery segment includes Bradington-Young, HF Custom (formerly Sam Moore), Shenandoah Furniture and Sunset West. All Other includes H Contract, Lifestyle Brands, and ~~Lifestyle Brands.~~BOBO Intriguing Objects.

Forward-Looking Statements

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:

■
general economic or business conditions, both domestically and internationally, including the current macro-economic uncertainties and challenges to the retail environment for home furnishings along with instability in the financial and credit markets, in part due to inflation and rising interest rates, including their potential impact on (i) our sales and operating costs and access to financing, (ii) customers, and (iii) suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses;

■
the direct and indirect costs and time spent by our associates associated with the implementation of our Enterprise Resource Planning system (“ERP”), including costs resulting from unanticipated disruptions to our business;
■
the cyclical nature of the furnishings industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit;
■
changes in consumer preferences, including increased demand for lower-priced furniture;
■
difficulties in forecasting demand for our imported products and raw materials used in our domestic operations;

■
risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, customs issues, freight costs, including the price and availability of shipping containers, ocean vessels, ocean and domestic trucking, and warehousing costs and the risk that a disruption in our offshore suppliers or the transportation and handling industries, including labor stoppages, strikes, or slowdowns, could adversely affect our ability to timely fill customer orders;

■
risks associated with ~~HMI~~Home Meridian segment restructuring and cost-savings efforts, including our ability to timely ~~dispose of excess inventories,~~ reduce expenses and return the segment to profitability;

■
the impairment of our long-lived assets including goodwill, which can result in reduced earnings and net worth;

■
adverse political acts or developments in, or affecting, the international markets from which we import products, including duties or tariffs imposed on those products by foreign governments or the U.S. government and possible future U.S. conflict with China;

■
the direct and indirect costs and time spent by our associates associated with the implementation of our Enterprise Resource Planning system (“ERP”), including costs resulting from unanticipated disruptions to our business;
■
~~the~~ interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the internet or other related issues including unauthorized disclosures of confidential information, hacking or other cyber-security threats or inadequate levels of cyber-insurance or risks not covered by ~~cyber- insurance;~~cyber-insurance;
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■
risks associated with our Georgia warehouse including the inability to realize anticipated cost savings and subleasing excess space on favorable terms;

■
risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs, availability of skilled labor, and environmental compliance and remediation costs;
17

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■
the risks related to the Sunset Acquisition including integration costs, maintaining Sunset West’s existing customer relationships, debt service costs, interest rate volatility, the use of operating cash flows to service debt to the detriment of other corporate initiatives or strategic opportunities, the loss of key employees from Sunset West, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies across the business which could adversely affect our internal control or information systems and the costs of bringing them into compliance and failure to realize benefits anticipated from the Sunset Acquisition;
■
the risks related to the BOBO Intriguing Objects acquisition, including the loss of a key BOBO employee, inconsistencies in standards, controls, procedures and policies across the business which could adversely affect our internal control or information systems and failure to realize benefits anticipated from the BOBO acquisition;

■
changes in U.S. and foreign government regulations and in the political, social and economic climates of the countries from which we source our products;

■
risks associated with product defects, including higher than expected costs associated with product quality and safety, regulatory compliance costs (such as the costs associated with the US Consumer Product Safety Commission’s new mandatory furniture tip-over standard, STURDY) related to the sale of consumer products and costs related to defective or non-compliant products, product liability claims and costs to recall defective products and the adverse effects of negative media coverage;

■
disruptions and damage (including those due to weather) affecting our Virginia or Georgia warehouses, our Virginia, North Carolina or California administrative facilities, our High Point, Las Vegas, and Atlanta showrooms or our representative offices or warehouses in Vietnam and China;

■
the risks specifically related to the concentrations of a material part of our sales and accounts receivable in only a few customers, including the loss of several large customers through business consolidations, failures or other reasons, or the loss of significant sales programs with major customers;

■
our inability to collect amounts owed to us or significant delays in collecting such amounts;

■
achieving and managing growth and change, and the risks associated with new business lines, acquisitions, including the selection of suitable acquisition targets, restructurings, strategic alliances and international operations;

■
capital requirements and costs;

■
risks associated with distribution through third-party retailers, such as non-binding dealership arrangements;

■
the cost and difficulty of marketing and selling our products in foreign markets;

■
changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials;
■
~~the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases,~~ and ~~the availability and terms of consumer credit;~~

■
price competition in the ~~furniture industry;~~
■
~~competition from non-traditional outlets, such as internet and catalog retailers; and~~
■
~~changes in consumer preferences, including increased demand for lower-priced furniture.~~furnishings industry.

Our forward-looking statements could be wrong considering 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.

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Also, our business is subject to 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 2023 Annual Report.
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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.

Quarterly Reporting

This quarterly report on Form 10-Q includes our unaudited condensed consolidated financial statements for the 2024 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” ~~“first~~“third quarter” or “quarterly period”) that began July 31, 2023, and the thirty-nine week period (also referred to as “nine months”, “nine-month period” or “year-to-date period”) that began January 30, 2023, ~~and~~which both ended ~~April 30,~~October 29, 2023. This report discusses our results of operations for ~~this period~~these periods compared to the 2023 fiscal year thirteen-week period that began August 1, 2022, and the thirty-nine-week period that began January 31, 2022, ~~and~~which both ended ~~May 1,~~October 30, 2022; and our financial condition as of ~~April 30,~~October 29, 2023 compared to January 29, 2023.

References in this report to:

■
the 2024 fiscal year and comparable terminology mean the fiscal year that began January 30, 2023 and will end January 28, 2024; and

■
the 2023 fiscal year and comparable terminology mean the fiscal year that began January 31, 2022 and ended January 29, 2023.

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

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 SEC, especially our 2023 Annual Report. Our 2023 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 2023 Annual Report and other public filings made with the SEC are available, without charge, at www.sec.gov and at http://investors.hookerfurnishings.com.

Overview

Hooker Furnishings Corporation, incorporated in Virginia in 1924, is a designer, marketer, and importer of casegoods (wooden and metal furniture), leather furniture, ~~and~~ fabric-upholstered furniture, lighting, accessories, and home décor for the residential, hospitality and contract markets. We also domestically manufacture premium residential custom leather, custom fabric-upholstered furniture and outdoor furniture.
Changes to segment reporting for fiscal 2024
During the second quarter of fiscal 2024, we acquired substantially all the assets of BOBO Intriguing Objects. Based on the requirements of ASC 280: Segment Reporting, BOBO’s results are included in All Other on a prospective basis.
We regularly monitor our reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. Before the fiscal 2024 third quarter, H Contract’s results included sales of certain products sourced from the Hooker Branded segment and Sunset West division of the Domestic Upholstery segment. Due to a change in the way management internally evaluates operating performance, beginning with the fiscal 2024 third quarter, Hooker Branded and Domestic Upholstery segments’ results now include sales of products formerly included in H Contract’s results. Fiscal 2024 year-to-date period and fiscal 2023 results discussed below have been recast to reflect this change. The Home Meridian segment is unchanged.
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Orders and Backlog

In the discussion below and herein, 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. We believe orders are generally good current indicators of sales momentum and business conditions. If the items ordered are in stock and the customer has requested immediate delivery, we generally ship products in about seven 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. It is our policy and industry practice to allow order cancellation for casegoods up to the time of shipment or, in the case of container direct orders, up until the time the container is booked with the ocean freight carrier; therefore, customer orders for casegoods are not firm. However, domestically produced upholstered products are predominantly custom-built and consequently, cannot be cancelled once the leather or fabric has been cut. Our hospitality products are highly customized and are generally not cancellable. For our outdoor furnishings, most orders require a deposit upon order and the balance before production is started, and hence are generally non-cancellable.

For the Hooker Branded and Domestic Upholstery segments and All Other, we generally consider 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. At times, the ratio of new products to currently available inventory items can affect the amount of the backlog that can be converted to shipments in the short-term. 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) the average sales order sizes of its mass and mega account channels of distribution, (ii) the proprietary nature of many of its products and (iii) the project nature of its hospitality business, for which average order sizes tend to be larger and consequently, the Home Meridian segment’s order backlog tends to be larger.

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There have been exceptions to the general predictive nature of our orders and backlogs noted in ~~this~~the above paragraph, such as during times of extremely high demand and supply chain challenges as experienced during the immediate aftermath of the initial COVID-19 crisis and subsequent recovery. Orders were not being converted to shipments as quickly as would be expected compared to the pre-pandemic environment due to the lack and cost of shipping containers and vessel space as well as limited overseas vendor capacity and our domestic production capacity. As a result, backlogs were significantly elevated and reached historical levels in the prior two years.

At ~~April 30,~~October 29, 2023, our backlog of unshipped orders was as follows:

Order Backlog

Order Backlog

(Dollars in 000s)

(Dollars in 000s)

Reporting Segment

April 30, 2023

January 29, 2023

May 1, 2022

October 29, 2023

January 29, 2023

October 30, 2022

Hooker Branded
$ 17,357 $ 19,276 $ 76,562 $ 18,646 $ 20,568 $ 36,747
Home Meridian
40,413 43,052 120,844 27,611 43,052 56,761
Domestic Upholstery
24,402 28,404 79,018 21,418 29,696 41,844
All Other
5,188 4,654 6,153 1,760 2,070 1,983

Consolidated
$ 87,360 $ 95,386 $ 282,577 $ 69,435 $ 95,386 $ 137,335

At the end of fiscal 2024 ~~first~~third quarter, order backlog decreased as compared to the fiscal 2023 year-end and the prior year ~~first~~third quarter end. The decrease was attributable to ~~more normalized levels~~soft demand and the absence of ~~shipping~~ACH orders and ~~lower~~backlog in the Home Meridian segment. See Review below for additional information on our incoming orders ~~driven by a decrease in overall demand.~~and backlog.
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Executive Summary-Results of Operations

■
Consolidated net sales for the fiscal 2024 third quarter decreased by $34.7 million, or 22.9%, compared to the prior year quarter due to sales decreases across all three reporting segments driven by continued soft demand for home furnishings, as well as our exit from the Accentrics Home product line. Despite the sales decline, consolidated gross profit and margin both increased for the quarter due to decreased product costs in the Hooker Branded segment driven by lower ocean freight costs and improved margin at Home Meridian segment due to our exit from the unprofitable categories, partially offset by decreased gross profit and margin in the Domestic Upholstery segment due to under-absorbed indirect costs, primarily indirect labor costs. Consolidated operating income and margin were $8.8 million and 7.5% as compared to $6.4 million and 4.2% in the prior year third quarter, due to improved profitability in the Hooker Branded and Home Meridian segments. Consolidated net income was $7.0 million or $0.65 per diluted share, compared to $4.8 million or $0.42 per diluted share in the prior year quarter.
Consolidated net sales for the fiscal 2024 first quarter decreased by $25.5 million, or 17.3% compared to the prior year quarter, driven by a 32.5% sales decrease in the Home Meridian segment and to a lesser extent, a 14.8% decrease in the Domestic Upholstery segment. Despite being a smaller part of overall results, All Other contributed a $1.1 million sales increase. Net sales in the Hooker Branded segment remained relatively unchanged. Consolidated gross profit decreased mainly due to lower sales volume, while gross margin increased. Consolidated operating income was $2.0 million or 1.6% of net sales, compared to $3.9 million or 2.7% in the prior year period. Consolidated net income was $1.5 million or $0.13 per diluted share for the quarter, compared to a $3.2 million or $0.26
■
For the fiscal 2024 nine-month period, consolidated net sales decreased by $115.4 million, or 25.5%, as compared to the same period last year due to decreased net sales in all three segments also attributable to industry-wide soft demand, as well as our exit from the Accentrics Home product line in the Home Meridian segment. Consolidated gross profit decreased due to the sales decline, while gross margin increased due to increased margin in the Hooker Branded and Home Meridian segments, partially offset by decreased gross profit and margin in the Domestic Upholstery segment. Consolidated operating income and margin were $12.0 million or 3.6% as compared to $17.6 million and 3.9% in the prior year period. Consolidated net income was $9.3 million or $0.85 per diluted share, as compared to $13.6 million or $1.14 per diluted share in the prior year period.

Our fiscal 2024 ~~first~~third quarter and nine months performance isare discussed in greater detail below under “Review” and “Results of Operations.”

Review

~~The~~Despite a challenging macroeconomic environment for the home furnishings industry, ~~continues to experience decreased demand~~including a slowdown in the housing market, high interest rates, and a ~~sluggish retail environment, as well as other economic uncertainties~~shift in consumer discretionary spending away from home furnishings, we are pleased to report an increase in net income for the fiscal 2024 third quarter. Despite these challenges, we are encouraged by positive indicators such as the normalization of ocean freight costs, eased supply chain constraints, more stable raw material costs, and increased ~~inflation and rising interest rates. We remain cautious yet~~labor availability. Additionally, our strategy to reposition the Home Meridian segment from a volatile, high risk model with unpredictable profitability to a lower risk, sustainable profit model have begun to yield positive results, with the segment reporting a quarterly operating income for ~~fiscal 2024 as during~~ the first ~~quarter of fiscal 2024 we managed~~time since calendar year 2021. All these factors have contributed to ~~strengthen~~ our ~~financial position by building up cash by $12 million from the 2023 fiscal year ended in January, reducing inventory levels by $23 million, and maintaining~~improved profitability ~~in the Hooker Branded and Domestic Upholstery segments. The Home Meridian segment’s operating loss was lower than prior year quarter’s result and better than management expected~~ for the ~~current year considering the current retail environment and the significant amount of closeout sales recorded in the first~~ quarter.

The Hooker Branded segment’s experienced a net sales ~~were essentially flat, decreasing slightly~~decrease of $17.5 million, or 30.9%, in the fiscal 2024 third quarter, due primarily to reduced volume driven by ~~0.8% or $339,000~~current lower demand for home furnishings. Short-term delays related to the implementation of a new ERP system over the Labor Day weekend had an impact of approximately $3 million, which would have positioned the sales in this segment down 26% for the quarter. Compounding this, the unusually high net sales in the previous year's third quarter created a challenging basis for comparison in the current year. Despite the sales decline, this segment reported an increased gross margin of 45.6% for the quarter, due mostly to lower ocean freight costs. We implemented price decreases and promotions on new orders in August to align with decreased ocean freight costs and the discounting levels in the home furnishings market. However, the majority of shipments still carried price increases we implemented in the prior year, which combined with lower freight costs, led to unusually high gross margins for the quarter. We anticipate a subsequent decrease in gross margin as more orders are shipped under our revised pricing. Additionally, decreased warehousing costs also contributed to the increased gross margin, as demurrage and drayage expenses decreased significantly compared to the prior year period. Discounting increased by 230 bps from abnormally low levels in the prior year due to softened demand in the quarter. In addition, returns and allowances increased by 140 bps compared to the prior year period. At the end of the first quarter, inventory levels decreased by $14 million as compared to fiscal 2023 year-end but were still elevated and much higher than pre-pandemic levels in fiscal 2020. We are actively working to reduce inventory levels to align with current demand. ThisThe segment reported ana solid operating income of ~~$2.3~~$7.3 million and an operating margin of ~~5.5%~~18.6%, compared to ~~$4.1~~$5.9 million and ~~9.8%, respectively,~~10.3% in the prior year period. ~~The decrease was due~~Incoming orders increased by 7% compared to ~~higher professional services fees~~both the prior year’s third quarter and increased marketing and advertising expenses to support the growth and expansion strategies. Additionally, compensation expenses also increased due to wage inflation and higher benefits expenses. Quarter-endthis year’s second quarter. Although quarter-end order backlog was much lower than the prior year ~~first quarter end but~~quarter-end, it increased from this year’s second quarter-end and remained ~~50%~~nearly 70% higher than pre-pandemic levels at the end of fiscal 2020 first quarter end. Incoming orders decreased by 16.6% as compared to the prior year quarter and approached levels similar to fiscal 2020 first quarter, reflecting more normalized demand after the pandemic.third quarter.

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The Home Meridian segment’s net sales decreased by ~~$20.2~~$6.9 million, or ~~32.5%~~13.6%, compared to the prior year third quarter, but increased compared to the first and second quarters of fiscal 2024. The sales decrease in the ~~fiscal 2024 first~~e-commerce channel accounted for over 40% of the overall decrease in the segment, due to our exit from the Accentrics Home (ACH) product line. The remaining decreases in the segment were attributable to sales decreases at Samuel Lawrence Furniture (SLF), Prime Resources International (PRI) and Pulaski Furniture (PFC), the divisions that serve independent furniture stores and major furniture chains. The decreases were partially offset by strong sales at Samuel Lawrence Hospitality (SLH), which reported sales increases of 152% and 46% for the third quarter and nine-month period, respectively, versus the prior year ~~first quarter. In addition, this segment recorded an operating loss of $2.1 million resulting from sales volume losses. Sales~~periods. Liquidations of inventory that ~~was~~were written down in the ~~fiscal 2023~~prior year fourth quarter ~~totaled $12.2 million in~~were substantially completed during the ~~fiscal 2024 first quarter. Sales of previously written-down or written-off inventory~~quarter and had an immaterial impact on gross profit. Despite the net sales decrease, HMI gross profit and margin increased by $3.4 million and 940 bps compared to the prior year third quarter, due to the absence of sales in unprofitable sales channels and product lines, as well as strong performance at SLH. The segment recorded a quarterly operating income of $0.9 million compared to a $3.2 million operating loss in the prior year third quarter. ~~While the results were disappointing, the operating loss improved~~Inventory levels decreased by $1$15 million as compared to year-end and $46 million as compared to prior year ~~first quarter. The sales declines were attributed to decreases with major furniture chains and mass merchants,~~third quarter end due to a slower retail environment for home furnishings and slower order rates and delayed orders from our retail customers as they continue to reduce their inventory levels. Prime Resources International and Samuel Lawrence Furniture accounted for nearly all the net sales decreases and about 70% of the operating loss, while Pulaski Furniture’s net sales decreased by $1.2 million. Meanwhile, at the Accentrics Home business unit (ACH), which focused on e-commerce customers, net sales remained flat as compared to the prior year quarter, and accounted for 30% of the operating loss in this segment due to the liquidation of the ACH business. On a more positive note, Samuel Lawrence Hospitality’s net sales more than doubled compared to the prior year quarter indicating a strong recovery in the hospitality industry after the COVID pandemic. Additionally, freight costs improved by approximately 300 bps versus the prior year first quarter due to the stabilization of ocean freight rates. Incoming orders and quarter-end backlog were lower than the prior year quarter and fiscal 2020 first quarter, dueprimarily to the absence of ~~orders from Clubs channel and the ACH business,~~Accentrics Home inventory, as well as the realignment of inventory mix to reflect our current business plan. We reduced our footprint in the Georgia warehouse by 200,000 square feet in the second quarter and entered into an agreement in the third quarter to reduce another 200,000 square feet by early next year. Consequently, costs at the Georgia warehouse decreased ~~incoming~~by 100 bps during the third quarter. Incoming orders ~~from~~were 19% higher than prior year third quarter, but lower than the first and second quarters’ orders as our retail ~~customers.~~customers are matching inventories to current soft demand for home furnishings. Quarter-end backlog was lower than the same period last year.

The Domestic Upholstery segment’s net sales decreased by ~~$6.1~~$10.9 million, or ~~14.8%~~25%, compared to the prior year third quarter due to sales declines in ~~the fiscal 2024 first quarter, following a streak of sales growth for the past two years.~~all four divisions. We reduced production at Bradington Young and HF Custom Sunset West and Shenandoah experienced sales decreases. These decreases were partially offset by increased net sales at Bradington-Young. The sales decline at HF Custom resulted from decreased incoming orders. Sales decreases at Sunset West were attributedin August to ~~slowed shipping in February and March caused by the December 2022 conversion to our new ERP system. Additionally, during the expansion of our outdoor furniture business~~conform to the ~~east coast, we experienced transition issues~~prevailing backlog levels. Gross profit and ~~start-up delays in~~margin decreased by $3.4 million and 290 bps, primarily due to the ~~Georgia warehouse, which affected shipping activities at Sunset West. These issues~~sales decline. On a positive note, direct material costs were ~~mostly resolved~~220 bps lower than prior year quarter due to more stable material costs; however, this favorable variance was more than offset by ~~the end of the first quarter. Profitability in the segment was negatively impacted by higher medical claims across all divisions and~~ under-absorbed indirect costs, atwhich increased by 440 bps from the prior year third quarter attributable to lower net sales. Direct labor and warehousing expenses decreased as a result of decreased production levels and demurrage costs but increased as a percent of sales due to lower net sales. Shenandoah and Sunset West recorded operating income despite sales decreases. Bradington Young achieved breakeven for the quarter, while HF Custom recorded an operating loss due to ~~sales volume loss and reduced working hours. Gross margin benefited from the price increases we implemented last year to help mitigate materials cost inflation. Despite the~~its sales decline and ~~disruptions, this segment reported an~~under-absorbed costs and operating ~~income~~expenses. Incoming orders increased by 39% in comparison to the third quarter of ~~$1.3 million~~the previous year, as Bradington Young, HF Custom and ~~an operating margin of 3.8%.~~Shenandoah all recorded increased orders. Sunset West orders remained unchanged as compared to the prior year third quarter. Quarter-end backlog for the segment slightly decreased from second quarter end. Bradington-Young ~~remained over three~~backlog was 2.5 times that of the pre-pandemic levels at fiscal 2020 ~~first~~third quarter end, while the backlogs for HF Custom and Shenandoah decreased to levels ~~similar~~comparable to fiscal 2020. ~~Incoming orders at Bradington-Young and Shenandoah were at similar levels in the first quarter of fiscal 2020, while HF Custom experienced lower orders compared to this period.~~

Cash and cash equivalents stood at ~~$31~~$39.8 million at fiscal 2024 ~~first~~third quarter-end, an increase of ~~$12~~$20.8 million from the prior year-end. During the ~~first quarter,~~nine-month period, we used a portion of the ~~$22.4~~$48.8 million cash generated from operating activities to fund ~~$4.3~~$11.7 million share repurchases, ~~$3.2~~$7.2 million in cash dividends to our shareholders, $5.7 million capital expenditures including investments in our new ~~showroom, $2.4~~High Point and Atlanta showrooms, $3.8 million ~~in cash dividends to our shareholders, and $1.3 million~~ for further development of our cloud-based ERP ~~system.~~system, and $2.4 million on BOBO acquisition. Our $25 million share repurchase program was completed during the fiscal 2024 third quarter. We purchased and retired approximately 1.4 million shares of our common stock since our share repurchase program began in the second quarter of last year. In addition to our cash balance, we had an aggregate of $27.2 million available under our existing revolver at quarter-end to fund working capital needs. ~~We believe that our liquidity and capital requirements will be further improved through the liquidation sales of excess inventories at Home Meridian, as discussed above.~~ With strategic inventory management, reasonable capital expenditures, and prudent expense management, we believe we have sufficient financial resources to support our business operations for the foreseeable future.

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Results of Operations

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

Thirteen Weeks Ended

April 30,

May 1,

2023

2022

Net sales
100 % 100 %
Cost of sales
77.1 80.0
Gross profit
22.9 20.0
Selling and administrative expenses

20.6 16.7
Intangible asset amortization
0.7 0.6
Operating income
1.6 2.7
Other income, net
0.1 0.2
Interest expense
0.1 -
Income before income taxes
1.5 2.9
Income tax expense
0.3 0.7
Net income
1.2 2.2
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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

Net sales
100 % 100 % 100 % 100 %
Cost of sales
71.1 78.9 74.7 79.5
Gross profit
28.9 21.1 25.3 20.5
Selling and administrative expenses
20.6 16.3 20.9 16.0
Intangible asset amortization
0.8 0.6 0.8 0.6
Operating income
7.5 4.2 3.6 3.9
Other income, net
0.6 0.1 0.3 0.1
Interest expense
0.3 0.3 0.4 0.1
Income before income taxes
7.8 4.1 3.5 3.9
Income tax expense
1.7 0.9 0.8 0.9
Net income
6.0 3.2 2.8 3.0

Fiscal 2024 ~~First~~Third Quarter and Nine Months Compared to Fiscal 2023 ~~First~~Third Quarter and Nine Months

Net Sales

Net Sales

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30,

May 1,

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Hooker Branded
$ 41,891 34.4 % $ 42,230 28.7 % $ (339 ) -0.8 % $ 39,122 33.5 % $ 56,632 37.4 % $ (17,510 ) -30.9 % $ 118,936 35.4 % $ 154,133 34.1 % $ (35,197 ) -22.8 %
Home Meridian
41,921 34.4 % 62,085 42.1 % (20,164 ) -32.5 % 43,692 37.4 % 50,588 33.4 % (6,896 ) -13.6 % 114,524 34.0 % 171,721 38.0 % (57,197 ) -33.3 %
Domestic Upholstery
35,104 28.8 % 41,220 28.0 % (6,116 ) -14.8 % 32,559 27.9 % 43,436 28.7 % (10,877 ) -25.0 % 98,555 29.3 % 122,982 27.2 % (24,427 ) -19.9 %
All Other
2,899 2.4 % 1,779 1.2 % 1,120 63.0 % 1,458 1.2 % 924 0.5 % 534 57.8 % 4,437 1.3 % 2,967 0.7 % 1,470 49.5 %
Consolidated
$ 121,815 100 % $ 147,314 100 % $ (25,499 ) -17.3 % $ 116,831 100 % $ 151,580 100 % $ (34,749 ) -22.9 % $ 336,452 100 % $ 451,803 100 % $ (115,351 ) -25.5 %

Unit Volume

FY24 Q1 % Increase vs. FY23 Q1

Average Selling Price (“ASP”)

FY24 Q1 % Increase vs. FY23 Q1

FY24 Q3 %
Increase
vs. FY23 Q3

FY24 YTD %
Increase
vs. FY23 YTD

Average Selling Price (“ASP”)

FY24 Q3 %
Increase
vs. FY23 Q3

FY24 YTD %
Increase
vs. FY23 YTD

Hooker Branded
-6.3 %
Hooker Branded
8.2 % -23.7 % -23.3 %
Hooker Branded
-6.3 % 2.3 %
Home Meridian
-10.5 %
Home Meridian
-24.4 % -18.0 % -19.2 %
Home Meridian
4.8 % -16.6 %
Domestic Upholstery
-25.0 %
Domestic Upholstery
13.2 % -37.0 % -30.2 %
Domestic Upholstery
4.2 % 10.1 %
All Other
55.1 %
All Other
4.7 % -4.9 % 13.9 %
All Other
-15.9 % -1.5 %
Consolidated
-11.1 %
Consolidated
-6.1 % -21.5 % -20.9 %
Consolidated
-4.8 % -5.9 %

Consolidated net sales decreased in the fiscal 2024 ~~first~~third quarter ~~due~~and nine-month period compared to ~~sales declines in~~ the ~~Home Meridian and Domestic Upholstery segments, while net sales at All Other were up $1.1 million and Hooker Branded net sales decreased slightly.~~prior year periods:

■
The Hooker Branded segment’s net sales decreased by ~~0.8%~~$17.5 million, or 30.9%, in the fiscal 2024 ~~first~~third quarter ~~compared~~primarily due to decreased unit volume driven by current soft demand for home furnishings, and to a lesser extent, decreased average selling prices and short-term delays related to the ~~prior year quarter. Although~~implementation of the new ERP system in early September. In response to normalized ocean freight costs and to align with current demand, we implemented price decreases and promotions on new orders effective in August, leading to the first quarterly decrease in ASP since calendar 2020. For the fiscal 2024 nine-month period, net sales decreased by $35.2 million, or 22.8%, due to decreased unit volume, which was driven by lower demand. ASP increased ~~due to~~during the nine-month period as the majority of inventories sold still carried price increases we implemented last year in response to higher freight costs and product cost ~~inflation, the favorable effect was offset by higher discounting and returns and allowances, which were 370 bps higher than prior year period, as well as decreased unit volume.~~inflation.
24
Table of Contents

■
The Home Meridian segment’s net sales decreased by ~~32.5%~~$6.9 million, or 13.6%, in the fiscal 2024 ~~first quarter~~third quarter. This decrease was attributed to decreased unit volume due to the absence of ACH sales and lower sales with independent furniture stores and major furniture chains. The decreases were largely mitigated by strong sales at SLH, driven by the continued rebound in the hospitality business. ASP increased during the third quarter as the liquidation sales of furniture previously written down were substantially completed, having a minimal impact on revenue for this period. Additionally, ASP benefitted from increased SLH sales, which tend to be higher priced items. For the nine-month period, net sales decreased by $57.2 million, or 33.3%, due to sales declines across the major furniture chains, the e-commerce channel, independent furniture stores, and mass merchant ~~channels due to a slow retail environment.~~categories. These decreases were also partially offset by ~~strong~~ sales ~~in the hospitality business, which more than doubled as compared to the prior year period.~~increases at SLH. ASP decreased ~~significantly~~during the nine-month period primarily due to the ~~increased volume of~~ liquidation sales ~~which accounted for over 50%~~ of heavily discounted ACH inventories and the ~~total units sold but less than 30%~~sales of ~~total sales dollars.~~obsolete inventories at PRI and SLF during the first and second quarters.

■
The Domestic Upholstery segment’s net sales decreased by ~~14.8%~~$10.9 million, or 25%, in the fiscal 2024 ~~first~~third quarter ~~compared to the prior year period. This decrease was driven by sales declines at HF Custom and Sunset West, and~~due to a ~~lesser extent, a~~significant decrease in unit volume. All four divisions reported sales ~~decrease at Shenandoah. Bradington-Young reported a~~decreases for both the quarter and the nine-month period. The Domestic Upholstery segment experienced sales ~~increase.~~growth for the past two years. However, as incoming orders and backlog normalized, we reduced production to align with current demand. ASP increased across all divisions during the fiscal 2024 third quarter and nine-month period due to the price increases we implemented last year in response to the inflation of raw material costs. However, itthe increase in ASP was not sufficient to offset the ~~decrease in~~ unit ~~volume.~~volume loss.

■
All Other’s net sales increased significantly in the fiscal 2024 first quarter driven by increased unit volume and ASP at H Contract due to continued recovery of the senior living industry after the COVID pandemic.

Gross Profit and Margin

Thirteen Weeks Ended

April 30,

May 1,

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

Hooker Branded
$ 13,091 31.3 % $ 13,240 31.4 % $ (149 ) -1.1 %
Home Meridian
6,713 16.0 % 6,305 10.2 % 408 6.5 %
Domestic Upholstery
7,023 20.0 % 9,354 22.7 % (2,331 ) -24.9 %
All Other
1,079 37.2 % 560 31.5 % 519 92.7 %
  Consolidated
$ 27,906 22.9 % $ 29,459 20.0 % $ (1,553 ) -5.3 %
22

~~Table of Contents~~

Gross Profit and Margin

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Hooker Branded
$ 17,823 45.6 % $ 16,156 28.5 % $ 1,667 10.3 % $ 43,840 36.9 % $ 45,357 29.4 % $ (1,517 ) -3.3 %
Home Meridian
8,803 20.1 % 5,431 10.7 % 3,372 62.1 % 18,726 16.4 % 19,057 11.1 % (331 ) -1.7 %
Domestic Upholstery
6,485 19.9 % 9,918 22.8 % (3,433 ) -34.6 % 19,872 20.2 % 26,400 21.5 % (6,528 ) -24.7 %
All Other
599 41.1 % 503 54.4 % 96 19.1 % 2,519 56.8 % 1,708 57.6 % 811 47.5 %
Consolidated
$ 33,710 28.9 % $ 32,008 21.1 % $ 1,702 5.3 % $ 84,957 25.3 % $ 92,522 20.5 % $ (7,565 ) -8.2 %

In the fiscal 2024 third quarter, consolidated gross profit and margin increased due to significantly improved profitability at Hooker Branded and Home Meridian segments. Consolidated gross profit decreased in the nine-month period of fiscal 2024, ~~first quarter due to~~primarily as a ~~decrease in the Domestic Upholstery segment, partially offset by increases in gross profit at Home Meridian and All Other. Consolidated~~result of lower net sales. However, consolidated gross margin increased ~~due~~during the period, also attributable to ~~lower net sales~~improved profitability at Hooker Branded and ~~improved gross margin in the traditionally lower margin~~ Home Meridian ~~segment.~~segments.

■
The Hooker Branded segment’s gross profit and ~~gross~~ margin both ~~remained flat. Warehousing~~increased in the fiscal 2024 third quarter despite a decline in net sales. This favorable outcome was attributed to significantly decreased product costs ~~increased primarily due to higher demurrage and drayage expenses. Although these expenses have shown a downward trend in recent quarters, they were higher than~~driven by lower ocean freight. Inventories sold carrying the ~~prior~~price increases we implemented last year, ~~first quarter. Additionally, operating and shipping supplies expenses, along~~combined with ~~benefits expenses, also~~lower freight costs, contributed to the increase in gross profit and margin. Furthermore, inventory turns have increased steadily since August, resulting in a higher proportion of inventories sold at lower costs. However, price decreases and promotions implemented on new orders starting in August are expected to gradually erode margins as more orders sold at lower prices are shipped. In addition, warehousing ~~costs. These increases were partially offset by~~costs decreased due to lower ~~warehouse costs resulting from the exit of a leased warehouse in Asia~~demurrage and drayage expenses, as well as lower labor and compensation expenses due to reduced shipping activities. For the fiscal 2024 nine-month period, gross profit decreased due to sales decline, while gross margin increased due to the factors discussed previously.

■
The Home Meridian segment’s gross profit and margin ~~both~~ increased by $3.4 million and 940 bps, respectively, in the fiscal 2024 ~~first quarter despite a net~~third quarter. This increase was primarily attributable to improved margin due to previous exits of unprofitable sales ~~decline. Gross~~channels and product lines, decreased product costs, and increased profitability at SLH. Furthermore, decreased costs in the Georgia warehouse, and decreased wage expenses due to organizational and personnel changes all contributed to increased gross profit and margin. For the fiscal 2024 nine-month period, gross profit slightly decreased driven by the sales decrease, while gross margin increased by 530 bps due to ~~lower ocean freight costs,~~the previously mentioned factors, as well as the absence of warehouse transition and start-up costs incurred in the prior year ~~period, and lower wage expenses due to organizational and personnel changes.~~first quarter. Sales of previously written-down or written-off inventory had an immaterial impact on gross profit in the ~~quarter.~~fiscal 2024 third quarter and nine-month period.
25
Table of Contents

■
The Domestic Upholstery segment’s gross profit and margin both decreased in the fiscal 2024 ~~first~~third quarter and nine-month period driven by net sales decreases. Direct material costs were 220 bps and 310 bps below prior year periods due to more stable raw material costs. However, these decreases were more than offset by under-absorbed indirect costs, which were 440 bps and 370 bps higher as compared to the prior year third quarter and nine-month period, respectively. Direct labor costs decreased in absolute terms due to reduced production at Bradington Young, HF Custom, and Shenandoah. Warehousing and distribution expenses also decreased in absolute amount, due to lower demurrage expense and freight-out expense, which was also impacted by lower sales. Direct labor costs and warehousing costs both increased as a percentage of net sales during these periods due to sales ~~decline and increased benefits expense driven by higher medical claims, which were 310 bps higher than the prior year period.~~decreases.

■
~~All Other’s gross profit and margin both increased in the fiscal 2024 first quarter due to increased net sales.~~

Selling and Administrative Expenses (S&A)

Selling and Administrative Expenses (S&A)

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30,

May 1,

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Hooker Branded
$ 10,791 25.8 % $ 9,098 21.5 % $ 1,693 18.6 % $ 10,535 26.9 % $ 10,296 18.2 % $ 240 2.3 % $ 30,542 25.7 % $ 28,935 18.8 % $ 1,608 5.6 %
Home Meridian
8,502 20.3 % 9,066 14.6 % (564 ) -6.2 % 7,550 17.3 % 8,302 16.4 % (752 ) -9.1 % 22,267 19.4 % 25,346 14.8 % (3,079 ) -12.1 %
Domestic Upholstery
5,142 14.6 % 6,058 14.7 % (916 ) -15.1 % 5,203 16.0 % 5,550 12.8 % (348 ) -6.3 % 15,392 15.6 % 16,479 13.4 % (1,088 ) -6.6 %
All Other
613 21.1 % 436 24.5 % 177 40.6 % 728 49.9 % 564 61.0 % 164 29.1 % 2,006 45.2 % 1,495 50.4 % 511 34.2 %
Consolidated
$ 25,048 20.6 % $ 24,658 16.7 % $ 390 1.6 % $ 24,016 20.6 % $ 24,712 16.3 % $ (696 ) -2.8 % $ 70,207 20.9 % $ 72,255 16.0 % $ (2,048 ) -2.8 %

Consolidated selling and administrative (“S&A”) expenses ~~increased slightly~~decreased in absolute terms ~~due to the increase in the Hooker Branded segment, which was offset by decreases in the Home Meridian and Domestic Upholstery segments. Consolidated S&A expenses~~but increased ~~significantly~~ as a percentage of net sales ~~due to overall decreased net sales.~~in the fiscal 2024 third quarter and nine-month period.

■
The Hooker Branded segment’s S&A expenses increased ~~both~~ in absolute terms during the fiscal 2024 third quarter and nine-month period. This increase was primarily attributed to higher selling expenses, including those associated with larger showroom footprints, higher professional services expenses and higher international travel expenses. These increases were partially offset by lower commissions due to decreased net sales. S&A expenses as a percentage of net sales inincreased for both the fiscal 2024 ~~first quarter. This increase was attributed to various factors, including higher compensation~~third quarter and ~~benefits expense from salary inflation and higher medical claims, higher marketing costs and higher professional services fees. The increases were partially offset by a decrease in bad debt expense~~nine-month period also due to ~~decreased AR balance.~~lower net sales.

■
The Home Meridian segment’s S&A expenses decreased in absolute terms infor the fiscal 2024 ~~first~~third quarter and nine-month period due primarily to decreased salary expenses as the result of personnel changes, and to a lesser extent, lower selling costs and ~~product development cost. These decreases were partially offset by higher bad debt expense~~decreased insurance costs due to ~~an increase in uninsured AR balance, return to more normalized travel expenses and higher compliance costs.~~significantly reduced inventory levels. S&A expenses increased as a percentage of net sales for these periods due to lower net sales.

■
The Domestic Upholstery segment’s S&A expenses decreased in absolute terms ~~and remained flat as a percentage of net sales~~ in ~~the~~ fiscal 2024 ~~first quarter. The decrease was primarily~~third quarter and nine-month period due to lower selling costs, ~~resulting from decreased net sales,~~ the absence of accelerated ERP depreciation ~~expense on its ERP system in~~expenses, and lower bonus accrual due to current low profitability. These decreases were partially offset by higher advertising supplies and sample expenses for the ~~prior year period,~~new M Brand, as well as ~~decreased wage expenses. The decrease was partially offset by increased benefits expense driven by higher medical claims,~~ higher professional ~~service fees, and other general spending.~~services expenses.

■
~~All Other S&A expenses increased in the fiscal 2024 first quarter due to increased selling costs on over 60% net sales increase.~~
23

~~Table of Contents~~

Intangible Asset Amortization

Thirteen Weeks Ended

April 30,

May 1,

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

Intangible asset amortization
$ 883 0.7 % $ 878 0.6 % $ 5 0.6 %

Intangible Asset Amortization

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Intangible asset amortization
$ 924 0.8 % $ 878 0.6 % $ 46 5.2 % $ 2,732 0.8 % $ 2,634 0.6 % $ 98 3.7 %

Intangible asset amortization expense increased slightly in fiscal 2024 ~~first~~third quarter and nine-month period due to the reassessment and amortization of Sam Moore trade name. See Note 8 to our Condensed Consolidated Financial Statements for additional information.

Operating Profit/(Loss) and Margin

Thirteen Weeks Ended

April 30,

May 1,

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

Hooker Branded
$ 2,300 5.5 % $ 4,142 9.8 % $ (1,842 ) -44.5 %
Home Meridian
(2,119 ) -5.1 % (3,095 ) -5.0 % 976 31.5 %
Domestic Upholstery
1,328 3.8 % 2,752 6.7 % (1,424 ) -51.7 %
All Other
466 16.1 % 124 7.0 % 342 275.8 %
  Consolidated
$ 1,975 1.6 % $ 3,923 2.7 % $ (1,948 ) -49.7 %
26
Table of Contents

Operating Profit/(Loss) and Margin

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Hooker Branded
$ 7,287 18.6 % $ 5,860 10.3 % $ 1,427 24.4 % $ 13,298 11.2 % $ 16,423 10.7 % $ (3,125 ) -19.0 %
Home Meridian
923 2.1 % (3,205 ) -6.3 % 4,128 128.8 % (4,532 ) -4.0 % (7,290 ) -4.2 % 2,758 37.8 %
Domestic Upholstery
688 2.1 % 3,823 8.8 % (3,135 ) -82.0 % 2,739 2.8 % 8,288 6.7 % (5,549 ) -67.0 %
All Other
(128 ) -8.8 % (60 ) -6.5 % (68 ) -113.3 % 513 11.6 % 212 7.2 % 301 142.0 %
Consolidated
$ 8,770 7.5 % $ 6,418 4.2 % $ 2,352 36.6 % $ 12,018 3.6 % $ 17,633 3.9 % $ (5,615 ) -31.8 %

Operating profit and margin increased as compared to the third quarter of the previous year but decreased as compared to the nine-month period of the prior year, ~~quarter~~ due to the factors discussed above.

Interest Expense, net

Thirteen Weeks Ended

April 30,

May 1,

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

Consolidated interest expense, net
$ 179 0.1 % $ 28 0.0 % $ 151 539.3 %

Interest Expense, net

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Consolidated interest expense, net
$ 364 0.3 % $ 434 0.3 % $ (70 ) -16.1 % $ 1,197 0.4 % $ 546 0.1 % $ 651 119.2 %

Consolidated interest expense was ~~higher~~lower in fiscal 2024 ~~first~~third quarter due to the absence of interest expense on the Existing Revolver we drew upon in the third quarter of prior year. Interest expense increased in the fiscal 2024 nine-month period due to interest on the term loans, which we entered ~~into~~ in July ~~2022.~~2022, as well as increased interest rates.

Income taxes

Income taxes

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30,

May 1,

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Consolidated income tax expense
$ 402 0.3 % $ 991 0.7 % $ (589 ) -59.4 % $ 2,027 1.7 % $ 1,334 0.9 % $ 693 51.9 % $ 2,620 0.8 % $ 3,946 0.9 % $ (1,326 ) -33.6 %

Effective Tax Rate
21.7 % 23.7 % 22.4 % 21.6 % 22.0 % 22.5 %

We recorded income tax ~~expenses~~expense of ~~$402,000 and $991,000~~$2.0 million for the fiscal 2024 ~~and fiscal 2023 first quarters, respectively.~~third quarter compared to $1.3 million for the comparable prior year quarter. The effective tax rates for the fiscal 2024 and ~~2021 first~~2023 third quarters were ~~21.7%~~22.4% and ~~23.7%~~21.6%, respectively. For the fiscal 2024 nine-month period, we recorded income tax expense of $2.6 million, compared to $3.9 million for the comparable prior year period. The effective tax rates for the fiscal 2024 and 2023 nine-month periods were 22.0% and 22.5%, respectively.

Net Income

Net Income

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30,

May 1,

October 29,

October 30,

October 29,

October 30,

2023

2022

2023

2022

2023

2022

% Net Sales

% Net Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

% Net
Sales

% Net
Sales

$ Change

% Change

Consolidated net income
$ 1,450 1.2 % $ 3,182 2.2 % $ (1,732 ) -54.4 % $ 7,038 6.0 % $ 4,841 3.2 % $ 2,197 45.4 % $ 9,272 2.8 % $ 13,566 3.0 % $ (4,294 ) -31.7 %

Diluted earnings per share
$ 0.13 $ 0.26 $ 0.65 $ 0.42 $ 0.85 $ 1.14

2427
Table of Contents

Outlook

While ~~retail conditions~~economic indicators remain mixed and ~~economic uncertainties continue, we saw increases in~~furniture industry retail traffic is down about 15% from January through October 2023, our consolidated ~~incoming~~ orders ~~in fiscal May. We believe~~were up $12.7 million, or 15.7% for the ~~industry is steadily working through excess inventory~~third quarter and ~~believe incoming~~for the first nine months, consolidated orders increased by $75.8 million or 33.5%. Recent order trends and an improved long-term economic outlook bode well for Hooker and the industry. Reduced housing activity and high mortgage interest rates are ~~indicative of that progress. Furthermore, we are encouraged by reports from customers about strong Memorial Day sales.~~still challenging, but several positives have emerged since last quarter. Core inflation is at the lowest level since 2021, the US economy grew nearly 5% last quarter, unemployment remains at record lows and a recession appears less likely.

~~Following Hooker Legacy Brands’ successful new showroom grand opening at~~As we look to the ~~Spring High Point Market,~~next quarter, we ~~expect to continue initiatives to enhance visibility and addressable market reach this summer such as debuting a new showroom at the Atlanta Market~~see flat sales for our higher-priced Hooker Legacy brands ~~and showing~~as compared to the prior year fourth quarter. We expect that the current downturn in the furniture retail business will temporarily suppress sales growth at ~~our~~HMI through the fourth ~~Las Vegas Market this summer. Sunset West will debut a~~quarter. However, significant new ~~showroom at the Atlanta Market, which is the new sponsor of the Casual Market for outdoor furniture,~~retail product placements achieved by HMI recently ~~relocated from Chicago. At HMI, we expect the previously announced inventory liquidations~~should begin to ~~be substantially completed~~buoy sales by the ~~end~~first quarter of next fiscal year as the ~~fiscal 2024 second quarter. While we expect some short-term volatility in sales~~placements generate orders and ~~earnings at HMI, we continue to expect the segment to achieve profitability by the end of the 2024 fiscal year.~~backlogs.

We believe a lot of our growth initiatives will begin to gain traction in the first half of calendar 2024. We believe that our focus on reducing costs, keeping our balance sheet strong and judiciously deploying capital, along with our investments to promote higher visibility and future growth will continue to focus on organic growth opportunities through expanded visibility, strategic product development, operational improvements, and cost reductions. We believe by focusing on these controllables, we will beput us in the strongest possible position ~~when the~~to leverage a return of furniture demand ~~environment improves.~~to more typical levels.

Financial Condition, Liquidity and Capital Resources

Cash Flows – Operating, Investing and Financing Activities

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

April 30,

May 1,

October 29,

October 30,

2023

2022

2023

2022

Net cash provided by/(used in) operating activities
$ 22,350 $ (30,018 ) $ 48,770 $ (41,149 )
Net cash used in investing activities
(3,265 ) (26,860 ) (8,025 ) (29,845 )
Cash used in financing activities
(7,111 ) (2,388 )
Net Cash (used in)/ provided by financing activities
(19,952 ) 8,136
Net increase / (decrease) in cash and cash equivalents
$ 11,974 $ (59,266 ) $ 20,793 $ (62,858 )

During the ~~three~~nine months ended ~~April 30,~~October 29, 2023, we used a portion of the ~~$22.4~~$48.8 million cash generated from operations and $444,000 life insurance proceeds to fund ~~$4.3~~$11.7 million share repurchases, ~~$3.2~~$7.2 million in cash dividends to our shareholders, $5.7 million capital expenditures including investments in our new ~~showroom, $2.4 million in cash dividends to our shareholders, $1.3~~showrooms, $3.8 million for development of our cloud-based ERP system, $2.4 million on the BOBO acquisition, and ~~$107,000~~$378,000 in life insurance premiums on Company-owned life insurance policies.

In comparison, during the ~~three~~nine months ended ~~May 1,~~October 30, 2022, we used a portion of the $25 million term-loan proceeds and existing cash and cash equivalents on hand to build up inventory levels by $58.9 million, fund the $26 million Sunset Acquisition, pay ~~$2.4~~$9.4 million in purchases and retirement of common stock, $7.1 million in cash dividends, ~~$830,000~~$4.4 million for the development of our new cloud-based ERP system, $3.5 million capital expenditures to enhance our business systems and facilities, and ~~$118,000~~$464,000 in life insurance premiums on Company-owned life insurance policies.

Liquidity, Financial Resources and Capital Expenditures

Our financial resources include:

■
available cash and cash equivalents, which are highly dependent on incoming order rates and our operating performance;

■
expected cash flow from operations;

■
available lines of credit; and

■
cash surrender value of Company-owned life insurance.

The most significant components of our working capital are inventory, accounts receivable and cash and cash equivalents reduced by accounts payable and accrued expenses.

2528
Table of Contents

Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for inventory, lease payments and payroll), quarterly dividend payments and capital expenditures related primarily to our ERP project, showroom renovations and upgrading systems, buildings and equipment. The timing of our working capital needs can vary greatly depending on demand for and availability of raw materials and imported finished goods but is generally the greatest in the mid-summer as a result of inventory build-up for the traditional fall selling season. Long term cash requirements relate primarily to funding lease payments and repayment of long-term debt.

Loan Agreements and Revolving Credit Facility

On July 26, 2022, we entered into the Fourth Amendment to the Second Amended and Restated Loan Agreement (the “Amendment”) with Bank of America, N.A. (“BofA”) to replenish cash used to make the Sunset Acquisition. The Second Amended and Restated Loan Agreement dated as of September 29, 2017, had previously been amended by a First Amendment to Second Amended and Restated Loan Agreement dated as of January 31, 2019, a Second Amendment to Second Amended and Restated Loan Agreement dated as of November 4, 2020, and a Third Amendment to Second Amended and Restated Loan Agreement dated as of January 27, 2021 (as so amended, the “Existing Loan Agreement”). Details of the individual credit facilities provided for in the Amendment are as follows:

■
Unsecured Revolving Credit Facility. Under the Amendment, the expiration date of the existing $35 million Unsecured Revolving Credit Facility (the “Existing Revolver”) was extended to July 26, 2027. Any amounts outstanding will bear interest at a rate per annum, equal to the then current Bloomberg Short-Term Bank Yield Index (“BSBY”) (adjusted periodically) plus 1.00%. The interest rate will be adjusted on a monthly basis. The actual daily amount of undrawn letters of credit is subject to a quarterly fee equal to a per annum rate of 1%. We must also pay a quarterly unused commitment fee that is based on the average daily amount of the facility utilized during the applicable quarter;

■
2022 Secured Term Loan. The Amendment provided us with aan $18 million ~~term loan~~Secured Term Loan (the “Secured Term Loan”), which was disbursed to us on July 26, 2022. We are required to pay monthly interest only payments at a rate per annum equal to the then current BSBY rate (adjusted periodically) plus 0.90% on the outstanding balance until the principal is paid in full. The interest rate will be adjusted on a monthly basis. On July 26, 2027, the entire outstanding indebtedness is due in full, including all principal and interest. The Secured Term Loan is secured by certain company-owned life insurance policies under a Security Agreement (Assignment of Life Insurance Policy as Collateral) dated July 26, 2022, by and between the Company and BofA; and

■
2022 Unsecured Term Loan. The Amendment provided us with a $7 million ~~unsecured term loan~~Unsecured Term Loan (the “Unsecured Term Loan”), which was disbursed to us on July 26, 2022. We are required to pay monthly principal payments of $116,667 and monthly interest payments at a rate per annum equal to the then current BSBY (adjusted periodically) plus 1.40% on the outstanding balance until paid in full. The interest rate will be adjusted monthly. On July 26, 2027, the entire outstanding indebtedness is due in full, including all principal and interest.

We may prepay any outstanding principal amounts borrowed under either the Secured Term Loan or the Unsecured Term Loan at any time, without penalty provided that any payment is accompanied by all accrued interest owed. As of ~~April 30,~~October 29, 2023, ~~$5.9~~$5.2 million was outstanding under the Unsecured Term Loan, and $18 million was outstanding under the Secured Term Loan.

We incurred $37,500 in debt issuance costs in connection with our term loans. As of ~~April 30,~~October 29, 2023, unamortized loan costs of ~~$31,875~~$28,125 were netted against the carrying value of our term loans on our condensed consolidated balance sheets.

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

■
Maintain a ratio of funded debt to EBITDA not exceeding:
o
~~2.50:1.0 through July 30, 2023;~~

o
2.25:1.0 through July 30, 2024; and

o
2.00:1.00 thereafter.

■
A basic fixed charge coverage ratio of at least 1.25:1.00; and

■
Limit capital expenditures to no more than $15.0 million during any fiscal year.

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The Existing 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 Existing 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 Existing Loan Agreement.

We were in compliance with each of these financial covenants at ~~April 30,~~October 29, 2023 and expect to remain in compliance with existing covenants for the foreseeable future.

As of ~~April 30,~~October 29, 2023, we had $27.2 million available under our $35 million Existing Revolver to fund working capital needs. Standby letters of credit in the aggregate amount of $7.8 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the Existing Revolver as of ~~April 30,~~October 29, 2023. There were no additional borrowings outstanding under the Existing Revolver as of ~~April 30,~~October 29, 2023.

Share Repurchase Authorization

In fiscal 2023, our Board of Directors authorized the repurchase of up to $20 million of the Company’s common shares. The authorization does not obligate us to acquire a specific number of shares during any period and does not have an expiration date, but it may be modified, suspended, or discontinued at any time at the discretion of our Board of Directors. Repurchases may be made from time to time in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, and subject to our cash requirements for other purposes, compliance with the covenants under the loan agreement for our revolving credit facility and other factors we deem relevant. In fiscal 2024 second quarter, our Board of Directors approved an additional $5 million for the repurchase of our common shares, adding to the $20 million authorization it approved in fiscal 2023.

During the ~~first quarter of~~ fiscal 2024 nine-month period, we used approximately ~~$4.3~~$11.7 million of the authorization to purchase ~~227,330~~620,634 of our common shares (at an average price of ~~$18.99~~$18.79 per share)~~, with approximately $2.3 million remaining available for future purchases under the authorization as of the end of~~. The share repurchase program was completed during the fiscal 2024 ~~first~~third quarter. ~~See Note 14 to our Condensed Consolidated Financial Statement “Additional Share Repurchase Authorization” herein for an update on our share repurchase program.~~

Capital Expenditures

We expect to spend approximately ~~$2.0-3.0~~$1 million in capital expenditures over the remainder of fiscal 2024 to maintain and enhance our operating systems and facilities.

Enterprise Resource Planning Project

During calendar 2021, our Board of Directors approved an upgrade to our current ERP system and implementation efforts began shortly thereafter. The ERP system went live at Sunset West in December 2022 and ~~is expected~~in the legacy Hooker divisions in early September 2023. We expect it to go live in ~~other legacy Hooker divisions in fiscal 2024, with~~ the Home Meridian segment ~~following afterwards.~~in fiscal 2025. To complete the ERP system implementation as anticipated, we will be required to expend significant financial and human resources. We anticipate spending approximately ~~$2.5~~$1 million over the remainder of fiscal 2024, with a significant amount of time invested by our associates.

Dividends

On ~~June~~December 5, 2023, our board of directors declared a quarterly cash dividend of ~~$0.22~~$0.23 per share which will be paid on ~~June 30,~~December 29, 2023 to shareholders of record at ~~June 16,~~December 15, 2023. This represents a $0.01 per share and 4.5% increase over the previous quarterly dividend and the eighth consecutive annual dividend increase.

Critical Accounting Policies

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 2023 Annual Report.
27

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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.

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Table of Contents
Interest Rate Risk

Borrowings under our revolving credit facility, the Secured Term Loan and the Unsecured Term loan bear interest based on BSBY plus 1.00%, BSBY plus 0.90% and BSBY plus 1.40%, respectively. 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 ~~April 30,~~October 29, 2023 other than standby letters of credit in the amount of $7.8 million. As of ~~April 30,~~October 29, 2023, ~~$23.9~~$23.2 million was outstanding under our term loans. A 1% increase in the BSBY rate would result in an annual increase in interest expenses on our terms loans of approximately ~~$233,000.~~$226,000.

Raw Materials Price Risk

We are exposed to market risk from changes in the cost of raw materials used in our domestic upholstery manufacturing processes; principally, wood, 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.

Currency Risk

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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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 ~~April 30,~~October 29, 2023. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective as of ~~April 30,~~October 29, 2023 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.

Changes in Internal Control over Financial Reporting

On January 31, 2022, we closed on the acquisition of substantially all of the assets of Sunset HWM, LLC (“Sunset West"). As permitted by SEC guidance for newly acquired businesses, we excluded Sunset West’s operations from the scope of our Sarbanes-Oxley Section 404 report on internal controls over financial reporting for the year ending January 29, 2023. We are in the process of implementing our internal control structure at Sunset West and expect that this effort will be completed in fiscal 2024.

During fiscal 2024 second quarter, we closed on the acquisition of substantially all of the assets of BOBO Intriguing Objects (“BOBO"). As permitted by SEC guidance for newly acquired businesses, we intend to exclude BOBO’s operations from the scope of our Sarbanes-Oxley Section 404 report on internal controls over financial reporting for the year ending January 28, 2024. We are in the process of implementing our internal control structure at BOBO and expect that this effort will be completed in fiscal 2025.
There have been no changes in our internal control over financial reporting during the fiscal quarter ended ~~April 30,~~October 29, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds (1).

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased As Part of Publicly Announced Program

Maximum Dollar Value of Shares That May Yet Be Purchased Under The Program

$ 6,646,127
January 30, 2023 - March 5, 2023
57,772 20.94 57,772 5,435,040
March 6, 2023 - April 2, 2023
58,216 19.79 58,216 4,281,603
April 3, 2023 - April 30, 2023
111,342 17.55 111,342 2,325,293

Total
227,330 $ 18.99 227,330

Total Number
of Shares
Purchased

Average
Price Paid
Per Share

Total Number of
Shares Purchased
As Part of Publicly
Announced Program

Maximum Dollar
Value of Shares
That May Yet Be
Purchased Under
The Program

$ 3,005,963
July 31, 2023 - September 3, 2023
78,471 21.00 78,471 1,356,172
September 4, 2023 - October 1, 2023
62,705 19.73 62,705 117,838
October 2, 2023 - October 29, 2023
5,995 19.64 5,995 0

Total
147,171 $ 20.41 147,171

(1)
On June 6, 2022, our Board of Directors authorized the repurchase of up to $20 million of the Company’s common shares. The authorization does not obligate us to acquire a specific number of shares during any period and does not have an expiration date, but it may be modified, suspended, or discontinued at any time at the discretion of our Board of Directors. Repurchases may be made from time to time in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, and subject to our cash requirements for other purposes, compliance with the covenants under the loan agreement for our revolving credit facility and other factors we deem relevant.
~~During the first quarter of~~ In fiscal 2024 ~~we used approximately $4.3~~second quarter, our Board of Directors approved an additional $5 million offor the ~~authorization to purchase 227,330~~repurchase of our common shares, ~~(at an average price of $18.99 per share), with approximately $2.3~~adding to the $20 million ~~remaining available for future purchases under the~~ authorization ~~as of the end of the~~it approved in fiscal ~~2024 first quarter. See Note 14 to our Condensed Consolidated Financial Statement “Additional Share Repurchase Authorization” herein for an update on our share repurchase program.~~2023.
During the fiscal 2024 nine-month period, we used approximately $11.7 million of the authorization to purchase 620,634 of our common shares (at an average price of $18.79 per share). The share repurchase program was completed during the fiscal 2024 third quarter.
Item 5.         Other Information
During the three months ended October 29, 2023, no director or officer of the Company adopted, terminated or modified a ‘Rule 10b5-1 trading arrangement’ or ‘non-Rule 10b5-1 trading arrangement,’ as each term is defined in Item 408(a) of Regulation S-K.
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Table of Contents

Item 6.         Exhibits

3.1
Articles of Incorporation of the Company, as amended as of September 16, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-25349) for the quarter ended October 31, 2021)
~~3.2~~3.2*
Amended and Restated Bylaws of the Company, as amended ~~December 10, 2013~~September 5, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q (SEC File No. 000-25349) for the ~~year~~quarter ended ~~February 2, 2014)~~July 30, 2023)
4.1
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)
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*
Interactive Data Files (formatted as Inline XBRL)
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Filed herewith
** Furnished herewith

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SIGNATURE

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.

HOOKER FURNISHINGS CORPORATION
Date: ~~June~~December 8, 2023
By:
/s/ Paul A. Huckfeldt
Paul A. Huckfeldt
Chief Financial Officer and
Senior Vice President – Finance and Accounting

3034
iso4217:USD xbrli:shares

										Accumulated
										Other			Total
	Common Stock						Retained			Comprehensive			Shareholders'
	Shares			Amount			Earnings			Income (loss)			Equity
Balance at January 30, 2022		11,922		$	53,295		$	207,884		$	(51	)	$	261,128
Net income								3,182						3,182
Unrealized loss on defined benefit plan, net of tax of $4											(14	)		(14	)
Cash dividends paid and accrued ($0.20 per share)								(2,388	)					(2,388	)
Restricted stock grants, net of forfeitures		80			(96	)								(96	)
Restricted stock compensation cost					296									296
Performance-based restricted stock units costs					154									154
Balance at May 1, 2022		12,002		$	53,649		$	208,678		$	(65	)	$	262,262



Balance at January 29, 2023		11,197		$	50,770		$	184,386		$	865		$	236,021
Net income								1,450						1,450
Unrealized loss on defined benefit plan, net of tax of $17											(53	)		(53	)
Cash dividends paid and accrued ($0.22 per share)								(2,444	)					(2,444	)
Purchase and retirement of common stock		(227	)	$	(1,081	)		(3,240	)					(4,321	)
Restricted stock grants, net of forfeitures		59			(150	)								(150	)
Restricted stock compensation cost					335									335
Performance-based restricted stock units costs					193									193
Balance at April 30, 2023		11,029		$	50,067		$	180,152		$	812		$	231,031

	Depreciable Lives	April 30,			January 29,			Depreciable Lives	October 29,			January 29,
	(In years)	2023			2023			(In years)	2023			2023

Buildings and land improvements	15 - 30	$	32,783		$	32,723		15 - 30	$	33,671		$	32,723
Computer software and hardware	3 - 10		16,000			15,887		3 - 10		8,907			15,887
Machinery and equipment	10		11,335			11,013		10		11,651			11,013
Leasehold improvements	Term of lease		15,064			11,894		Term of lease		12,445			11,894
Furniture and fixtures	3 - 10		6,313			5,991		3 - 10		6,377			5,991
Other	5		695			694		5		697			694
Total depreciable property at cost			82,190			78,202				73,748			78,202
Less accumulated depreciation			(54,663	)		(53,427	)			(46,590	)		(53,427	)
Total depreciable property, net			27,527			24,775				27,158			24,775
Land			1,077			1,077				1,077			1,077
Construction-in-progress			466			1,158				844			1,158
Property, plant and equipment, net		$	29,070		$	27,010			$	29,079		$	27,010

	Capitalized Implementation Costs			Capitalized interest expenses			Capitalized Implementation Costs			Capitalized interest expenses

Balance at January 29, 2023	$	8,598		$	84		$	8,598		$	84
Costs capitalized during the period		1,298			66			3,818			225
Accumulated amortization		(19	)		(1	)
Balance at April 30, 2023	$	9,877		$	149
Accumulated amortization during the period								(187	)		(4	)
Balance at October 29, 2023							$	12,229		$	305

	Fair value at April 30, 2023								Fair value at January 29, 2023								Fair value at October 29, 2023								Fair value at January 29, 2023
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)																(In thousands)
Assets measured at fair value
Company-owned life insurance	$	-	$	27,899	$	-	$	27,899	$	-	$	27,576	$	-	$	27,576	$	-	$	28,264	$	-	$	28,264	$	-	$	27,576	$	-	$	27,576

	April 30, 2023					January 29, 2023
											October 29, 2023					January 29, 2023
	Gross carrying amount		Accumulated Amortization			Gross carrying amount		Accumulated Amortization			Gross carrying amount		Accumulated Amortization			Gross carrying amount		Accumulated Amortization
Intangible assets with indefinite lives:
Goodwill
Domestic Upholstery - Shenandoah *		490		-			490		-			490		-			490		-
Domestic Upholstery - Sunset West		14,462		-			14,462		-			14,462		-			14,462		-
All Other - BOBO Intriguing Objects												84		-			-		-
Goodwill		14,952		-			14,952		-			15,036		-			14,952		-

Trademarks and Trade names *		7,511		-			7,907		-			8,011		-			7,907		-

Intangible assets with definite lives:
Customer Relations		38,001		(16,460	)		38,001		(15,618	)		38,001		(18,141	)		38,001		(15,618	)
Trademarks and Trade names		2,334		(491	)		1,938		(449	)		2,334		(658	)		1,938		(449	)

Intangible assets, net		47,846		(16,951	)		47,846		(16,067	)		48,346		(18,799	)		47,846		(16,067	)

	Undiscounted Future Operating Lease Payments
Remainder of fiscal 2024	$	7,463
2025		10,102
2026		10,182
2027		10,267
2028		8,931
2029 and thereafter		35,130
Total lease payments	$	82,075
Less: impact of discounting		(12,835	)
Present value of lease payments	$	69,240

	Undiscounted Future Operating Lease Payments
Remainder of fiscal 2024	$	2,424
2025		9,732
2026		9,797
2027		9,635
2028		8,010
2029 and thereafter		29,166
Total lease payments	$	68,764
Less: impact of discounting		(12,068	)
Present value of lease payments	$	56,696

	As of April 30,					As of January 29,					Thirteen Weeks Ended												Thirty-Nine Weeks Ended
	2023		%Total			2023		%Total			October 29,						October 30,						October 29,						October 30,
Identifiable Assets			Assets					Assets
											2023						2022						2023						2022
														% Net						% Net						% Net						% Net
Net Sales														Sales						Sales						Sales						Sales
Hooker Branded	$	172,499		54.2	%	$	174,523		52.1	%	$	39,122			33.5	%	$	56,632			37.4	%	$	118,936			35.4	%	$	154,133			34.1	%
Home Meridian		80,709		25.4	%		92,469		27.6	%		43,692			37.4	%		50,588			33.4	%		114,524			34.0	%		171,721			38.0	%
Domestic Upholstery		63,307		19.9	%		66,435		19.8	%		32,559			27.9	%		43,436			28.7	%		98,555			29.3	%		122,982			27.2	%
All Other		1,706		0.5	%		1,558		0.5	%		1,458			1.2	%		924			0.5	%		4,437			1.3	%		2,967			0.7	%
Consolidated	$	318,221		100	%	$	334,985		100	%	$	116,831			100	%	$	151,580			100	%	$	336,452			100	%	$	451,803			100	%
Consolidated Goodwill and Intangibles		45,847					46,731
Total Consolidated Assets	$	364,068				$	381,716

Gross Profit
Hooker Branded											$	17,823			45.6	%	$	16,156			28.5	%	$	43,840			36.9	%	$	45,357			29.4	%
Home Meridian												8,803			20.1	%		5,431			10.7	%		18,726			16.4	%		19,057			11.1	%
Domestic Upholstery												6,485			19.9	%		9,918			22.8	%		19,872			20.2	%		26,400			21.5	%
All Other												599			41.1	%		503			54.4	%		2,519			56.8	%		1,708			57.6	%
Consolidated											$	33,710			28.9	%	$	32,008			21.1	%	$	84,957			25.3	%	$	92,522			20.5	%

Operating Income/(Loss)
Hooker Branded											$	7,287			18.6	%	$	5,860			10.3	%	$	13,298			11.2	%	$	16,423			10.7	%
Home Meridian												923			2.1	%		(3,205	)		-6.3	%		(4,532	)		-4.0	%		(7,290	)		-4.2	%
Domestic Upholstery												688			2.1	%		3,823			8.8	%		2,739			2.8	%		8,288			6.7	%
All Other												(128	)		-8.8	%		(60	)		-6.5	%		513			11.6	%		212			7.1	%
Consolidated											$	8,770			7.5	%	$	6,418			4.2	%	$	12,018			3.6	%	$	17,633			3.9	%

Capital Expenditures (net of disposals)
Hooker Branded											$	747					$	589					$	4,156					$	1,295
Home Meridian												827						589						1,065						1,221
Domestic Upholstery												179						344						436						953
All Other												-						-						61						-
Consolidated											$	1,753					$	1,522					$	5,718					$	3,469

Depreciation & Amortization
Hooker Branded											$	467					$	479					$	1,461					$	1,600
Home Meridian												670						724						2,047						2,110
Domestic Upholstery												1,100						963						3,092						2,860
All Other												17						3						26						8
Consolidated											$	2,254					$	2,169					$	6,626					$	6,578

	As of October 29,					As of January 29,
	2023		%Total			2023		%Total
Identifiable Assets			Assets					Assets
Hooker Branded	$	178,435		57.6	%	$	174,523		52.1	%
Home Meridian		63,310		20.4	%		92,469		27.6	%
Domestic Upholstery		63,179		20.4	%		66,435		19.8	%
All Other		4,991		1.6	%		1,558		0.5	%
Consolidated	$	309,915		100	%	$	334,985		100	%
Consolidated Goodwill and Intangibles		44,583					46,731
Total Consolidated Assets	$	354,498				$	381,716

	Net Sales (in thousands)										Net Sales (in thousands)
	Thirteen Weeks Ended										Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	April 30, 2023		%Total			May 1, 2022		%Total			October 29, 2023		%Total			October 30, 2022		%Total			October 29, 2023		%Total			October 30, 2022		%Total
Casegoods	$	67,975		56	%	$	74,192		50	%	$	71,787		61	%	$	86,717		57	%	$	191,825		57	%	$	253,748		56	%
Upholstery		53,840		44	%		73,122		50	%		45,044		39	%		64,863		43	%		144,627		43	%		198,055		44	%
	$	121,815		100	%	$	147,314		100	%	$	116,831		100	%	$	151,580		100	%	$	336,452		100	%	$	451,803		100	%

	Order Backlog						Order Backlog
	(Dollars in 000s)						(Dollars in 000s)

Reporting Segment	April 30, 2023		January 29, 2023		May 1, 2022		October 29, 2023		January 29, 2023		October 30, 2022

Hooker Branded	$	17,357	$	19,276	$	76,562	$	18,646	$	20,568	$	36,747
Home Meridian		40,413		43,052		120,844		27,611		43,052		56,761
Domestic Upholstery		24,402		28,404		79,018		21,418		29,696		41,844
All Other		5,188		4,654		6,153		1,760		2,070		1,983

Consolidated	$	87,360	$	95,386	$	282,577	$	69,435	$	95,386	$	137,335

Unit Volume	FY24 Q1 % Increase vs. FY23 Q1			Average Selling Price (“ASP”)	FY24 Q1 % Increase vs. FY23 Q1			FY24 Q3 % Increase vs. FY23 Q3			FY24 YTD % Increase vs. FY23 YTD			Average Selling Price (“ASP”)	FY24 Q3 % Increase vs. FY23 Q3			FY24 YTD % Increase vs. FY23 YTD

Hooker Branded		-6.3	%	Hooker Branded		8.2	%		-23.7	%		-23.3	%	Hooker Branded		-6.3	%		2.3	%
Home Meridian		-10.5	%	Home Meridian		-24.4	%		-18.0	%		-19.2	%	Home Meridian		4.8	%		-16.6	%
Domestic Upholstery		-25.0	%	Domestic Upholstery		13.2	%		-37.0	%		-30.2	%	Domestic Upholstery		4.2	%		10.1	%
All Other		55.1	%	All Other		4.7	%		-4.9	%		13.9	%	All Other		-15.9	%		-1.5	%
Consolidated		-11.1	%	Consolidated		-6.1	%		-21.5	%		-20.9	%	Consolidated		-4.8	%		-5.9	%

	Gross Profit and Margin
	Thirteen Weeks Ended
	April 30,					May 1,
	2023					2022
			% Net Sales					% Net Sales			$ Change			% Change
Hooker Branded	$	13,091		31.3	%	$	13,240		31.4	%	$	(149	)		-1.1	%
Home Meridian		6,713		16.0	%		6,305		10.2	%		408			6.5	%
Domestic Upholstery		7,023		20.0	%		9,354		22.7	%		(2,331	)		-24.9	%
All Other		1,079		37.2	%		560		31.5	%		519			92.7	%
Consolidated	$	27,906		22.9	%	$	29,459		20.0	%	$	(1,553	)		-5.3	%

	Selling and Administrative Expenses (S&A)																Selling and Administrative Expenses (S&A)
	Thirteen Weeks Ended																Thirteen Weeks Ended																Thirty-Nine Weeks Ended
	April 30,					May 1,											October 29,					October 30,											October 29,					October 30,
	2023					2022											2023					2022											2023					2022
			% Net Sales					% Net Sales			$ Change			% Change					% Net Sales					% Net Sales			$ Change			% Change					% Net Sales					% Net Sales			$ Change			% Change
Hooker Branded	$	10,791		25.8	%	$	9,098		21.5	%	$	1,693			18.6	%	$	10,535		26.9	%	$	10,296		18.2	%	$	240			2.3	%	$	30,542		25.7	%	$	28,935		18.8	%	$	1,608			5.6	%
Home Meridian		8,502		20.3	%		9,066		14.6	%		(564	)		-6.2	%		7,550		17.3	%		8,302		16.4	%		(752	)		-9.1	%		22,267		19.4	%		25,346		14.8	%		(3,079	)		-12.1	%
Domestic Upholstery		5,142		14.6	%		6,058		14.7	%		(916	)		-15.1	%		5,203		16.0	%		5,550		12.8	%		(348	)		-6.3	%		15,392		15.6	%		16,479		13.4	%		(1,088	)		-6.6	%
All Other		613		21.1	%		436		24.5	%		177			40.6	%		728		49.9	%		564		61.0	%		164			29.1	%		2,006		45.2	%		1,495		50.4	%		511			34.2	%
Consolidated	$	25,048		20.6	%	$	24,658		16.7	%	$	390			1.6	%	$	24,016		20.6	%	$	24,712		16.3	%	$	(696	)		-2.8	%	$	70,207		20.9	%	$	72,255		16.0	%	$	(2,048	)		-2.8	%

	Operating Profit/(Loss) and Margin
	Thirteen Weeks Ended
	April 30,						May 1,
	2023						2022
				% Net Sales						% Net Sales			$ Change			% Change
Hooker Branded	$	2,300			5.5	%	$	4,142			9.8	%	$	(1,842	)		-44.5	%
Home Meridian		(2,119	)		-5.1	%		(3,095	)		-5.0	%		976			31.5	%
Domestic Upholstery		1,328			3.8	%		2,752			6.7	%		(1,424	)		-51.7	%
All Other		466			16.1	%		124			7.0	%		342			275.8	%
Consolidated	$	1,975			1.6	%	$	3,923			2.7	%	$	(1,948	)		-49.7	%

	Income taxes																		Income taxes
	Thirteen Weeks Ended																		Thirteen Weeks Ended																	Thirty-Nine Weeks Ended
	April 30,						May 1,												October 29,						October 30,											October 29,						October 30,
	2023						2022												2023						2022											2023						2022
				% Net Sales						% Net Sales			$ Change			% Change						% Net Sales						% Net Sales			$ Change		% Change						% Net Sales						% Net Sales			$ Change			% Change
Consolidated income tax expense	$	402			0.3	%	$	991			0.7	%	$	(589	)		-59.4	%	$	2,027			1.7	%	$	1,334			0.9	%	$	693		51.9	%	$	2,620			0.8	%	$	3,946			0.9	%	$	(1,326	)		-33.6	%

Effective Tax Rate		21.7	%					23.7	%											22.4	%					21.6	%										22.0	%					22.5	%

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased As Part of Publicly Announced Program		Maximum Dollar Value of Shares That May Yet Be Purchased Under The Program
							$	6,646,127
January 30, 2023 - March 5, 2023		57,772		20.94		57,772		5,435,040
March 6, 2023 - April 2, 2023		58,216		19.79		58,216		4,281,603
April 3, 2023 - April 30, 2023		111,342		17.55		111,342		2,325,293

Total		227,330	$	18.99		227,330

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased As Part of Publicly Announced Program		Maximum Dollar Value of Shares That May Yet Be Purchased Under The Program
							$	3,005,963
July 31, 2023 - September 3, 2023		78,471		21.00		78,471		1,356,172
September 4, 2023 - October 1, 2023		62,705		19.73		62,705		117,838
October 2, 2023 - October 29, 2023		5,995		19.64		5,995		0

Total		147,171	$	20.41		147,171

3.1	Articles of Incorporation of the Company, as amended as of September 16, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-25349) for the quarter ended October 31, 2021)

~~3.2~~3.2*	Amended and Restated Bylaws of the Company, as amended ~~December 10, 2013~~September 5, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q (SEC File No. 000-25349) for the ~~year~~quarter ended ~~February 2, 2014)~~July 30, 2023)

4.1	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)

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*	Interactive Data Files (formatted as Inline XBRL)

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

	HOOKER FURNISHINGS CORPORATION


Date: ~~June~~December 8, 2023	By:	/s/ Paul A. Huckfeldt
		Paul A. Huckfeldt
		Chief Financial Officer and Senior Vice President – Finance and Accounting