Hooker Furnishings (HOFT) 8 Jun 232024 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Hooker Furnishings Corporation's First Quarter 2024 Earnings Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

the to hand Mr. speaker now would conference your over host, I Huckfeldt, Financial Paul Officer. Chief sir. ahead go Please

Thank you, the morning XXXX. to quarter, Lydia. Good ended review conference our which financial call quarterly results April for on fiscal first and XXXX XXth, welcome to

me Hoff, Chief We is Executive Jeremy this your participation morning. morning this Officer. Joining our appreciate

results from our we may that subject expectations uncertainties. and risks of in call, release make factors are our materially XXXX During and announcing A cause quarter could to is contained actual SEC our to results. management's our forward-looking statements, differ first discussion press which fiscal filing

Any or after forward-looking we update revise and any today forward-looking today's call. reflect only statement circumstances as statements of or to undertake no obligation to speaks events

sales the The reported Home merchants compared and decrease the driven this mass lower decrease a decline of $XX.X we growth lesser extent, first of quarter decrease two net major quarter. a million, XX% by in sales and Meridian XX% of million million or years to morning first XXXX in revenue consolidated in $XXX.X year's fiscal upholstery chains to after a furniture of sales was $XX last segment segment. due for to domestic sales This

or remained in diluted per share prior segment sales per income Net period. the to share million Hooker to diluted prior or $X.XX year this million relatively the was $X.X compared flat $X.XX branded in year. compared $X.X Consolidated the net quarter

I'll on quarter to our comment the fiscal to first over results. Jeremy Now, XXXX turn call

Accentrics our to delivering uncertainties, the line, external the retail quarter. we're sales quarterly to discuss exceeded expectations our On which organic growth the for call recent are results pleased earnings Home economic positioned Paul we'll begin you, Thank everyone. and initiatives morning environment, our and from of during several strategic good exit have our considering and softer long-term and today,

profitability XX% about HMI make reduce back track helping other complete, ACH footprint on us obsolete inventories getting is Our inventories our and liquidation HMI. domestic towards which at of and at warehousing is progress

we were cash from repurchases contributed and operating sheet. our for cash balance million in million funded requirements. our generated the typical million quarter, which This strengthen $X.X to quarter along with about able a in increase $XX position to $XX cash activities, We our share

June, As we and moved reduce continuing build into further May cash are now and to we inventories.

yesterday, during on million. to quarter, almost of first balance of $XX cash our more well fiscal the cash bringing decreased by generated we have towards the million Inventory quarter, in our end. inventories way $XX year since of end million our million $XX goal levels As by before our $XX reducing

customers Legacy High we Showroom as opening of presentation providing new more Point a nearly M. in meaningful met year our and from ago, new grand Our our attracting doubled brands much new Market a expectations our of its launch legacy attendance the our Hooker April and brand

visibility new Many initiatives our organic the Hooker of brands. Legacy of increase to enable us tied total will our to and that and addressable market showroom strategic growth are share

High brand the M upholstery occasional Point expectations. imported Market and surpassed initiatives, domestically One growth furniture launch of those strategic of our produced

towards. M without to This us us core up point much today's new enable a the on to will brand and compete younger with gravitating capabilities of the Shenandoah, those very Bradington-Young, modern lifestyle Hooker that modern is Retailers affirm and HF the businesses. is brand combining consumer casual Custom unique aesthetic in any coming Casegoods that lifestyle disrupting new of

new Showplace. of us within the in product updated highly brand elevate Moore in the the to at The unveil the timing with of covered came Market Point Spring Sam time HF as the presentation Custom High at silhouettes ideal a look treatments rebranding an and allowed

transition ERP to the Just prior system furnishings Sunset we our outdoor for to the a April line Market, new completed High West. Point

in our of West inventory completed warehouse. stocking addition, brand Coast Coast East for adding both the Sunset line East distribution by In West the Savannah Coast our to warehouse current its we positioning and now

Sunset Coast High first debuted a our in Market, national comprehensive the multiple believe At its organic a to industry's Sunset We double-digit major market. West distribution opportunity expansion offers display growth Spring years. Point West's that over East

entertainment divisions the agreement, furniture and suppliers in bedroom, leading announced April, for which dining, exclusive multiyear Samuel renewed and Jonathan licensing Drew HMI's brand. we Scott Furniture Brothers Also Pulaski Hooker company, Home the serve Furnishing as lifestyle have Global and occasional the and and Lawrence

California Drew Home a line and At XX-piece in benefiting a Point and further retail due Drew delay now HMI and to High the expand line. After the Jonathan in Jonathan the to momentum has initial shipments demand collection Market, placements Casual and short long-term. the the introduced pandemic, product the

our into transition continue year. will achieve new that on Hospitality, Our on a the business move Samuel to year the of still by core away Furniture, Samuel Furniture, businesses; and we of leaner in Resources businesses strength segment this HMI Pulaski focus to from Lawrence track and profitability Lawrence International, Primary we are higher fiscal risk model believe as end

reducing team and our Importantly, cost. our the focused direct is core on competencies support resources behind HMI key businesses, our we as while

want highlights Paul, segments. to the each discuss to who our will in I turn Now, of over discussion

remained X.X% relatively Thanks by with gross margin slightly sales and net compared by $XXX,XXX unchanged, prior well. segment, flat or -- remained decreasing relatively as Beginning quarter. Hooker first year Jeremy. profit Gross to our Branded the

higher abnormally of discounting Net in by period. sales discounting levels negatively low prior year were compared impacted to

discounting expenses, product prior prior previous somewhat softer points due from to are margin trending year quarter, benefited which Higher demurrage year but the and we mitigate cost implemented current demand higher basis quarters, quarter. down. in first than the in While drayage the still year impacted from price XXX gross the inflation, were prior increased by heavily increases in to

than quarter year levels end calendar in end. Inventories the compared XXXX inventory are levels fiscal quarter, million higher decreased $XX the the at of At still XXXX. first Branded are and elevated pre-pandemic Hooker by to end

to working in we're So, to obsolescence our an we stock that management not best-selling current on with align most demand. inventory so inventory pleased levels We're well, has work process items been issue. and our inventory continue is

end decreased was Incoming quarter prior approach levels lows. demand. to Quarter XXXX than about for the higher XX% reflecting fiscal by orders quarter, first lower normalized than quarter year but pre-pandemic the more end, XX% and backlog Hooker Branded year remained compared post-pandemic prior to similar first

compared the decrease to Turning first expectations better $X.X and as operating than Jeremy quarter. was improvement Meridian the sales prior million loss noted, segment, the year million the was a to $X our of Home

to quarter, driven with retail by in year or first sales in sales home Net slower furnishing. some a the prior major furniture by at decreases million for HMI compared change decreased $XX merchants environment XX% mass

lower since divisions. the orders they to we've delayed customers reduce Other those sale include at continue factors ACH from inventory exited and their sales clause as the contributing retail of businesses the to absence

Inventories decreased inventory liquidation million demand. $X with fiscal and XXXX current the end efforts of from to due the align to inventories levels of our obsolete

encouraging the division's the prior an more after net note hospitality indicating in SLH, strong industry doubled hospitality the On sales our COVID than pandemic. a recovery quarter, year compared first to

ocean costs have due rates. of stabilization to freight freight Additionally, improved

lower the as during well from fiscal were HMI ACH orders fiscal quarter and at Clubs XXXX orders of decreased business and HMI to year retail channel, orders Incoming XXXX the first absence end exited the as the quarter than due backlog quarter incoming prior customers. from and which

Custom, to domestic or quarters -- the years decline Sunset Sales segment, HF to first prior about West, Bradington-Young. $X upholstery consecutive Sales partially the compared at In we two sales Shenandoah in year-over-year sales XX% after quarterly by million increases. experienced over and year's increased XX at quarter. were net by sales offset last first of decreased reductions

which involved and shipments outdoor Georgia brands at caused to including by resolved of start-up issues and to our costs the by of center. Sales transition the end December ERP expansion delays Coast non-recurring as February well distribution decreases the to are the at March quarter. in West Sunset East largely new and attributed as system factors, our slowed conversion were the These the warehouse,

the which a that situation. the the Upholstery income dip worked and of reported We then don't disruption, operating million divisions operating believe $X.X our softer is inventory driven sales these we backlogs sales we long-term Domestic through an large by and Despite experienced segment somewhat fact and domestic much margin X.X%. decline demand, in think that was of of

than Quarter remained higher three XXXX end the year end. pre-pandemic times at levels quarter backlog for first fiscal Bradington-Young

While backlogs at HF to to levels similar Customs decreased in fiscal Shenandoah XXXX.

lower similar compared orders H our increase. Incoming Senior to which all part period. overall $X.X orders And Living experienced represents a and division, to Shenandoah sales contributed while at HF smaller were Contract that includes our Furniture while Bradington-Young Custom XXXX, it fiscal other, of million at business, levels

$XX at now cash and $XX the capital an Turning end million first XXXX cash, million the the of and stood inventory, fiscal of allocation. quarter, year prior equivalents at Cash end. increase from debt, to

bolster we of million to $X.X of -- ERP position. cash million cash and generated cash helped share As the operations and our our $X.X Jeremy capital $XX repurchases, and reported from to which in including new used showroom new of helped expenditures quarter, in our we million also million fund our investments system, earlier, $X.X in shareholders, dividend which

earlier the announcement approximately the last the of this and we've shareholders million allocation with week, retired million for we generated a around we've Since Board additional programs cash approved just time made which year. progress $XX the And under the $X X.X this We're we plan during inventories, approximately our part of returned repurchase as large shares. our reducing pleased generated quarter. authorization million to our capital part year, was an --

plan, organic for of streak noted year our and with our continuing the funding typical addition initiatives cash execute paying capital earlier, as requirements. Jeremy share expenditure included building our to repurchase the priorities funding reserves, to XX-year In -- capital of continuing streak allocation dividends growth of the

needs under our that our balance, HMI other aggregate liquidation remaining fund excess end through at to revolver our be of addition the improved to an have necessary. the inventory. million We working liquidity that will existing and sales believe further capital available In cash become should $XX.X requirements year capital we

his Now, to I'll Jeremy turn back the for discussion outlook.

Thank you, Paul.

some some mixed with be breakthrough believe have getting for see June. along far and uncertainties, seeing May orders holding economic trends so elevated may that up in to through and in is industry remain of in We we area. challenges the incoming conditions that the more some retail inventory positive consolidated we begun While is

at successful Market, addressable visibility Hooker new Following a new market showroom at summer, spring to initiatives Legacy opening this Hooker debuting showroom for reach our continue Point Furnishings High will market enhance brands. Atlanta and grand

In opening also Chicago. from Sunset casual the debut brands, new the Atlanta showroom market West of Legacy sponsor furniture which the market, at a relocating will the addition new showroom outdoor for to new for

liquidations inventory show will At announced well. fiscal by Vegas its fourth of to brands HMI, quarter. substantially as Las completed Legacy be we end second summer Hooker XXXX at the expect the this market previously

While we some we in end the by to volatility achieve HMI, fiscal expect segment XXXX continue short-term to profitability of the year. the and at earnings sales quarterly expect

Hooker will these controllables, the continues visibility, expanded improvements, The focus Furnishings demand organic focusing and improve. team to as By cost on strongest in on growth product reductions. position operational continues development, opportunities possible to through strategic we the environment be

I formal This part call of and time, for to the will turn over ends back discussion the our operator, questions. Lydia at our this

Certainly. [Operator Instructions]

our Anthony Lebiedzinski coming from of the question with line first And Sidoti.

is line open. Your

thank the questions. good for Hi, taking morning and you

then first, couple the quarter on questions of So, outlook. your just a on

volumes just far first of talked just general wondering discounting, just this in your as I quarter, pricing? comment so you'll know versus have some you unit you but the XX-Q, as information pricing. I about on know in volumes guys about for can versus So,

up continue to to pull if to the I'm I'm draft pull -- you you another our the going going if want Q question. of up

are. Let's of-- here go back that to instead we

Sure. Yes. No problem.

Okay. And got Okay. it? you then, --

Okay.

volume unit is up Hooker, X%. X%, about ASP but for So, about is down

volume ASP unit is XX% is up XX% HMI, volume is XX%. For unit -- about down down

you. Got

Okay.

So, overall, -- have a lot.. but, I increase we are don’t

Got it.

obviously, margin talked I we Okay. And have guys well. about well as points basis. overall discounting lower to costs, of know demurrage costs ocean it a increase nice as freight the was higher then nearly see on consolidated just but as you percentage gross three

just -- the and can increase? drove about you to as margin talk puts So, takes what the kind gross of, various

starting continually experiencing morning, versus Good just we what the come pandemic. were we're Anthony. cost down Really starting experience to during to

obvious unusual challenges back normalized chain an or little we're the the far line line. really went discount and As that’s a to discounting almost getting all to discount line, with We everything for more pandemic the during zero very low going on. as reasons supply

Paul, the the industry's And saw, add do the approach there discount you -- to changed that demand I at of approach think a level our want and some standpoint. other? from entire it wasn't we the to

decline, the we raise seen as dramatically. efficient. for increasing Upholstery was we're increases So, were more didn't during We prices Domestic taken We've Domestic pretty -- on sales effect, even have price Upholstery, going, backlog. the despite -- didn't prices pandemic,

price that's So, come all into effect, new helped. have our list and

on think a was I strategic raise to not and because cycle long the time existing the to took decision backlog so big. prices so was backlog it through made

of our overall which a gross HMI businesses, surprises when eliminated through we were going affected experiencing side lot we've on our of lastly, margin And obviously negatively we that. were

Got you.

right. all Okay,

So, predictability with to better it's good see some HMI.

fiscal think year I as as with reducing initiative? of be and So, today HMI, you'll Where the end do know that of warehousing you so footprint. that that guys about far the talked are with guys by where the kind you as of you

-- the we're like through of. getting said, continue of the get So, we way trying out to on to out as products of Savannah, XX% we we're

As less needed goes requirement for the Savannah to we in than the that, footprint we do before. much

already we've X the made fiscal -- to over this XXX,XXX arrangements year. million So, hand year feet Xst will July of happen this that square

the we return on to this that track be fiscal We're would on by get that after. would working some not, of it's quarterly year then and other our talked our hoping end fiscal are focus shortly end, if it plans XXX,XXX. reduction fiscal the year. about for to by be that's goal year activities again HMI But -- to We're that profitable to other profitability all cost down

then guys have chance by you And any consolidated Jeremy. do the Thanks Yes. number it. backlog Got handy?

-- was at at Consolidated end backlog was million. $XX right the the now Yes. of quarter

Got it.

Okay. ERP couple said in a I little just had but And you dollars, correct Sunset know call I'm you of a wrong? was then rollout. if April, as this far the touched system that by I last on on as bit was but West, me your it believe million impacted

the you I go And if this in And be rollout? then, as progress, ERP issues overall, -- other where do there could you with but work stand it's it's other with potential brands through know process?

first, as lot as So point referred through to of this that number the the they're the pretty East Coast West, them transition disruption. They well. Sunset on much distribution a close the creating far we are was at of your what for and as through

West rest year. for really of We're going optimistic So, there -- about well. it's Sunset the the

first -- July about of company, for lot is company candidly wanted One of thought to Regarding the the ERP for rest we we of a West the way the were sure would have go-live feel rest business. Legacy systems early work did they our make needing to date portion the it. work for Sunset those have we we of a we Hooker the work. in will would We we our good that very reason

in a did those issues going larger parts the saw company, we of of them, one but smaller the So, we're test we which our and on able of fix to we're aware our go-lives.

system. and about headed good where feel ERP confident with So, our we're we feel

don't-- And if we

it. Got

Okay.

good it are we we any weekly visibility live we track a with our point. negative to be disruption if and there's We of and going issues a Yes, that's that's see lot for not will where company. another go

what in great hear. details that to just the curious important weekend? you share some saw the -- as heard then That's you about to Day May? see And can orders of about month retailers And higher also from incoming the you Memorial more the

Yes.

our -- good actually started, the has seen -- the order really as quarter excuse for I really order second been second the quarter trends. rates me, really think it's consistently better have we've So, us has encouraging for as industry, and

brands, across our if somewhat it's really, at Board. you the And look throughout

If been their order at up. has rate look HMI, you

Legacy look If up brands, you has the thing. rate their then the at been same order has seen Hooker and Sunset

partners feedback Memorial So, our was Day, from of a positive. lot

of saw I recently if similar us and pre-pandemic, So, think Day then our that to think happy And Memorial rate a all an many Memorial was of before trend from standpoint. back order hits. not Day kind you industry times,

seem used normalized what in. a we to so we cycle to be And be more in from

best you to hear. much thank great it. Well, luck. Got very That's and of

Thank you, Anthony.

Thank Instructions] from next line Asset Barry Management. our you. with of Haimes [Operator question coming the Sage And

Your line is open.

question, would that good distribution, the I a build or help Thanks works? on had a revenue your overhead So, quarter. Sunset they inventory so you national did to either much have quarter your or help an how West, go one and on this as that next quarter? absorption little either just

of year? past season just them on a orders? business? the seasonality be And Are there would little for their kind we and how maybe their next bigger feel are the Or the benefit for seasonal

better. last and Thanks. still we then is being talking question, you are year-over-year well? sequentially And it as or orders that's down year-over-year presume just mentioned I better

start it's It's I'll with morning. less asked Coast outdoor on -- build, in ever year of able But I'm before. Good we and little become more less some the be a about round customers. that's a you to the I start cyclical had nature East with those been obviously case to mean, -- than supply going category. to that the the of build really, inventory

East we And all a advantage major take we the distribution our more a lot -- we're the us versus really of country Sunset at a being gaining that revenue portions in West that Coast-centric gives sudden a because of. -- of do our pretty company, major, for can of opportunity big of just opportunity growth of see

answer of -- that do to other question, the your you on So, and orders? part then Paul, want the

the -- year improvement a that's Orders year-over-year. is

Got it.

you. Thank Okay.

you. Thank

John coming next from line of Deysher the with Value. you. Pinnacle Thank our And question

is Your open. line

Hi, my question. taking Thanks for good morning.

think. on reduction, In how I would loss, have you sold words, for without that the quarter? higher Could reduction, number On profit the gross much other been a a inventory inventory the that? I guess would the was at put

at big -- of last charge. end end that [Indiscernible] year, that fiscal QX of took charge We at last XX the the

it nominal. we impact of took So, that We against is off then the actually selling and reserves reserved the stuff back.

So, there that. was impact much not to

Okay.

impact. What were orders no for first So, quarter? the the

$XXX Orders were million.

$XXX Sorry. million?

last $XX compared million $XXX year. to million

the would the that's year? Good, And what going be CapEx Okay. finally, this right direction. fiscal for budget

About $X million.

year. $X million for the

Okay, great. very much. you Thank

you. Thank

Thanks.

will Hoff. Thank you. the time, this not queue. call showing Mr. in At any to back questions turn Jeremy I the further And over I'm now

in XXXX I our would interest for their forward like to Hooker quarter second thank results the on Furnishings. fiscal We Take call to look care. everyone in sharing September.

Ladies your you conference for and conclude for participation. our gentlemen, today. doesn't Thank that

disconnect. You may now