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HOOKER FURNITURE Hooker Furnishings Reports Third Quarter Results December 9 , 2021 MARTINSVILLE , Va . , Dec. 09 , 2021 ( GLOBE NEWSWIRE ) -- Hooker Furnishings Corporation ( NASDAQ - GS : HOFT ) today reported consolidated net sales of $ 133.4 million for its fiscal 2022 third quarter ended October 31 , 2021 , a $ 16.3 million , or 11 % , decrease compared to the prior year period . Consolidated operating loss for the fiscal 2022 third quarter was $ 1.7 million , compared to $ 13 million of operating income in the prior year period . Net loss for the third quarter of fiscal 2022 was $ 1.2 million , or $ 0.10 per diluted share , as compared to a net income of $ 10.1 million , or $ 0.84 per diluted share , in the third quarter of fiscal 2021 . The third quarter revenue decline follows two consecutive quarters of double - digit sales and income gains at Hooker Furnishings and was driven by significantly reduced shipments in the Home Meridian segment ( HMI ) due to COVID - related factory closures in Vietnam and Malaysia . The HMI sales decrease was partially offset by double - digit sales increases in the Hooker Branded and Domestic Upholstery segments versus the prior year period . These two segments have provided five consecutive quarters of higher net sales . Consolidated operating income and margin decreased in the quarter primarily due to the sales volume reduction at HMI , along with higher freight and product costs . In addition , HMI had three unusual charges during the period , including $ 2.6 million in one - time order cancellation costs to exit the ready - to - assemble ( RTA ) furniture category . This was a move HMI made to improve long - term profitability by eliminating a low - margin category . Also , HMI experienced higher than expected chargebacks with two clubs channel customers which negatively impacted net sales and operating income by $ 1.9 million . " Despite favorable demand for home furnishings and a historically strong order backlog triple typical levels for Hooker Furnishings , we were challenged by ongoing supply chain disruptions , especially the slower - than - expected reopening of Vietnam and Malaysia factories , " said Jeremy Hoff , chief executive officer . " The COVID - related factory closings in Vietnam and Malaysia began around August 1st and did not begin reopening until late in the quarter , and then at only about 25 % capacity , " he said . " We expect the factories will begin to approach 50 % capacity in the near future . " " Industry - wide inflationary pressures also were a factor in reduced income , " Hoff said , along with " making some decisions now that will have short term adverse impacts but will strengthen the Company in the long term . For example , exiting the HMidea RTA category increased consolidated cost of goods sold by 200 bps and contributed to the quarterly loss , but we believe this move will save an additional $ 10 million in product and freight costs related to RTA products on order and help us focus our resources in the areas where we can be most competitive and profitable , " Hoff said . For the fiscal 2022 nine - month period , consolidated operating income was $ 20.2 million compared to a $ 24.9 million operating loss in the prior year period . The loss last year was mainly attributable to $ 44.3 million in non - cash impairment charges on certain intangible assets due to the impact of the COVID crisis on the Company's share price in the prior year . Consolidated net income for the fiscal 2022 nine - month period was $ 15.7 million or $ 1.30 per diluted share , as compared to net loss of $ 19.0 million , or a loss of $ 1.61 per diluted share in the prior year period . Segment Reporting : Hooker Branded Net sales increased by $ 8.7 million , or 18.5 % , in the Hooker Branded segment compared to the prior year quarter , driven by higher demand and inventory availability , as well as lower discounting . Commenting on the consistent and vibrant growth in the segment , Hoff said , " The diversification of the Hooker Branded product portfolio to address a wide variety of lifestyles in our price points has had a major positive impact . The introduction of our new Commerce & Market accent furniture collection this summer , along with the ongoing strength of our Mélange accent collection , has significantly expanded our leadership position in the accent furniture category , " he said . “ In addition , our strategy to rationalize our stocking inventory to focus on top sellers is helping us maximize shipping and production capacity , product flow and cash utilization . " While sales continue to reflect strong demand and a healthy furniture demand environment , higher ocean freight and product cost inflation impacted gross margin in the segment , diluting the gains from sales increases in the third quarter . The Hooker Branded segment has implemented price increases to mitigate increased product costs ; however , due to current order backlog levels and customer price changes taking effect at different times , the Company anticipates seeing the benefits of price increases in future periods as more products sold carry these increased prices . Additionally , the segment is starting to see another round of product and logistics costs increases which will likely necessitate additional customer price changes . Despite these adverse factors , the Hooker Branded segment reported $ 6.7 million in operating income , or an 11.9 % operating margin . Incoming orders decreased slightly by 1.9 % as compared to prior year period when business dramatically rebounded . Backlog remained historically high , nearly doubled as compared to the prior year third quarter end , when backlog was already elevated versus historical averages . Segment Reporting : Home Meridian The Home Meridian segment's net sales decreased by $ 27.5 million , or 37.3 % , compared to the prior year third quarter , driven by inventory unavailability due to the temporary , COVID - related closure of factories in Vietnam and Malaysia during the period . The segment reported a $ 10 million operating loss largely attributable to reduced shipments and higher product costs primarily from increased freight charges . In addition , higher than expected chargeback from two clubs channel customers and inventory cancellation costs related to HMidea's RTA business contributed to the operating loss . " Despite the disappointing financial results at HMI , we believe the challenges are short - term , " Hoff said . " We expect to see some improvements next