Hooker Furniture Corporation reported third quarter fiscal year 2026 results that reflect a strategic transformation following the sale of its HMI business segment. The company recorded revenue of $70.7 million, operating income of negative $16.3 million, and adjusted earnings per share of negative $1.99. These figures fell below both Stonegate Capital Partners' estimates of $85.2 million revenue, negative $2.2 million operating income, and negative $0.15 EPS, and consensus estimates of $85.5 million revenue, negative $2.2 million operating income, and negative $0.14 EPS.
The 32.2% year-over-year revenue decline was primarily driven by the company selling the majority of its HMI business segment, a strategic move that has fundamentally reshaped the company's operations. Despite the overall revenue decrease, Hooker Branded net sales grew 4.4% year-over-year while Domestic Upholstery increased 3.0%, demonstrating continued resilience in the company's legacy brands. This performance suggests that core business segments remain stable even as the company undergoes significant restructuring.
Following the sale of its lower margin HMI business, consolidated gross margins grew to 25.6%, showing sequential improvement. The company's overall profitability was challenged by one-time trade name impairment charges related to the HMI transaction, which Stonegate Capital Partners expects to be mostly one-time in nature. Management has reaffirmed its focus on navigating macro headwinds including housing market weakness, high mortgage rates, and subdued consumer demand while positioning the company to return to profitability.
The transformative sale of two HMI brands represents a strategic shift for Hooker Furniture as it streamlines operations and focuses on higher-margin segments. The improved gross margin percentage indicates that the company's remaining business segments operate more efficiently than the divested operations. This restructuring comes at a time when the furniture industry faces significant challenges from economic factors affecting consumer spending and housing markets.
Stonegate Capital Partners' coverage update highlights the company's strategic repositioning and provides context for understanding the financial results within the broader industry landscape. The firm notes impressive buzz around the upcoming Margaritaville launch, suggesting potential growth opportunities in new product lines. For business and technology leaders, Hooker Furniture's experience demonstrates how companies can navigate challenging market conditions through strategic divestitures and focus on core competencies.
The furniture industry has been particularly affected by housing market fluctuations and changing consumer spending patterns. Hooker Furniture's approach of selling lower-margin segments while investing in brand development and new product launches like Margaritaville represents a case study in corporate adaptation. The company's ability to grow its legacy brands despite broader market challenges suggests effective brand management and customer loyalty in competitive segments.
For investors and industry observers, the Q3 results provide insight into how traditional manufacturing companies are restructuring in response to economic pressures. The shift toward higher-margin operations while maintaining core brand strength represents a potential blueprint for similar companies facing margin compression and market headwinds. The full announcement, including downloadable images and additional information, is available through Stonegate Capital Partners' coverage update.
