Stonegate Capital Partners has updated its coverage on Hooker Furniture Corporation (NASDAQ: HOFT) following the company's fiscal third-quarter 2026 results. The company reported revenue of $70.7 million, operating income of ($16.3) million, and adjusted EPS of ($1.99), significantly below Stonegate and consensus estimates of $85.2 million/$85.5 million, ($2.2) million/($2.2) million, and ($0.15)/($0.14), respectively. Revenues declined 32.2% year-over-year, primarily driven by the sale of a majority of the company's HMI business segment.
Despite the top-line miss, Hooker's legacy brands demonstrated resilience. Hooker Branded net sales grew 4.4% year-over-year, and Domestic Upholstery increased 3.0%. Following the divestiture of its lower-margin HMI business, consolidated gross margins improved to 25.6%, showing sequential growth. However, overall profitability was challenged by one-time trade name impairment charges related to the HMI transaction, which Stonegate expects to be mostly non-recurring.
Management reaffirmed its focus on navigating macroeconomic headwinds, including housing market weakness, high mortgage rates, and subdued consumer demand, while positioning the company to return to profitability. The company is also generating buzz around its upcoming Margaritaville launch, which could provide a growth catalyst.
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