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What changed in HOOKER FURNISHINGS Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HOOKER FURNISHINGS Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+264 added−264 removedSource: 10-K (2025-04-18) vs 10-K (2024-04-12)

Top changes in HOOKER FURNISHINGS Corp's 2025 10-K

264 paragraphs added · 264 removed · 147 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

39 edited+15 added−15 removed27 unchanged
Biggest changeThe project is expected to be completed by 2025. ■ We continue to partner with the Arbor Day Foundation, the Sustainable Furnishings Council, and the Eco Ambassador Council for their commitment to environmental responsibility and sustainability, including financial assistance, educating employees on the necessity of preserving and replenishing resources, and supporting various projects within the Dan River Basin area. 11 Table of Contents Human Capital Resources As of January 28, 2024, we had 1,203 full-time employees, of which 312 were employed in our Hooker Branded segment, 202 were employed in our Home Meridian segment, 671 were employed in our Domestic Upholstery segment and 18 were employed in All Other.
Biggest changeWe are recognized as an Appalachian Power 2024 Top Performer for energy efficiency in the Martinsville area. ◾ We continue to partner with the Arbor Day Foundation, the Sustainable Furnishings Council, and the Eco Ambassador Council for their commitment to environmental responsibility and sustainability, including financial assistance, educating employees on the necessity of preserving and replenishing resources, and supporting various projects within the Dan River Basin area.
Most of the leather is imported from Italy and South America, and is purchased as full hides and cut and sewn in our facilities or is purchased as pre-cut and sewn kits processed by our vendors to our pattern specifications. We believe our sources for raw materials are adequate and that we are not dependent on any one supplier.
Most of the leather is imported from Italy and South America and is purchased as full hides and cut and sewn in our facilities or is purchased as pre-cut and sewn kits processed by our vendors to our pattern specifications. We believe our sources for raw materials are adequate and that we are not overly dependent on any one supplier.
Given the sourcing capacity available in Vietnam and other low-cost producing countries such as Mexico, Malaysia, and India, as well as our supply chain diversification efforts, we believe the risks from these potential supply disruptions are manageable in the long-term.
Given the sourcing capacity available in Vietnam and other low-cost producing countries such as China, Mexico, Malaysia, and India, as well as our supply chain diversification efforts, we believe the risks from these potential supply disruptions are manageable in the long-term.
U.S. imports of furniture produced overseas, such as from Vietnam, have stabilized in recent years. The primary competitive factors for home furnishings in our price points include price, style, availability, service, quality and durability.
U.S. imports of furniture produced overseas, such as from Vietnam and China, have stabilized in recent years. The primary competitive factors for home furnishings in our price points include price, style, availability, service, quality and durability.
Environmental Matters As a part of our business operations, our manufacturing sites generate both non-hazardous and hazardous wastes; the treatment, storage, transportation and disposal of which are subject to various local, state and federal laws relating to environmental protection. Our policy is to record monitoring commitments and environmental liabilities when expenses are probable and can be reasonably estimated.
Environmental Matters As a part of our business operations, our manufacturing sites generate both non-hazardous and hazardous waste; the treatment, storage, transportation and disposal of which are subject to various local, state and federal laws relating to environmental protection. Our policy is to record monitoring commitments and environmental liabilities when expenses are probable and can be reasonably estimated.
Hooker Furnishings Corporation consists of the following three operating segments and “All Other”: ■ The Hooker Branded segment which includes two businesses: □ Hooker Casegoods, which covers a wide range of design categories and includes home entertainment, home office, accent, dining and bedroom furniture in the upper-medium price points sold under the Hooker Furniture brand; and □ Hooker Upholstery, imported upholstered furniture targeted at the upper-medium price-range. ■ The Home Meridian segment which includes the following brands/marketing units: □ Pulaski Furniture, casegoods covering the complete design spectrum in a wide range of bedroom, dining room, accent and display cabinets at medium price points; □ Samuel Lawrence Furniture, value-conscious offerings in bedroom, dining room, home office and youth furnishings; □ Prime Resources International, value-conscious imported leather motion upholstery; and □ Samuel Lawrence Hospitality, a designer and supplier of hotel furnishings targeted toward four and five-star hotels. ■ The Domestic Upholstery segment which includes the following operations: □ Bradington-Young, a seating specialist in upscale motion and stationary leather furniture; □ HF Custom (formerly Sam Moore Furniture), a specialist in fashion forward custom upholstery offering a selection of chairs, sofas, sectionals, recliners and a variety of accent upholstery pieces; □ Shenandoah Furniture, an upscale upholstered furniture business specializing in private label sectionals, modulars, sofas, chairs, ottomans, benches, beds and dining chairs in the upper-medium price points for lifestyle specialty retailers; and □ Sunset West, a designer and manufacturer of comfortable, stylish and high-quality outdoor furniture. ■ All Other consisting of: □ The H Contract product line which supplies upholstered seating and casegoods to upscale senior living and assisted living facilities through designers, design firms, industry dealers and distributors that service that market; □ BOBO Intriguing Objects, a lighting, accessories and home décor source acquired in fiscal 2024 that offers a variety of one-of-a-kind designs; and □ Lifestyle Brands, a business started in fiscal 2019 targeted at the interior designer channel. 7 Table of Contents Sourcing Imported Products We have sourced products from foreign manufacturers for over thirty years, predominantly from Asia.
Hooker Furnishings Corporation consists of the following three operating segments and “All Other”: ◾ The Hooker Branded segment which includes two businesses: ☐ Hooker Casegoods, which covers a wide range of design categories and includes home entertainment, home office, accent, dining and bedroom furniture in the upper-medium price points sold under the Hooker Furniture brand; and ☐ Hooker Upholstery, imported upholstered furniture targeted at the upper-medium price range. ◾ The Home Meridian segment which includes the following brands/marketing units: ☐ Pulaski Furniture, casegoods covering the complete design spectrum in a wide range of bedroom, dining room, accent and display cabinets at medium price points; ☐ Samuel Lawrence Furniture, value-conscious offerings in bedroom, dining room, home office and youth furnishings; ☐ Samuel Lawrence Hospitality, a designer and supplier of hotel furnishings targeted toward four-and five-star hotels; and ☐ Prime Resources International (PRI), value-conscious imported leather motion upholstery. ◾ The Domestic Upholstery segment which includes the following operations: ☐ Bradington-Young, a seating specialist in upscale motion and stationary leather furniture; ☐ HF Custom (formerly Sam Moore Furniture), a specialist in fashion forward custom fabric upholstery offering a selection of chairs, sofas, sectionals, recliners and a variety of accent upholstery pieces; ☐ Shenandoah Furniture, an upscale upholstered furniture business specializing in private label sectionals, modulars, sofas, chairs, ottomans, benches, beds and dining chairs in the upper-medium price points for lifestyle specialty retailers; and ☐ Sunset West, a designer and manufacturer of comfortable, stylish and high-quality outdoor furniture. ◾ All Other consisting of: ☐ The H Contract product line which supplies upholstered seating and casegoods to upscale senior living and assisted living facilities through designers, design firms, industry dealers and distributors that service that market; and ☐ BOBO Intriguing Objects (BOBO), a lighting, accessories and home décor source acquired in fiscal 2024 that offers a variety of one-of-a-kind designs. 6 Table of Contents Sourcing Imported Products We have sourced products from foreign manufacturers for over thirty years, predominantly from Asia.
We are actively working to refine and align our environmental stewardship based on current best practices, shareholder expectations and regulatory developments through our ESG-focused employee committee called CARE (Community Action & Responsibility for our Environment). It regularly updates management and updates the Board at least quarterly on these initiatives.
We are actively working to refine and align our environmental stewardship based on current best practices, shareholder expectations and regulatory developments through our Environmental, Social and Governance (ESG) focused employee committee called CARE (Community Action & Responsibility for our Environment). It regularly updates management and updates the Board at least quarterly on these initiatives.
Payment for goods which are shipped to our US warehouses or container direct to our customers FOB Origin (free on board origin, which means the buyer is responsible for the costs and liability of the freight during transport) is generally due upon proof of lading onto a US-bound vessel and invoice presentation; however, payment terms, depending on the supplier, can stretch up to 45 days from invoice date.
Payment for goods which are shipped to our U.S. warehouses or container direct to our customers FOB Origin (free on board origin, which means the buyer is responsible for the costs and liability of the freight during transport) is generally due upon proof of lading onto a U.S.-bound vessel and invoice presentation; however, payment terms, depending on the supplier, can stretch up to 45 days from invoice date.
Governmental Regulations Our company is subject to U.S. federal, state and local laws and regulations in the areas of safety, health, employment and environmental pollution controls, as well as U.S. and international trade laws and regulations. We are also subject to foreign laws and regulations.
Governmental Regulations Our company is subject to U.S. federal, state and local laws and regulations in the areas of safety, health, employment and environmental pollution controls, as well as U.S. and international trade laws and regulations, including tariffs. We are also subject to foreign laws and regulations.
Less than 2% of our sales in fiscal 2024 were to international customers. We define sales to international customers as sales to customers outside of the United States and Canada since our independent domestic sales force services both countries.
Less than 2% of our sales in fiscal 2025 were to international customers. We define sales to international customers as sales to customers outside of the United States and Canada since our independent domestic sales force services both countries.
A free copy of our annual report on Form 10-K may also be obtained by contacting Earl Armstrong, Senior Vice-President Finance and Corporate Secretary at CorpSec@hookerfurnishings.com or by calling 276-632-2133.
A free copy of our annual report on Form 10-K may also be obtained by contacting Earl Armstrong, Chief Financial Officer, Senior Vice-President Finance and Corporate Secretary at CorpSec@hookerfurnishings.com or by calling 276-632-2133.
Our five largest domestic upholstery suppliers accounted for 35% of our raw materials purchases for domestic upholstered furniture manufacturing operations in fiscal 2024. Should disruptions with these suppliers occur, other than macro disruptions affecting all such suppliers, we believe we could successfully source these products from other suppliers without significant disruption to our operations.
Our five largest domestic upholstery suppliers accounted for 31% of our raw materials purchases for domestic upholstered furniture manufacturing operations in fiscal 2025. Should disruptions with these suppliers occur, other than macro disruptions affecting all such suppliers, we believe we could successfully source these products from other suppliers without significant disruption to our operations.
Some of the action steps we have taken recently or are working on currently include: ■ We carefully evaluate the overall compensation and benefits packages regularly to ensure the economic security, health, and safety of our employees, including; o compensating employees competitively relative to the industry and local labor markets, and in accordance with all applicable federal, state, and local wage, work hour, overtime, and benefits laws; and o providing affordable and comprehensive health benefits to employees focused on financial, emotional, and physical health and well-being, including a standardized process of reporting worker’s compensation claims which we believe promotes health and safety of our employees. ■ We maintain standardized safety procedures at all locations and established safety committees that consist of management and employee representatives, with tasks of identifying and reporting hazards and unsafe work practices, removing obstacles to accident prevention, and minimizing the risks of accidents, injury and impacts on health.
Some of the action steps we have taken recently or are working on currently include: ◾ We carefully evaluate the overall compensation and benefits packages regularly to ensure the economic security, health, and safety of our employees, including; ο compensating employees competitively relative to the industry and local labor markets, and in accordance with all applicable federal, state, and local wage, work hour, overtime, and benefits laws; and ο providing affordable and comprehensive health benefits to employees focused on financial, emotional, and physical health and well-being, including a standardized process of reporting worker’s compensation claims which we believe promotes the health and safety of our employees. 10 Table of Contents ◾ We maintain standardized safety procedures and training at all locations including established safety committees, under the leadership of our Director of Facilities & Safety, which consist of management and employee representatives, with tasks of identifying and reporting hazards and unsafe work practices, removing obstacles to accident prevention, and minimizing the risks of accidents, injury and impacts on health.
Due to our exit from the Accentrics Home (“ACH”) business unit which demanded significant amounts of inventory to meet the quick shipping requirements of its e-commerce model, we reduced the physical footprint of the Georgia warehouse by 400,000 square feet over the course of fiscal 2024.
Due to our exit from the Accentrics Home (“ACH”) business unit which demanded significant amounts of inventory to meet the quick shipping requirements of its e-commerce model, we reduced the physical footprint of the Georgia warehouse by 400,000 square feet over the course of fiscal 2024. In March 2025, we announced the planned exit from our Georgia warehouse.
All employees are required to sign off on the Code at hiring and reaffirm their understanding and compliance with the Code, as well as anti-corruption and anti-bribery training on an annual basis. In addition, the Company has launched the effort to have domestic suppliers to sign a Vendor Code of Conduct.
All employees are required to sign off on the Code at hiring and reaffirm their understanding and compliance with the Code, as well as anti-corruption and anti-bribery training on an annual basis. In addition, the Company has both import and domestic suppliers to sign a Vendor Code of Conduct.
However, our insight into the probability of a wide scale global or regional disruption or pandemic, like the recent COVID-19 pandemic, remains limited. See Item 1A, “Risk Factors” for additional information on our risks related to imported products. For imported products, we generally negotiate firm pricing with foreign suppliers in U.S.
However, our insight into the probability of a wide scale global or regional disruption or pandemic, like the COVID-19 pandemic, remains limited. See Item 1A, “Risk Factors” for additional information on our risks related to imported products. For imported products, we generally negotiate firm pricing with foreign suppliers in U.S. Dollars, typically for a term of at least one year.
No single customer accounted for more than 6% of our consolidated sales in fiscal 2024. Our top five customers accounted for approximately 22% of our fiscal 2024 consolidated sales. The loss of any one or more of these customers would have a material adverse impact on our business.
No single customer accounted for more than 7% of our consolidated sales in fiscal 2025. Our top five customers accounted for approximately 24% of our fiscal 2025 consolidated sales. The loss of any one or more of these customers would have a material adverse impact on our business.
Our imported furniture business is subject to inherent risks in importing products manufactured abroad, including, but not limited to, supply disruptions and delays due to a variety of reasons, including our foreign suppliers’ factory capacities, factory shutdowns, and delays including those caused by the COVID-19 pandemic and possible similar health-related issues, much higher ocean freight costs, container and vessel space availability, currency exchange rate fluctuations, economic and political developments and instability, as well as the laws, policies and actions of foreign governments and the United States.
Our imported furniture business is subject to inherent risks in importing products manufactured abroad, including, but not limited to: supply disruptions and delays due to a variety of reasons, including our foreign suppliers’ factory capacities, factory shutdowns and delays, fluctuations in ocean freight costs, container and vessel space availability, currency exchange rate fluctuations, economic and political developments and instability, as well as the laws, policies and actions of foreign governments and the United States.
We believe these trade names, in addition to the recently obtained “M” brand, HF Custom and BOBO, are well-recognized and associated with quality and service in the furnishings industry. We also own a number of patents and trademarks, both domestically and internationally, none of which is considered to be material.
We believe these trade names are well-recognized and associated with quality and service in the furnishings industry. We also own a number of patents and trademarks, both domestically and internationally, none of which is considered to be material.
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.
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 or has requested that we ship the order “in-full”, meaning all products ordered for the end-user must ship together.
Additionally, our hospitality products are highly customized and are generally not cancellable. 10 Table of Contents 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.
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.
Imported casegoods and upholstered furniture together accounted for approximately 70% of our net sales in fiscal 2024, 72% of our net sales in fiscal 2023, and 82% of our net sales in fiscal 2022.
Imported casegoods and upholstered furniture together accounted for approximately 71%, 70%, and 72% of our net sales in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.
We are committed to implementing and improving safety measures to achieve a safe, healthy, secure, and productive workplace; ■ We are committed to employees’ professional success and growth by providing an average of 28 hours of training per employee per year including on-the-job coaching, formal training sessions, and online learning resources.
We are committed to implementing and improving safety measures to achieve a safe, healthy, secure, and productive workplace; ◾ We are committed to employees’ professional success and growth by providing extensive safety training, on-the-job coaching, formal training sessions, and online learning resources.
We largely did not have to re-negotiate prices during fiscal 2024 as these pressures stabilized. We accept the exposure to exchange rate movements during these negotiated periods. We do not use derivative financial instruments to manage this risk but could choose to do so in the future. Since we transact our imported product purchases in U.S.
However, under certain circumstances, we may re-negotiate pricing during the year. We accept the exposure to exchange rate movements during these negotiated periods. We do not use derivative financial instruments to manage this risk but could choose to do so in the future. Since we transact our imported product purchases in U.S.
Working Capital Practices Inventory We generally import casegoods inventory and certain upholstery items in amounts that enable us to meet the delivery requirements of our customers, our internal in-stock goals and minimum purchase requirements from our sourcing partners.
See additional information in Management’s Discussion and Analysis and Note 22 Subsequent Events on page 23 and F-33. Working Capital Practices Inventory We generally import casegoods inventory and certain upholstery items in amounts that enable us to meet the delivery requirements of our customers, our internal in-stock goals and minimum purchase requirements from our sourcing partners.
During fiscal 2024, we liquidated substantially all of these inventories. 9 Table of Contents Accounts receivable Substantially all of our trade accounts receivable are due from retailers and dealers that sell residential home furnishings or commercial purchasers of our hospitality and senior living products, which consist of a large number of entities with a broad geographic dispersion.
Accounts receivable Substantially all of our trade accounts receivable are due from retailers and dealers that sell residential home furnishings or commercial purchasers of our hospitality and senior living products, which consist of a large number of entities with a broad geographic dispersion. We perform credit evaluations of our customers and generally do not require collateral.
Seasonality Generally, sales in our fiscal first quarter are lower than our other fiscal quarters due to the post-Lunar New Year shipping lag and sales in our fiscal fourth quarter are generally stronger due to the pre-Lunar New Year surge in shipments from Asia.
At fiscal 2020 year-end, Sunset West had approximately $1.6 million in backlog. 9 Table of Contents Seasonality Generally, sales in our fiscal first quarter are lower than our other fiscal quarters due to the post-Lunar New Year shipping lag and sales in our fiscal fourth quarter are generally stronger due to the pre-Lunar New Year surge in shipments from Asia.
These laws, policies and actions may include regulations affecting trade or the application of tariffs. Because of the large number and diverse nature of the foreign suppliers from which we source our imported products, we have flexibility in the sourcing of products among any particular supplier or country.
Because of the large number and diverse nature of the foreign suppliers in Vietnam, China, Mexico, India, and Malaysia from which we source our imported products, we have flexibility in the sourcing of products among any particular supplier or country.
Order Backlog At January 28, 2024, our backlog of unshipped orders was as follows: Order Backlog (Dollars in 000s) January 28, 2024 January 29, 2023 Reporting Segment Dollars Weeks Dollars Weeks Hooker Branded $ 15,416 5.1 $ 20,567 5.2 Home Meridian 36,013 13.0 43,052 10.3 Domestic Upholstery 18,920 7.8 29,696 9.9 All Other 1,475 12.2 2,071 26.2 Consolidated $ 71,824 8.6 $ 95,386 8.5 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.
Payment terms for domestic raw materials and non-inventory related charges vary but are generally 30 days from invoice date. 8 Table of Contents Order Backlog At February 2, 2025, our backlog of unshipped orders was as follows: Order Backlog (Dollars in 000s) February 2, 2025 January 28, 2024 *February 2, 2020 Reporting Segment Dollars Weeks Dollars Weeks Dollars Weeks Hooker Branded $ 11,984 4.3 $ 15,416 5.1 $ 10,979 3.5 Home Meridian 21,002 8.5 36,013 13 85,556 13.1 Domestic Upholstery 18,123 8.4 18,920 7.8 14,705 8 All Other 1,527 13.6 1,475 12.2 2,520 10.5 Consolidated $ 52,636 7.0 $ 71,824 8.6 $ 113,760 9.7 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 have purchased renewable energy from solar farms for several domestic manufacturing facilities since 2022. Sunset West is operating on 100% renewable resources; HF Custom (formerly Sam Moore) is operating on 50% renewable energy with a plan expected to achieve 100% in calendar 2024; and the Savannah distribution center is operating on 30% renewable energy.
We have purchased renewable energy from solar farms for several domestic manufacturing facilities since 2022. Sunset West is operating on 100% renewable energy; HF Custom (formerly Sam Moore) is operating on 100% renewable energy; and the Savannah distribution center is operating on 30% renewable energy. All remaining facilities will be added as renewable energy programs are available in those locations.
However, these price changes could adversely impact sales volume and profit margin during the affected periods. Conversely, a relative increase in the value of the U.S. Dollar compared to the currencies from which we obtain our imported products could decrease the cost of imported products and favorably impact net sales and profit margins during the affected period.
Conversely, a relative increase in the value of the U.S. Dollar compared to the currencies from which we obtain our imported products could decrease the cost of imported products and favorably impact net sales and profit margins during the affected period. However, due to other factors, such as inflationary pressure, we may not fully realize savings when exchange rates fall.
We note the following recent and ongoing activities and new developments: ■ We have put in place several initiatives focused on promoting sustainability and preserving natural resources. We have completed a corporate-wide inventory of 2022 to 2023 Greenhouse Gas Emissions (GHG). Third-party verification of GHG data is in process and on target to be completed in calendar 2024.
We note the following recent and ongoing activities and new developments: ◾ We have put in place several initiatives focused on promoting sustainability and preserving natural resources. We maintain an annual Greenhouse Gas (GHG) emissions inventory and verification.
We perform credit evaluations of our customers and generally do not require collateral. For qualified customers, we offer payment terms, generally requiring payment 30 days from shipment. However, we may offer extended payment terms in certain circumstances, including to promote sales of our product.
For qualified customers, we offer payment terms, generally requiring payment 30 days from shipment. However, we may offer extended payment terms in certain circumstances, including to promote sales of our product. We purchase accounts receivable insurance on certain customers if their risk profile warrants it and the insurance is available.
“Quantitative and Qualitative Disclosures About Market Risk.” Raw Materials Significant materials used in manufacturing our domestic upholstered furniture products include leather, fabric, foam, wooden and metal frames and electronic mechanisms.
Therefore, lower exchange rates may only have a tempering effect on future price increases by merely delaying cost increases on imported products. See also Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.” Raw Materials Significant materials used in manufacturing our domestic upholstered furniture products include leather, fabric, foam, wooden and metal frames and electronic mechanisms.
By geographical area, 1,030 employees were located in the United States and 173 were located in Asia. None of our employees are represented by a labor union. We consider our relations with our employees to be good. We are committed to creating a diverse, equitable and inclusive space for all our employees, customers and retail partners.
By geographical area, 895 employees were located in the United States and 139 were located in Asia. None of our employees are represented by a labor union. We consider our relations with our employees to be good. Our employees are critical to our success, and we are committed to attracting, developing, and retaining top talent to drive our business forward.
However, domestically produced upholstered products are predominantly custom-built and consequently, cannot be cancelled once the leather or fabric has been cut.
However, domestically produced upholstered products are predominantly custom-built and consequently, cannot be cancelled once the leather or fabric has been cut. Additionally, our hospitality products are highly customized and are generally not cancellable. Similarly, for our outdoor furnishings, most orders require a deposit upon order and the balance before production is started, and hence are generally not cancellable.
The Company also provides continuing education opportunities, comprehensive leadership development programs, and a renewable tuition reimbursement program to children and spouses of all employees, excluding family members of current and former executive officers and board directors; ■ We are committed to creating a diverse, equitable, and inclusive space for all employees: o we have partnered with Centro Latino, Bedford Adult Education Center, Veteran Centric Organizations, and Historically Black Colleges and Universities (HBCU) Partnerships to improve recruitment and retention of a diverse workforce.
The Company also provides continuing education opportunities, including an independently operated educational foundation originally funded by the Company, comprehensive leadership development programs, and a renewable tuition reimbursement program to children and spouses of all employees, excluding family members of current and former executive officers and board directors; ◾ We are committed to fostering a culture of opportunity and respect for all members of our team.
The Company has also started periodic audits of its international vendors to ensure compliance and produce a scorecard that can be used in future purchasing decisions based upon their performance. 12 Table of Contents Patents and Trademarks The Hooker Furnishings, Hooker Furniture, Bradington-Young, Sam Moore, Pulaski Furniture, Samuel Lawrence Furniture, Samuel Lawrence Hospitality, Room Gear, Home Meridian International, Prime Resources International, Accentrics Home, Shenandoah, H Contract, Homeware, and Sunset West trade names represent many years of continued business.
Our ESG audit involves a systematic evaluation of our performance across the ESG spectrum aiming to identify strengths, weaknesses, opportunities, and risks, and to provide stakeholders with a comprehensive view of our sustainability efforts and adherence to ESG principles 11 Table of Contents Patents and Trademarks The Hooker Furnishings, Hooker Furniture, Bradington-Young, Sam Moore, Pulaski Furniture, Samuel Lawrence Furniture, Samuel Lawrence Hospitality, Home Meridian International, Prime Resources International, Shenandoah, H Contract, Sunset West, HF Custom and BOBO trade names represent many years of continued business.
We were able to find an alternative plywood source at a higher price during fiscal 2023 and this issue was mitigated as of early calendar 2023. 8 Table of Contents Customers Our home furnishings products are sold through a variety of retailers including independent furniture stores, department stores, mass merchants, national chains, catalog merchants, interior designers, and e-commerce retailers.
However, if we are unable to offset the tariff costs on these imported materials, it may lead to increased product costs, potentially adversely affecting net sales and profit margins. 7 Table of Contents Customers Our home furnishings products are sold through a variety of retailers including independent furniture stores, department stores, mass merchants, national chains, catalog merchants, interior designers, and e-commerce retailers.
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Dollars, typically for a term of at least one year. However, under certain circumstances, we may re-negotiate pricing during the year. Due to the global supply chain crisis and inflation pressure in Asia and the U.S., we were forced to re-negotiate prices multiple times during fiscal 2022 and 2023.
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These laws, policies and actions may include regulations affecting trade or the application of tariffs, such as the current ten percent tariff and the potential additional reciprocal tariffs on imports imposed by the current U.S. administration , affecting the countries from which we source imported home furnishings and components, including the possible adverse effects on our sales, earnings, and liquidity.
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However, due to other factors, such as inflationary pressure, we may not fully realize savings when exchange rates fall. Therefore, lower exchange rates may only have a tempering effect on future price increases by merely delaying cost increases on imported products. See also Item 7A.
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However, these price changes could adversely impact sales volume and profit margin during the affected periods, and potential competitive pricing pressures could limit the company’s ability to pass cost increases to vendors or customers. Additionally, we generally do not apply price increases on order backlog, which could adversely affect our earnings.
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For example, due to the Russian invasion of Ukraine, there was a shortage of Russian Birch which was the third largest source of US hardwood plywood imports in calendar 2021. Prior to the invasion, a large portion of the plywood used at one division of our Domestic Upholstery segment was Russian Birch.
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After the implementation of the initial reciprocal tariffs in April 2025, we have observed price increases in imported raw materials, including fabrics, steel, and hides. Generally, we engage in negotiations with our suppliers to share a portion of the tariff burden.
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The majority of products in the Hooker Branded segment are shipped from our U.S. warehouses. In calendar 2021, the COVID-19 related lockdowns at our suppliers in Vietnam and Malaysia, along with the supply chain disruptions, resulted in low inventory levels within the Hooker Branded segment in early fiscal 2023.
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The exit strategy involves several risks, including the timely execution of the exit, costs and availability of temporary warehousing, expenses related to relocation and start-up, and potential challenges with ERP and technology systems. Additional considerations include the timing and magnitude of restructuring charges, anticipated cost savings, and the potential for disruptions to sales, earnings, and revenue.
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Inventory availability began to improve in mid-to-late fiscal 2023, finally stabilizing in fiscal 2024. Home Meridian’s warehoused inventory increased significantly during fiscal 2023 due primarily to increased inventory in the ACH division, which is focused on the e-commerce channel.
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At the end of fiscal 2025, our consolidated order backlog decreased by $19.2 million as compared to the prior year-end, representing a 27% decrease year-over-year.
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A slowing in the ecommerce business, coupled with an aggressive backlog reduction by our Asian suppliers after the end of COVID-19-related lockdowns in the late-summer of 2021, resulted in a substantial ACH inventory increase in fiscal 2023.
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This decrease was primarily driven by a $15 million reduction in the Home Meridian backlog and a $3.4 million reduction in the Hooker Branded backlog, both due to weak demand in the home furnishings market. * For comparison purposes, we included order backlog as of fiscal 2020 year-end, the year before the COVID crisis.
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Due to low profitability, low rates of sales and a general slowing of furniture sales in the e-commerce space, we decided to exit this division and recorded $24 million write-downs of ACH inventories and other excess inventories during the fourth quarter of fiscal 2023.
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At fiscal 2020 year-end, Home Meridian backlog included approximately $18 million orders from the unprofitable Clubs and Accentrics Home e-commerce (ACH) businesses which we decided to exit in fiscal 2022 and fiscal 2023, respectively. Domestic Upholstery backlog did not include Sunset West, the business we acquired in the beginning of fiscal 2023.
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We purchase accounts receivable insurance on certain customers if their risk profile warrants it and the insurance is available.
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The third-party verification of GHG emissions issued in calendar year 2024 stated that we have established appropriate systems for the collection, aggregation and analysis of quantitative data for determination of these GHG emissions for the stated period and boundaries. ◾ Since 2021, we have started projects to reduce our carbon footprint by investment in renewable energy and in projects to reduce energy consumption.
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Payment terms for domestic raw materials and non-inventory related charges vary but are generally 30 days from invoice date.
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We also support the Virginia Museum of Natural History’s Cultural Heritage Monitoring lab, which provides global monitoring capability for cultural heritage sites threatened by armed conflict and natural disaster.
Removed
At the end of fiscal 2024, order backlog decreased by $23.6 million or 25%, as compared to the prior year end. The decrease was largely attributable to normalized levels of shipping, soft incoming orders driven by a decrease in overall demand, and absence of ACH orders and backlog in the Home Meridian segment.
Added
Human Capital Resources As of February 2, 2025, we had 1,034 full-time employees, of which 233 were employed in our Hooker Branded segment, 173 were employed in our Home Meridian segment, 623 were employed in our Domestic Upholstery segment and 5 were employed in All Other.
Removed
We are in the process of establishing a functional baseline to be able to measure whether future improvement initiatives reduce our carbon footprint. Going forward, each material facility will have its carbon footprint measured annually. ■ Since 2021, we have started projects to reduce our carbon footprint by investment in renewable energy and in projects to reduce energy consumption.
Added
We have done this by: ο Expanding Talent Pipelines ● We expanded our Furniture Market Internship, providing aspiring professionals with hands-on experience and exposure to the furniture industry in areas such as customer service, hospitality, marketing, and sales. ● We established a formal summer internship program aligned with roles of interest for recent graduates.
Removed
All remaining facilities are expected to participate in renewable energy programs by the end of calendar 2024. The multi-year project of switching to LED lighting in the manufacturing facilities and distribution centers resulted in an electrical usage reduction of 20% to 30% in the year 2021 and 2022.
Added
During the summer of 2024, the program focused on marketing, with three interns contributing to various aspects of the department and gaining valuable experience. ● We strengthened our partnerships with local HBCUs and participated in the State of North Carolina’s HBCU Internship Program, hosting a supply chain intern to support skill development in key roles. ο Enhancing Employee Training ● We introduced feedback training and conflict management training for people leaders to improve workplace communication and foster a collaborative environment. ● We developed plans for future training initiatives, including programs focused on mental health awareness, boundary-spanning skills, and change management to support employee growth, adaptability, and well-being. ο Strengthening Community Partnerships ● We continue to maintain and grow community partnerships in the communities where our employees live and work.
Removed
We are recognized as Appalachian Power 2023 Top Performer for energy efficiency in the Martinsville area.
Added
For example, we deepened our collaboration with the Resource Access Network in Lynchburg, which led to receiving the Champions of Disability Employment Award for our efforts to create meaningful employment opportunities for individuals with disabilities. ● In calendar 2024, we participated in job fairs, workshops, and university events, offering resume reviews, mock interviews, and insights into careers at Hooker Furnishings to strengthen community ties and support workforce development. ◾ We maintain a Code of Business Conduct and Ethics.
Removed
In 2023, the Company’s demographic composition of U.S.-based employees included 65% White, 16% Black or African American, 15% Hispanic or Latino, and other racial groups; o in 2023, more than 40% of executive and senior level employees were female, demonstrating the Company's commitment to gender diversity.
Added
The Company also has audits in place for both Environmental Social and Governance (ESG) and the US Customs Trade Partnership Against Terrorism certification (CTPAT) and conducts them every 6 months and produces a scorecard that can be used in future purchasing decisions based upon the vendor’s performance.
Removed
Earlier in 2023, the Company was selected by Furniture Today, a leading information source of the furniture industry, as one of the advocates for women’s empowerment in the home furnishings industry and presented with the Furniture Today “Empowering Women Award.” ■ We maintain a Code of Business Conduct and Ethics.
Added
The CTPAT audit process involves a comprehensive self-assessment of our supply chain covering facilities, logistics, and personnel, IT, etc., and the implementation of security best practices, to ensure our entire supply chain is secure. This self-assessment is ultimately audited by US Customs and Border Protection. Adherence to this program allows for quicker processing of shipments through US Customs.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+20 added−5 removed47 unchanged
Biggest changeIf our product offerings do not meet applicable safety standards or consumers' expectations regarding safety, we could experience decreased sales, increased costs and/or be exposed to legal and reputational risk. Events that give rise to actual, potential or perceived product safety concerns could expose us to regulatory enforcement action and/or private litigation.
Biggest changeSee Note 10 to our Consolidated Financial Statements for additional information. Our sales and operating results could be adversely affected by product safety concerns. If our product offerings do not meet applicable safety standards or consumers’ expectations regarding safety, we could experience decreased sales, increased costs and/or be exposed to legal and reputational risk.
Increased transportation costs, both domestically and internationally, in the future would likely adversely affect earnings, financial condition and liquidity. ■ Our dependence on suppliers could, over time, adversely affect our ability to service customers. We rely heavily on suppliers we do not own or control, including a large number of non-U.S. suppliers.
Increased transportation costs, both domestically and internationally, in the future would likely adversely affect our earnings, financial condition and liquidity. ◾ Our dependence on suppliers could, over time, adversely affect our ability to service customers. We rely heavily on suppliers we do not own or control, including a large number of non-U.S. suppliers.
Any disruption affecting our domestic facilities, for even a relatively short period of time, could adversely affect our ability to ship our furniture products and disrupt our business, which could adversely affect our sales, earnings, financial condition and liquidity.
Any disruption affecting our domestic facilities, even for a relatively short period of time, could adversely affect our ability to ship our furniture products and disrupt our business, which could adversely affect our sales, earnings, financial condition and liquidity.
Lack of qualified workers and high turnover in a variety of positions caused increased training costs and adversely affected our production schedules and the ability to ship our furniture products. Furthermore, we experienced higher labor costs and persistent inflationary pressure.
Lack of qualified workers and high turnover in a variety of positions caused increased training costs and adversely affected our production schedules and our ability to ship our furniture products. Furthermore, we experienced higher labor costs and persistent inflationary pressure.
Accordingly, our results of operations for any quarter are not necessarily indicative of the results of operations to be expected for a full year or the next quarter. 18 Table of Contents The interruption, inadequacy or security failure of our information systems or information technology infrastructure or the internet or inadequate levels of cyber-insurance could adversely impact our business, sales, earnings, financial condition and liquidity.
Accordingly, our results of operations for any quarter are not necessarily indicative of the results of operations to be expected for a full year or the next quarter. 17 Table of Contents The interruption, inadequacy or security failure of our information systems or information technology infrastructure or the internet or inadequate levels of cyber insurance could adversely impact our business, sales, earnings, financial condition and liquidity.
Additionally, while we carry cyber insurance, including insurance for social engineering fraud, the amounts of insurance we carry may be inadequate due either to inadequate limits available from the insurance markets or inadequate coverage purchased. Because cyber threat scenarios are inherently difficult to predict and can take many forms, cyber insurance may not cover certain risks.
Additionally, while we carry cyber insurance, including insurance for social engineering fraud, the amounts of insurance we carry may be inadequate due either to inadequate limits available from the insurance markets or inadequate coverage purchased. Because cyberthreat scenarios are inherently difficult to predict and can take many forms, cyber insurance may not cover certain risks.
Additionally, we transitioned a significant portion of our imported product purchases from China to Vietnam due to the imposition of tariffs on most furniture and component parts imported from China. As conditions dictate, we could be forced to make similar transitions in the future.
Additionally, in the past we transitioned a significant portion of our imported product purchases from China to Vietnam due to the imposition of tariffs in 2018 on most furniture and component parts imported from China. As conditions dictate, we could be forced to make similar transitions in the future.
Fluctuations in the price, availability or quality of raw materials for our domestically manufactured upholstered furniture could cause manufacturing delays, adversely affect our ability to provide goods to our customers or increase our costs.
Fluctuations in the price (including tariffs), availability or quality of raw materials for our domestically manufactured upholstered furniture could cause manufacturing delays, adversely affect our ability to provide goods to our customers or increase our costs.
We have experienced and expect to continue to experience actual or attempted cyber-attacks of our information systems or networks; however, none of these actual or attempted cyber-attacks had a material impact on our operations or financial condition.
We have experienced and expect to continue to experience actual or attempted cyberattacks of our information systems or networks; however, none of these actual or attempted cyberattacks had a material impact on our operations or financial condition.
These price changes could decrease our sales, earnings, financial condition and liquidity during the affected periods. 15 Table of Contents ■ Supplier transitions, including cost or quality issues, could result in longer lead times and shipping delays.
These price changes could decrease our sales, earnings, financial condition and liquidity during the periods affected. ◾ Supplier transitions, including cost or quality issues, could result in longer lead times and shipping delays.
In fiscal 2024, imported products sourced from Vietnam accounted for 88% of our import purchases and our top five suppliers in Vietnam accounted for 60% of our fiscal 2024 import purchases. Our supply chain could be adversely impacted by the uncertainties of health concerns such as COVID-19 or similar pandemics and governmental restrictions.
In fiscal 2025, imported products sourced from Vietnam accounted for 76% of our import purchases and our top five suppliers in Vietnam accounted for 62% of our fiscal 2025 import purchases. Our supply chain could be adversely impacted by the uncertainties of health concerns such as COVID-19 or similar pandemics and governmental restrictions.
A claim that is brought against us, successful or unsuccessful, that is uninsured or under-insured could harm our business, result in substantial costs, divert management attention and adversely affect our sales, earnings, financial condition and liquidity. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
A claim that is brought against us, successful or unsuccessful, that is uninsured, or under-insured could harm our business, result in substantial costs, divert management attention and adversely affect our sales, earnings, financial condition and liquidity.
The furniture industry is particularly sensitive to cyclical variations in the general economy and the current macro-economic uncertainties, including the economic downturn caused by pandemics such as COVID-19, persistent inflation and higher interest rates, and slow housing market. Home furnishings are generally considered a postponable purchase by most consumers.
The furniture industry is particularly sensitive to cyclical variations in the general economy and the current macro-economic uncertainties, including the current sustained economic downturn caused by persistent inflation and higher interest rates, the slow housing market, and after-effects of COVID-19. Home furnishings are generally considered a discretionary and postponable purchase by most consumers.
These costs and risks could include, but are not limited to: ● Significant capital and operating expenditures; ● Disruptions to our domestic and international supply chains; ● Inability to fill customer orders accurately and on a timely basis, or at all; ● Inability to process payments to suppliers, vendors and associates accurately and in a timely manner; ● Disruption to our system of internal controls; ● Inability to fulfill our SEC or other governmental reporting requirements in a timely or accurate manner; ● Inability to fulfill international, federal, state or local tax filing requirements in a timely or accurate manner; and ● Increased demands on management and staff time to the detriment of other corporate initiatives.
These costs and risks could include, but are not limited to: ● Significant capital and operating expenditures; ● Disruptions to our domestic and international supply chains; ● Inability to fill customer orders accurately and on a timely basis, or at all; ● Inability to process payments to suppliers, vendors and associates accurately and in a timely manner; ● Disruption to our system of internal controls; ● Inability to fulfill our SEC or other governmental reporting requirements in a timely or accurate manner; ● Inability to fulfill international, federal, state or local tax filing requirements in a timely or accurate manner; and ● Increased demands on management and staff time to the detriment of other corporate initiatives. 15 Table of Contents We may not be able to maintain, raise prices, or raise prices in a timely manner in response to inflation and increasing costs.
Economic downturns could affect consumer spending habits by decreasing the overall demand for home furnishings. Changes in interest rates, consumer confidence, new housing starts, existing home sales, the availability of consumer credit and broader national or geopolitical factors have particularly significant effects on our business. We have seen negative effects on all of these measures due to the COVID-19 pandemic.
Economic downturns could affect consumer spending habits by decreasing the overall demand for home furnishings. Changes in interest rates, consumer confidence, new housing starts, existing home sales, the availability of consumer credit and broader national or geopolitical factors have particularly significant effects on our business.
One customer accounted for approximately 6% of our consolidated sales in fiscal 2024, and our top five customers accounted for about 22% of our fiscal 2024 consolidated sales. Approximately 16% of our consolidated accounts receivable is concentrated in our top five customers.
One customer accounted for approximately 6% of our consolidated sales in fiscal 2025, and our top five customers accounted for about 24% of our fiscal 2025 consolidated sales. Approximately 36% of our consolidated accounts receivable is concentrated in our top five customers.
At times, especially during the post COVID-19 demand surge, we have experienced difficulties in recruiting skilled labor into our domestic upholstery plants and warehouses and in some skilled or professional positions.
Labor shortages and rising labor costs could disrupt operations at our domestic warehousing and manufacturing facilities. At times, especially during the post COVID-19 demand surge, we have experienced difficulties in recruiting skilled labor into our domestic upholstery plants and warehouses and in some skilled or professional positions.
We may experience impairment of our long-lived assets, which would decrease our earnings and net worth. At January 28, 2024, we had $72.8 million in net long-lived assets, consisting primarily of property, plant and equipment, trademarks, trade names and goodwill.
We may experience impairment of our long-lived assets, which would decrease our earnings and net worth. At February 2, 2025, we had $65.3 million in net long-lived assets, consisting primarily of property, plant and equipment, trademarks, trade names and goodwill.
Should more customers than we anticipate experience liquidity issues, if payment is not received on a timely basis, or if a customer declares bankruptcy or closes stores, we may have difficulty collecting amounts owed to us by these customers, which could adversely affect our sales, earnings, financial condition and liquidity. 17 Table of Contents Labor shortages and rising labor costs could disrupt operations at our domestic warehousing and manufacturing facilities.
Should more customers than we anticipate experience liquidity issues, if payment is not received on a timely basis, or if a customer declares bankruptcy or closes stores, we may have difficulty collecting amounts owed to us by these customers, which could adversely affect our sales, earnings, financial condition and liquidity. 16 Table of Contents Our existing and future debt obligations could impair our liquidity and financial condition.
We grant payment terms to most customers ranging from 30 to 60 days and do not generally require collateral. However, in some instances we provide longer payment terms. We purchase credit insurance on certain customers’ receivables and factor certain other customer accounts. Some of our customers have experienced, and may in the future experience, credit-related issues.
We may not be able to collect amounts owed to us. We grant payment terms to most customers ranging from 30 to 60 days and do not generally require collateral. However, in some instances we provide longer payment terms. We purchase credit insurance on certain customers’ receivables and factor certain other customer accounts.
Credit evaluations involve significant management diligence and judgment, especially in the current environment. We may be unable to obtain sufficient credit insurance on certain customers’ receivable balances.
While we perform credit evaluations of our customers, those evaluations may not prevent uncollectible trade accounts receivable. Credit evaluations involve significant management diligence and judgment, especially in the current environment. We may be unable to obtain sufficient credit insurance on certain customers’ receivable balances.
Furniture manufacturing creates large amounts of highly flammable wood dust and may utilize other highly flammable materials such as varnishes and solvents in its manufacturing processes and is therefore subject to the risk of losses arising from explosions and fires. Additionally, our domestic operations could be negatively affected by public health events, such as the COVID-19 pandemic.
Furniture manufacturing creates large amounts of highly flammable wood dust and may utilize other highly flammable materials such as foam, varnishes and solvents in its manufacturing processes and is therefore subject to the risk of losses arising from explosions and fires.
A decline in demand for our domestically produced upholstered furniture could result in the realignment of our domestic manufacturing operations and capabilities and the implementation of cost-saving measures. These programs could include the consolidation and integration of facilities, functions, systems and procedures. We may decide to source certain products from other suppliers instead of continuing to manufacture them.
Our domestic manufacturing operations make only upholstered furniture. A decline in demand for our domestically produced upholstered furniture could result in the realignment of our domestic manufacturing operations and capabilities and the implementation of cost-saving measures. These programs could include the consolidation and integration of facilities, functions, systems and procedures.
Amounts owed to us by a customer whose business fails, or is failing, may become uncollectible (in whole or in part), and we could lose future sales, any of which could adversely affect our sales, earnings, financial condition and liquidity. We may not be able to collect amounts owed to us.
Amounts owed to us by a customer whose business fails, or is failing, may become uncollectible (in whole or in part), and we could lose future sales, any of which could adversely affect our sales, earnings, financial condition and liquidity. In fiscal 2025, we recorded $3.1 million in bad debt expense due to a large customer’s bankruptcy.
One or a combination of these issues could adversely affect our sales, earnings, financial condition and liquidity. A disruption affecting our domestic facilities could disrupt our business. The facilities in which we store our inventory in Virginia, North Carolina, Georgia and California are critical to our success.
We may not always accomplish these actions as quickly as anticipated and may not achieve the expected cost savings, which could adversely affect our sales, earnings, financial condition and liquidity. A disruption affecting our domestic facilities could disrupt our business. The facilities in which we store our inventory in Virginia, North Carolina, Georgia and California are critical to our success.
These realignments and cost-saving measures typically involve initial upfront costs and could result in decreases in our near-term earnings before the expected cost savings are realized, if they are realized at all.
We may decide to source certain products from other suppliers instead of continuing to manufacture them. These realignments and cost-saving measures typically involve initial upfront costs and could result in decreases in our near-term earnings before the expected cost savings are realized, if they are realized at all.
If we purchase too little or the wrong mix of inventory, we may not be able to fill customer orders and may lose market share and weaken or damage customer relationships, which also could adversely affect our sales, earnings, financial condition and liquidity. 14 Table of Contents ■ Increased transportation costs, including freight costs on imported products could decrease earnings and liquidity.
If we purchase too little or the wrong mix of inventory, we may not be able to fill customer orders and may lose market share and weaken or damage customer relationships, which also could adversely affect our sales, earnings, financial condition and liquidity. ◾ A disruption in supply from Vietnam or from our most significant suppliers in Asia could adversely affect our ability to timely fill customer orders for these products and decrease our sales, earnings and liquidity.
We do not have long-term supply contracts with our suppliers. Unfavorable fluctuations in the price, quality or availability of required raw materials could negatively affect our ability to meet the demands of our customers. We may not always be able to pass price increases on raw materials through to our customers due to competition and other market pressures.
We do not have long-term supply contracts with our suppliers. Unfavorable fluctuations in the price (including those due to the potential implementation of additional reciprocal tariffs), quality or availability of required raw materials could negatively affect our ability to meet the demands of our customers.
If we are unsuccessful in obtaining those products from other sources or at comparable cost, a disruption in our supply chain from our largest import furniture suppliers, or from Vietnam in general, could adversely affect our sales, earnings, financial condition and liquidity. ■ Our inability to accurately forecast demand for our imported products could cause us to purchase too much, too little or the wrong mix of inventory.
If we are unsuccessful in obtaining those products from other sources or at comparable cost, a disruption in our supply chain from our largest import furniture suppliers, or from Vietnam in general, could adversely affect our sales, earnings, financial condition and liquidity. ◾ Increased transportation costs, including freight costs on imported products, could decrease earnings and liquidity.
Were the economic downturn, COVID-19 or a similar pandemic or another major, unexpected event with negative economic effects occur, we may not be able to collect amounts owed to us or such payment may only occur after significant delay. While we perform credit evaluations of our customers, those evaluations may not prevent uncollectible trade accounts receivable.
Some of our customers have experienced, and may in the future experience, credit-related issues. Were an economic downturn, pandemic or another major, unexpected event with negative economic effects occur, we may not be able to collect amounts owed to us or such payment may only occur after significant delay.
Our failure to timely fill customer orders due to an extended business interruption for a major supplier, or due to transportation issues, could negatively impact existing customer relationships and adversely affect our sales, earnings, financial condition and liquidity. ■ Potential future increases in tariffs or new tariffs imposed on other countries from which we source, including Vietnam, could adversely affect our business.
Our failure to timely fill customer orders due to an extended business interruption for a major supplier, or due to transportation issues, could negatively impact existing customer relationships and adversely affect our sales, earnings, financial condition and liquidity. 13 Table of Contents ◾ We are subject to 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.
While we carry general and umbrella liability insurance for such events, settlements or jury awards could exceed our policy limits. Reputational damage caused by real or perceived product safety concerns or failure to prevail in private litigation against us could adversely affect our business, sales, earnings, financial condition and liquidity.
Reputational damage caused by real or perceived product safety concerns or failure to prevail in private litigation against us could adversely affect our business, sales, earnings, financial condition and liquidity. A material part of our sales and accounts receivable are concentrated in a few customers.
New tariffs could be imposed on manufactured goods from other countries from which we source, including Vietnam. Inability to reduce product costs, pass through price increases or find other suitable manufacturing sources may have a material adverse impact on sales volume, earnings and liquidity.
Inability to reduce product costs, pass through price increases or find other suitable manufacturing sources may have a material adverse impact on sales volume, earnings and liquidity. In addition, the tariffs, and our responses to the tariffs, may cause our products to become less competitive due to price increases or less profitable due to lower margins.
In addition, the price increases are frequently implemented on future orders instead of existing order backlogs. Considering our lead times during periods of high demand, the benefits of new pricing could be offset by continued price increases from our suppliers that could impact us before we realize the benefit from our price increases.
Considering our lead times during periods of high demand, the benefits of new pricing could be offset by continued price increases from our suppliers, which could impact us before we realize the benefit from our price increases. The inability to meet customers’ demands or recover higher costs could adversely affect our sales, earnings, financial condition and liquidity.
The inability to meet customers’ demands or recover higher costs could adversely affect our sales, earnings, financial condition and liquidity. If demand for our domestically manufactured upholstered furniture declines, we may respond by realigning manufacturing or need to implement cost-saving measures. Our domestic manufacturing operations make only upholstered furniture.
If these efforts are unsuccessful, in whole or in part, our ongoing business and financial results may be adversely affected, which could adversely affect our sales, earnings, financial condition and liquidity. 14 Table of Contents If demand for our domestically manufactured upholstered furniture declines, we may respond by realigning manufacturing or implementing cost-saving measures.
Our inability to effectively manage the negative impacts of changing U.S. and foreign trade policies could adversely affect our business and financial results. ■ We are subject to 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.
Our inability to effectively manage the negative impacts of changing U.S. and foreign trade policies could adversely affect our business and financial results. ◾ Our inability to accurately forecast demand for our imported products could cause us to purchase too much, too little or the wrong mix of inventory.
These events could also impact retailers, who are our primary customers, possibly adversely affecting our sales, earnings, financial condition and liquidity. 13 Table of Contents The implementation of our Enterprise Resource Planning ( “ ERP ” ) system could disrupt our business. We are in the process of implementing a common ERP system across all divisions.
These factors also impact retailers, who are our primary customers, possibly adversely affecting our sales, earnings, financial condition and liquidity. 12 Table of Contents We rely on offshore sourcing from Vietnam for most of our sales and source other products internationally as well.
We may not always accomplish these actions as quickly as anticipated and may not achieve the expected cost savings, which could adversely affect our sales, earnings, financial condition and liquidity. 16 Table of Contents We may not be able to maintain, raise prices, or raise prices in a timely manner in response to inflation and increasing costs.
One or a combination of these issues could adversely affect our sales, earnings, financial condition and liquidity. We may fail to realize the benefits of HMI segment restructuring and cost-savings efforts.
Removed
The ERP system went live at Sunset West in December 2022 and in the legacy Hooker divisions and for consolidated reporting in early September 2023. We expect the ERP system to go live in the Home Meridian segment during fiscal 2026.
Added
We have seen negative effects on all of these measures due to the COVID-19 pandemic and persistent macroeconomic headwinds of the last few years.
Removed
We rely on offshore sourcing from Vietnam for most of our sales. Consequently: ■ A disruption in supply from Vietnam or from our most significant suppliers in Asia could adversely affect our ability to timely fill customer orders for these products and decrease our sales, earnings and liquidity.
Added
Additionally, most of our sales are of wooden or metal Casegoods products, which have a slower replacement cycle than our upholstered home furnishings products.
Removed
In addition, the tariffs, and our responses to the tariffs, may cause our products to become less competitive due to price increases or less profitable due to lower margins.
Added
Consequently: ◾ Potential future increases in tariffs or new tariffs imposed on other countries from which we source, including Vietnam, China, or Mexico, could adversely affect our business.
Removed
A write-down of our assets would, in turn, reduce our earnings and net worth. See Notes 8 and 10 to our Consolidated Financial Statements for additional information. Our sales and operating results could be adversely affected by product safety concerns.
Added
There is a potential that the current U.S. administration will impose additional reciprocal tariffs on nearly all the countries from which we source our product, including Vietnam and China, which accounted for 76% and 13% of our total imports in fiscal 2025, respectively.
Removed
A material part of our sales and accounts receivable are concentrated in a few customers.
Added
During the fourth quarter of fiscal 2023, management approved a plan to exit the Accentrics Home (ACH) e-commerce brand of the HMI segment along with repositioning the PRI brand as a direct-container only business model. We recorded a $24.4 million charge in the fiscal 2023 fourth quarter to write-down certain segment inventories to market and also recorded severance expenses.
Added
We also reduced the physical footprints at our Savannah, GA warehouse and High Point, NC administrative office over the course of the 2024 fiscal year with a concurrent reduction in lease, warehouse, and related expenses. In March 2025, we announced the planned exit of our Savannah, GA warehouse and the consolidation of warehouse operations at existing and temporary facilities.
Added
We recorded $1.3 million in inventory reserves on end-of-life and near-end of life cycle products that we don’t plan to move to these existing or temporary facilities due to the moving costs involved.
Added
We expect to record between $3 million to $4 million in exit charges in the fiscal 2026 first half consisting of a combination of severance and fixed asset impairment. We expect these actions will return the HMI segment to future profitability assuming demand improves to more normalized levels.
Added
However, we may be unable to realize these cost savings in a timely manner or at all.
Added
Additionally, our domestic operations could be negatively affected by natural disasters such as hurricanes and floods, and public health events, such as the COVID-19 pandemic.
Added
We may not always be able to pass price increases on raw materials through to our customers due to competition and other market pressures. In addition, the price increases are frequently implemented on future orders instead of existing order backlogs.
Added
The implementation of our ERP system could disrupt our business. We implemented a common ERP system across all Hooker Legacy divisions in 2022 and 2023. Due to our cost reduction initiatives, we have temporarily paused the ERP project in the Home Meridian segment beginning in the third quarter of fiscal 2025.
Added
The risk in pausing this effort is that HMI’s current version of SAP will no longer be supported after December 2025. We expect to mitigate this risk by engaging a third party who supports end-of-life SAP instances.
Added
A write-down of our assets would, in turn, reduce our earnings and net worth. During fiscal 2025, we reviewed triggering events under ASU 2021-03, Intangibles – Goodwill and Other (Topic 350).
Added
Due to the decline in revenue driven by the downturn in the furniture industry, increased freight costs, changes in management’s strategy, and the bankruptcy of a key customer, we identified triggering events that necessitated a valuation of the indefinite-lived trade names and trademarks in the Home Meridian segment. Consequently, we performed a valuation using the discounted cash flow method.
Added
This methodology involved cash flow projections and growth rates for each trade name over the next five years, provided by management, along with a royalty rate benchmark for companies engaged in similar activities. Based on this analysis, we recorded non-cash impairment charges of $2.8 million for certain indefinite-lived trade names within the Home Meridian segment.
Added
Events that give rise to actual, potential or perceived product safety concerns could expose us to regulatory enforcement action and/or private litigation. While we carry general and umbrella liability insurance for such events, settlements or jury awards could exceed our policy limits.
Added
Our Amended and Restated Loan Agreement, consisting of an asset-based lending facility of up to $70 million from Bank of America, is secured by substantially all of our assets and contains provisions that limit the amount of our future borrowings under that facility.
Added
Moreover, the terms of our Amended and Restated Loan Agreement also include financial and negative covenants that, among other things, may limit our ability to incur additional indebtedness.
Added
If we violate any loan covenants and do not obtain a waiver from our lender, our indebtedness under this arrangement would become immediately due and payable, and the lender could foreclose on its security, which could materially adversely affect our business and future financial condition and could require us to curtail or otherwise cease our existing operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company’s Chief Information Officer leads the overall cybersecurity strategy and risk management program. This includes overseeing risk assessments, developing security policies and procedures, and managing the IT security team. Senior executives, including the Company’s CEO and CFO, integrate cybersecurity risks into the overall business strategy and financial planning.
Biggest changeSenior executives, including the Company’s CEO and CFO, integrate cybersecurity risks into the overall business strategy and financial planning. The VP and IT security team provide regular reports to senior management on the Company’s identified vulnerabilities, progress on cybersecurity initiatives and remediation efforts, and details of ongoing incidents.
For additional information on the impact of cyber risks, refer to Part I, Item 1A. Risk Factors on page 13. 19 Table of Contents Governance The board of directors oversees the Company’s practice for assessing, identifying and managing material risks from cybersecurity threats.
Governance The board of directors oversees the Company’s practice for assessing, identifying and managing material risks from cybersecurity threats.
Additionally, we maintain cyber insurance coverage, including protection against social engineering fraud, to further mitigate potential financial losses from cybersecurity incidents. We have previously experienced actual or attempted cyber-attacks on our information systems or networks; however, none of these incidents had a material impact on our operations or financial condition.
We have previously experienced actual or attempted cyber-attacks on our information systems or networks; however, none of these incidents had a material impact on our operations or financial condition. For additional information on the impact of cyber risks, refer to Part I, Item 1A. Risk Factors on page 12.
We have collaborated with external consultants and built a cybersecurity program designed to protect and safeguard the integrity of our information systems, which aligns with industry best practices and regulatory requirements. To continually enhance the effectiveness of the practice, we regularly assess the program’s measures, contractual obligations, and compliance with industry standards.
We have collaborated with third-party consultants and built a cybersecurity program designed to protect and safeguard the integrity of our information systems, which aligns with industry standards and regulatory requirements. Key components of our cybersecurity risk management and strategy include: ◾ Risk assessments, including vulnerability scans and penetration testing to identify potential system weaknesses.
Removed
The IT department executes daily security tasks such as vulnerability scanning, threat detection, and incident response. The Chief Information Officer and IT security team provide regular reports to senior management on the Company’s cybersecurity posture, identified vulnerabilities, and ongoing incident management activities. Management provides the Audit Committee with quarterly updates on the Company's cybersecurity practices.
Added
These are performed internally and supported by third-party consultants; ◾ Alignment of our cybersecurity framework with industry standards; ◾ Employee training and awareness: all employees receive mandatory regular cybersecurity training, with additional specialized sessions for high-risk roles.
Added
We also conduct simulated phishing exercises to enhance awareness and preparedness; ◾ Continuous monitoring and threat detection: our IT security team uses advanced tools for real-time network and system monitoring, enabling rapid detection and response to potential threats; ◾ Comprehensive cyber insurance coverage, including protection against social engineering fraud and other cyber incidents, to further mitigate potential financial losses.
Added
The Company’s VP of enterprise systems and applications leads the overall cybersecurity strategy and risk management program. This role oversees development and execution of risk assessments, implementation of security policies and procedures, regular cybersecurity training for our employees, and leadership of the IT security team and coordination with third-party consultants.
Added
Management notifies the board of directors when significant incidents occur and provides the Audit Committee with quarterly updates on the Company’s cybersecurity practices. 19 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAll facilities maintain modern fire and spark detection systems, which we believe are adequate. We have leased certain warehouse facilities for our distribution and import operations, typically on a short or medium-term basis.
Biggest changeWe have leased certain warehouse facilities for our distribution and import operations, typically on a short or medium-term basis. We expect that we will be able to renew or extend these leases or find alternative facilities to meet our warehousing and distribution needs at a reasonable cost.
DU Manufacturing Supply Plant 53,000 Owned Vista, CA DU Manufacturing and Offices 43,813 Leased Las Vegas, NV HB, DU, AO Showrooms 14,428 Leased Ho Chi Minh City, VN HB, HM Office, Warehouse and Distribution 106,157 Leased Dongguan, China HB, HM Office 957 Leased HB=Hooker Branded, HM=Home Meridian, DU=Domestic Upholstery, AO=All Other ITEM 3. LEGAL PROCEEDINGS None.
DU Manufacturing Supply Plant 53,000 Owned Vista, CA DU Manufacturing, Warehousing, and Offices 52,813 Leased Las Vegas, NV HB, DU, AO Showrooms 9,717 Leased Ho Chi Minh City, VN HB, HM Office, Warehouse and Distribution 106,157 Leased Dongguan, China HB, HM Office 926 Leased HB=Hooker Branded, HM=Home Meridian, DU=Domestic Upholstery, AO=All Other ITEM 3. LEGAL PROCEEDINGS None.
All segments Office and Showrooms 238,359 Leased Atlanta, GA All segments Showrooms and warehousing 72,813 Leased Midway, GA HM, DU Warehouse 590,240 Leased Bedford, VA DU Manufacturing and Offices 327,000 Owned Hickory, N.C. DU Manufacturing and Offices 166,000 Owned Mt. Airy, N.C. DU Manufacturing and warehousing 104,150 Leased Valdese, N.C. DU Manufacturing and warehousing 102,905 Leased Cherryville, N.C.
All segments Office and Showrooms 243,588 Leased Atlanta, GA DU Showroom 55,508 Leased Savannah, GA HM, DU Warehouse 590,240 Leased Bedford, VA DU Manufacturing and Offices 327,000 Owned Hickory, N.C. DU Manufacturing and Offices 166,000 Owned Mt. Airy, N.C. DU Manufacturing and warehousing 104,150 Leased Valdese, N.C. DU Manufacturing and warehousing 102,905 Leased Cherryville, N.C.
ITEM 2. PROPERTIES Set forth below is information with respect to our principal properties on April 12, 2024. We believe all of these properties are well-maintained and in good condition. During fiscal 2024, we estimate our upholstery plants operated at approximately 60% of capacity on a one-shift basis. All our production facilities are equipped with automatic sprinkler systems.
We believe all of these properties are well-maintained and in good condition. During fiscal 2025, we estimate our upholstery plants operated at approximately 60% of capacity on a one-shift basis. All our production facilities are equipped with automatic sprinkler systems. All facilities maintain modern fire and spark detection systems, which we believe are adequate.
Location Segment Use Primary Use Approximate Size in Square Feet Owned or Leased Martinsville, VA All segments Corporate Headquarters, Distribution, Manufacturing and Warehousing 1,489,766 Owned / Leased High Point, N.C.
All facilities set forth below are active and operational, representing in the aggregate approximately 3.3 million square feet of owned space, leased space or properties utilized under third-party operating agreements. Location Segment Use Primary Use Approximate Size in Square Feet Owned or Leased Martinsville, VA All segments Corporate Headquarters, Distribution, Manufacturing and Warehousing 1,489,766 Owned / Leased High Point, N.C.
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We expect that we will be able to renew or extend these leases or find alternative facilities to meet our warehousing and distribution needs at a reasonable cost. All facilities set forth below are active and operational, representing in the aggregate approximately 3.3 million square feet of owned space, leased space or properties utilized under third-party operating agreements.
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ITEM 2. PROPERTIES Set forth below is information with respect to our principal properties on April 18, 2025. In March 2025, we announced the decision to exit the warehouse in Midway, Georgia. We expect to complete the exit in the second half of fiscal 2026; however, the timing of the completion of the exit could differ from preliminary estimate.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeQuantitative and Qualitative Disclosures About Market Risk 36 Item 8. Financial Statements and Supplementary Data 36 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 36 Item 9A. Controls and Procedures 37 Item 9B. Other Information 37 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 37 Part III Item 10.
Biggest changeQuantitative and Qualitative Disclosures About Market Risk 34 Item 8. Financial Statements and Supplementary Data 34 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 34 Item 9A. Controls and Procedures 35
Item 3. Legal Proceedings 20 Item 4. Mine Safety Disclosures 20 Information about our Executive Officers 21 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6. Selected Financial Data 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A.
Item 3. Legal Proceedings 20 Item 4. Mine Safety Disclosures 20 Information about our Executive Officers 21 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6. Reserved 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A.
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Directors, Executive Officers and Corporate Governance 38 Item 11. Executive Compensation 38 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 38 Item 13. Certain Relationships and Related Transactions, and Director Independence 38 Item 14. Principal Accounting Fees and Services 38 Part IV Item 15. Exhibits, Financial Statement Schedules 39 Item 16.
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Form 10-K Summary 41 Signatures 42 Index to Consolidated Financial Statements F-1 All references to 2024, 2023, 2022, 2021 and 2020 or other years are referring to our fiscal years, unless otherwise stated. Our fiscal years end on the Sunday closest to January 31, with fiscal 2024 ending on January 28, 2024.
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Our quarterly periods are based on thirteen-week “ reporting periods ” (which end on a Sunday) rather than quarterly periods consisting of three calendar months. As a result, each quarterly period generally is thirteen weeks, or 91 days.
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In some years (generally once every six years) the fourth quarter will be fourteen weeks long and the fiscal year will consist of fifty-three weeks.
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On January 31, 2022, the first day of our 2023 fiscal year, we entered into an Asset Purchase Agreement with Sunset HWM, LLC ( “ Sunset West ” ) and its three members to acquire substantially all of the assets of Sunset West (the “ Sunset Acquisition ” ).
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The results of operations of Sunset West are included in the Domestic Upholstery segment ’ s results beginning with the fiscal 2023 first quarter. Consequently, Sunset West ’ s results are not included in our results prior to the 2023 fiscal year.
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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.
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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.
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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 BOBO Intriguing Objects, a business acquired during fiscal 2024. Forward-Looking Statements Certain statements made in this report, including statements under Part II, Item 7.
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“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.
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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 negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy.
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Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.
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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; ■ the impairment of our long-lived assets, 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 acts of war, duties or tariffs imposed on those products by foreign governments or the U.S. government; 4 Table of Contents ■ 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; ■ 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; ■ risks associated with Home Meridian segment restructuring and cost-savings efforts, including our ability to timely reduce expenses and continue to return the segment to profitability; ■ the risks related to the Sunset Acquisition including 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 possible loss of key employees from Sunset West, the disruption of ongoing business 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 possible 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, including new foreign markets which require material startup costs without the guarantee of future sales; ■ changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials; and ■ price competition in the furniture industry. 5 Table of Contents Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions.
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The future events, developments or results described in this report could turn out to be materially different.
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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 a number of 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” below.
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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.
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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. 6 Table of Contents Hooker Furnishings Corporation Part I

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

4 edited+4 added−4 removed0 unchanged
Biggest changeHuckfeldt 66 Chief Financial Officer and Senior Vice President - Finance and Accounting 2004 Anne J. Smith 62 Chief Administration Officer and President - Domestic Upholstery 2008 Tod R. Phelps 55 Senior Vice President - Operations and Chief Information Officer 2017 Jeremy R. Hoff has been Chief Executive Officer and Director since February 2021. Mr.
Biggest changeEarl Armstrong III 53 Chief Financial Officer and Senior Vice President - Finance 2009 Anne J. Smith 63 Chief Administration Officer and President - Domestic Upholstery 2008 Jeremy R. Hoff has been Chief Executive Officer and Director since February 2021. Mr.
Hoff served as President of Hooker Legacy Brands from February 2020 to January 2021, President of the Hooker Branded segment from April 2018 to January 2020. Mr. Hoff joined the Company in August of 2017 as President of Hooker Upholstery. Prior to that, Mr. Hoff served as President of Theodore Alexander USA from December 2015 to August 2017. Paul A.
Hoff served as President of Hooker Legacy Brands from February 2020 to January 2021, President of the Hooker Branded segment from April 2018 to January 2020. Mr. Hoff joined the Company in August of 2017 as President of Hooker Upholstery. Prior to that, Mr. Hoff served as President of Theodore Alexander USA from December 2015 to August 2017. C.
ITEM 4. MINE SAFETY DISCLOSURES None. 20 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Hooker Furnishings’ executive officers and their ages as of April 12, 2024 and the calendar year each joined the Company are as follows: Name Age Position Year Joined Company Jeremy R. Hoff 50 Chief Executive Officer and Director 2017 Paul A.
ITEM 4. MINE SAFETY DISCLOSURES None. 20 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Hooker Furnishings’ executive officers and their ages as of April 18, 2025 and the calendar year each joined the Company are as follows: Name Age Position Year Joined Company Jeremy R. Hoff 51 Chief Executive Officer and Director 2017 C.
Smith has been Chief Administration Officer and President – Domestic Upholstery since February 2021. Ms. Smith served as Chief Administration Officer from July 2018 to January 2021, Senior Vice President – Administration from January 2014 to June 2018, Vice President- HR and Administration from January 2011 to January 2014 and Vice President-Human Resources from November 2008 to January 2011. Ms.
Smith served as Chief Administration Officer from July 2018 to January 2021, Senior Vice President – Administration from January 2014 to June 2018, Vice President- HR and Administration from January 2011 to January 2014 and Vice President-Human Resources from November 2008 to January 2011. Ms.
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Huckfeldt has been Senior Vice President - Finance and Accounting since September 2013 and Chief Financial Officer since January 2011. Mr.
Added
Earl Armstrong III became the Company’s Chief Financial Officer, effective February 3, 2025, and in such role, he serves as the Company’s principal financial officer and principal accounting officer. Mr. Armstrong has served as Senior Vice President - Finance & Corporate Secretary since April 2024. Mr.
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Huckfeldt served as Vice President – Finance and Accounting from December 2010 to September 2013, Corporate Controller and Chief Accounting Officer from January 2010 to January 2011, Manager of Operations Accounting from March 2006 to December 2009 and led the Company’s Sarbanes-Oxley implementation and subsequent compliance efforts from April 2004 to March 2006. Anne J.
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Armstrong joined Hooker in 2009 as the Company’s Manager of Financial Reporting through January 2013. He served as Director of Accounting from January 2013 to January 2016, Corporate Controller from February 2017 to June 2019 and Corporate Controller and Secretary from June 2019 through April 2024.
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Smith joined the Company in January of 2008 as Director of Human Resources. Tod R. Phelps has been Chief Information Officer and Senior Vice President – Operations since February 2021. Mr. Phelps joined the Company in April 2017 as Chief Information Officer.
Added
In February 2021 through the end of January 2025, he also served as Chief Financial Officer of the Company’s Home Meridian segment. Anne J. Smith has been Chief Administration Officer and President – Domestic Upholstery since February 2021. Ms.
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From March 2014 to April 2017, he served as Chief Technology Officer of Heritage Home Group, LLC. 21 Table of Contents Hooker Furnishings Corporation Part II
Added
Smith joined the Company in January of 2008 as Director of Human Resources. 21 Table of Contents Hooker Furnishings Corporation Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed5 unchanged
Biggest changeAt January 28, 2024, Zacks Investment Research, Inc. reported that these two SIC Codes consisted of Bassett Furniture Industries, Inc., Compass Diversified Holdings, Dorel Industries, Ethan Allen Interiors, Inc., Flexsteel Industries, Inc., Hooker Furnishings Corporation, Horrison Resources Inc., IDP Holdings (USA) Corp., La-Z-Boy, Inc., Leggett & Platt, Inc., Luvu Brands, Inc., MasterBrand, Inc., Natuzzi Spa, Nova Lifestyle, Inc., Purple Innovation Inc., The Rowe Companies, Sleep Number Corp. and Tempur Sealy International, Inc. 22 Table of Contents
Biggest changeAt February 2, 2025, Zacks Investment Research, Inc. reported that these two SIC Codes consisted of Bassett Furniture Industries, Inc., Compass Diversified Holdings, Dorel Industries, Ethan Allen Interiors, Inc., Flexsteel Industries, Inc., Hooker Furnishings Corporation, Horrison Resources Inc., IDP Holdings (USA) Corp., La-Z-Boy, Inc., Leggett & Platt, Inc., Luvu Brands, Inc., MasterBrand, Inc., Natuzzi Spa, Nova Lifestyle, Inc., Purple Innovation Inc., The Rowe Companies, Sleep Number Corp. and Tempur Sealy International, Inc.
Performance Graph (1) The following graph compares cumulative total shareholder return for the Company with a broad performance indicator, the Russell 2000® Index (2), and a published industry index, the Household Furniture Index (3), for the period from February 3, 2019 to January 28, 2024.
Performance Graph (1) The following graph compares cumulative total shareholder return for the Company with a broad performance indicator, the Russell 2000 ® Index (2), and a published industry index, the Household Furniture Index (3), for the period from February 2, 2020 to February 2, 2025.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our stock is traded on the NASDAQ Global Select Market under the symbol “HOFT”. As of January 28, 2024, we had approximately 7,500 beneficial shareholders.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our stock is traded on the NASDAQ Global Select Market under the symbol “HOFT”. As of February 2, 2025, we had approximately 6,500 beneficial shareholders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

47 edited+71 added−72 removed21 unchanged
Biggest changeResults of Operations The following table sets forth the percentage relationship to net sales of certain items for the annual periods included in the consolidated statements of operations: Fifty-two weeks ended January 28, January 29, 2024 2023 Net sales 100.0 % 100.0 % Cost of sales 74.5 79.1 Inventory valuation expense 0.4 4.9 Gross profit 25.1 16.0 Selling and administrative expenses 21.4 16.4 Intangible asset amortization 0.8 0.6 Operating income / (loss) 2.9 (1.0 ) Other income, net 0.4 0.1 Interest expense, net 0.4 0.1 Income / (Loss) before income taxes 2.9 (1.0 ) Income tax expense / (benefit) 0.6 (0.3 ) Net income / (loss) 2.3 (0.7 ) 26 Table of Contents Fiscal 2024 Compared to Fiscal 2023 Net Sales Fifty-two weeks ended January 28, 2024 January 29, 2023 $ Change % Change % Net Sales % Net Sales Hooker Branded $ 156,590 36.2 % $ 205,935 35.3 % $ (49,345 ) -24.0 % Home Meridian 143,538 33.1 % 216,338 37.1 % (72,800 ) -33.7 % Domestic Upholstery 126,827 29.3 % 156,717 26.9 % (29,890 ) -19.1 % All Other 6,271 1.4 % 4,112 0.7 % 2,159 52.5 % Consolidated $ 433,226 100 % $ 583,102 100 % $ (149,876 ) -25.7 % Unit Volume and Average Selling Price ( “ ASP ” ) Unit Volume FY24 % Increase / (Decrease) vs.
Biggest changeOur fiscal 2025 performance is discussed in greater detail below under “Results of Operations”. 23 Table of Contents Results of Operations The following table sets forth the percentage relationship to net sales of certain items for the annual periods included in the consolidated statements of operations: 53 weeks ended 52 weeks ended February 2, January 28, 2025 2024 Net sales 100 % 100 % Cost of sales 77.7 74.9 Gross profit 22.3 25.1 Selling and administrative expenses 25.2 21.4 Trade name impairment charges 0.7 - Intangible asset amortization 0.9 0.8 Operating (loss) / income (4.6 ) 2.9 Other income, net 0.7 0.4 Interest expense, net 0.3 0.4 (Loss) / income before income taxes (4.1 ) 2.9 Income tax (benefit) / expense (1.0 ) 0.6 Net (loss) / income (3.1 ) 2.3 Fiscal 2025 Compared to Fiscal 2024 Net Sales 53 weeks ended 52 weeks ended February 2, 2025 January 28, 2024 $ Change % Change % Net Sales % Net Sales Hooker Branded $ 146,470 36.9 % $ 156,590 36.2 % $ (10,120 ) -6.5 % Home Meridian 130,816 32.9 % 143,538 33.1 % (12,722 ) -8.9 % Domestic Upholstery 114,216 28.7 % 126,827 29.3 % (12,611 ) -9.9 % All Other 5,963 1.5 % 6,271 1.4 % (308 ) -4.9 % Consolidated $ 397,465 100 % $ 433,226 100 % $ (35,761 ) -8.3 % Unit Volume and Average Selling Price (“ASP”) Unit Volume FY25 % Increase / (Decrease) vs.
During fiscal 2023, we used a portion of the $25 million term-loan proceeds and existing cash and cash equivalents on hand to fund the $25 million Sunset Acquisition, pay $13.3 million in purchases and retirement of common stock, build up inventory levels by $19 million, $9.6 million in cash dividends, $5.4 million for the development of our new cloud-based ERP system, $4.2 million capital expenditures to enhance our business systems and facilities, and $492,000 in life insurance premiums on Company-owned life insurance policies.
During fiscal 2023, we used a portion of the $25 million term-loan proceeds and existing cash and cash equivalents on hand to fund the $25 million Sunset Acquisition, pay $13.3 million in purchases and retirement of common stock, build up inventory levels by $12 million, $9.6 million in cash dividends, $5.4 million for the development of our new cloud-based ERP system, $4.2 million capital expenditures to enhance our business systems and facilities, and $492,000 in life insurance premiums on Company-owned life insurance policies.
We especially encourage you to familiarize yourself with: ■ All of our recent public filings made with the SEC which are available, without charge, at www.sec.gov and at http://investors.hookerfurnishings.com; ■ The forward-looking statements disclaimer contained prior to Item 1 of this report, which describe the significant risks and uncertainties that could cause actual results to differ materially from those forward-looking statements made in this report, including those contained in this section of our annual report on Form 10-K; ■ The company-specific risks found in Item 1A.
We especially encourage you to familiarize yourself with: ◾ All of our recent public filings made with the SEC which are available, without charge, at www.sec.gov and at http://investors.hookerfurnishings.com; ◾ The forward-looking statements disclaimer contained prior to Item 1 of this report, which describes the significant risks and uncertainties that could cause actual results to differ materially from those forward-looking statements made in this report, including those contained in this section of our annual report on Form 10-K; ◾ The company-specific risks found in Item 1A.
In some cases, we were able to provide substitutions using inventory on hand, in-transit and from our domestic warehouses, but not enough to entirely mitigate the lost sales. Supply disruptions and delays on selected items could occur for six months or longer before the impact of remedial measures would be reflected in our results.
In some cases, we may be able to provide substitutions using inventory on hand, in-transit and from our domestic warehouses, but not enough to entirely mitigate the lost sales. Supply disruptions and delays on selected items could occur for six months or longer before the impact of remedial measures would be reflected in our results.
Under this method, inventory is valued at cost, which is determined by applying a cumulative index to current year inventory dollars. We review inventories on hand and record an allowance for slow-moving and obsolete inventory based on historical experience, current sales trends and market conditions, expected sales and other factors.
Under this method, inventory is valued at cost, which is determined by applying a cumulative index to current year inventory dollars. We review inventories on hand and record an allowance for slow-moving and obsolete inventory based on historic experience, current sales trends and market conditions, expected sales and other factors.
This note describes commitments, contractual obligations and off-balance sheet arrangements, some of which are not reflected in our consolidated financial statements. In Management’s Discussion and Analysis, we analyze and explain the annual changes in some specific line items in the consolidated financial statements for fiscal 2024 compared to fiscal 2023.
This note describes commitments, contractual obligations and off-balance sheet arrangements, some of which are not reflected in our consolidated financial statements. In Management’s Discussion and Analysis, we analyze and explain the annual changes in some specific line items in the consolidated financial statements for fiscal 2025 compared to fiscal 2024.
We have a present right to payment at the time of shipment as customers are invoiced at that time. We believe the customer obtains control of goods at the time of shipment, which is typically when title passes. While the customer may not enjoy immediate physical possession of the products, the customers’ right to re-direct shipment indicates control.
We have a present right to payment at the time of shipment as customers are invoiced at that time. We believe the customer obtains control of goods at the time of shipment, which is typically when title passes. While the customer may not enjoy immediate physical possession of the products, the customer’s right to re-direct shipment indicates control.
If we are unsuccessful in obtaining those products from other sources or at comparable cost, a disruption in our supply chain from our largest import furniture suppliers, or from Vietnam in general, could adversely affect our sales, earnings, financial condition and liquidity. 35 Table of Contents
If we are unsuccessful in obtaining those products from other sources or at comparable cost, a disruption in our supply chain from our largest import furniture suppliers, or from Vietnam in general, could adversely affect our sales, earnings, financial condition and liquidity. 33 Table of Contents
We also provide information regarding the performance of each of our operating segments and All Other. The analysis and discussions of fiscal 2023 compared to fiscal 2022 results are in our 2023 Form-10K available through Hooker Furnishings and SEC websites.
We also provide information regarding the performance of each of our operating segments and All Other. The analysis and discussions of fiscal 2024 compared to fiscal 2023 results are in our 2024 Form-10K available through Hooker Furnishings and SEC websites.
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.
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 showroom renovations and upgrading systems, buildings and equipment.
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. 32 Table of Contents During fiscal 2024, we had 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.
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 fiscal 2024, we had 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 effective tax rate was higher in fiscal 2023 due to the impact of state tax benefits and the cash surrender value of company-owned life insurance which were added to the favorable tax impact of the pretax loss, versus a subtraction from tax expense in the case of a pretax profit in the current year.
The effective tax rate was higher in fiscal 2025 due to the impact of state tax benefits and the cash surrender value of company-owned life insurance which were added to the favorable tax impact of the pretax loss, versus a subtraction from tax expense in the case of a pretax profit in the previous year.
The share repurchase program was completed during the fiscal 2024 third quarter. Capital Expenditures We expect to spend between $3 million to $4 million in capital expenditures in fiscal 2025 to maintain and enhance our operating systems and facilities.
The share repurchase program was completed during the fiscal 2024 third quarter. Capital Expenditures We expect to spend between $2 million to $3 million in capital expenditures in fiscal 2026 to maintain and enhance our operating systems and facilities.
If any of these risks materialize, our business, financial condition and future prospects could be adversely impacted; and ■ Our commitments and contractual obligations and off-balance sheet arrangements described on page 32 and in Note 19 to our Consolidated Financial Statements on page F-34 of this report.
If any of these risks materialize, our business, financial condition and future prospects could be adversely impacted; and ◾ Our commitments and contractual obligations and off-balance sheet arrangements described on page 30 and in Note 17 to our Consolidated Financial Statements on page F-29 of this report.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As you read Management’s Discussion and Analysis, please refer to the selected financial data and the consolidated financial statements, including the related notes, contained elsewhere in this annual report.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As you read Management’s Discussion and Analysis, please refer to the consolidated financial statements, including the related notes, contained elsewhere in this annual report.
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 Amended and Restated Loan Agreement also limits the Borrowers’ right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions.
All references to the “Hooker,” “Hooker Division,” “Hooker Legacy Brands” or “traditional Hooker” divisions or companies refer to the current components of our Hooker Branded segment, the Domestic Upholstery segment including Bradington-Young, HF Custom, Shenandoah Furniture and Sunset West, and All Other which includes H Contract, Lifestyle Brands and BOBO Intriguing Objects.
All references to the “Hooker,” “Hooker Division,” “Hooker Legacy Brands” or “traditional Hooker” divisions or companies refer to the current components of our Hooker Branded segment, the Domestic Upholstery segment including Bradington-Young, HF Custom, Shenandoah Furniture and Sunset West, and All Other which includes H Contract, and BOBO. Furnishings sales account for all of our net sales.
On March 4, 2024, our Board of Directors declared a quarterly cash dividend of $0.23 per share, payable on March 29, 2024 to shareholders of record at March 18, 2024. Our Board of Directors will continue to evaluate the appropriateness of the current dividend rate considering our performance and economic conditions in future quarters.
On March 5, 2025, our Board of Directors declared a quarterly cash dividend of $0.23 per share, payable on March 31, 2025 to shareholders of record at March 17, 2025. Our Board of Directors will continue to evaluate the appropriateness of the current dividend rate considering our performance and economic conditions in future quarters.
Enterprise Resource Planning 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 in the legacy Hooker divisions in early September 2023. We expect it to go live in the Home Meridian segment in fiscal 2026.
Enterprise Resource Planning 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 in the legacy Hooker divisions in early September 2023.
FY23 Average Selling Price FY24 % Increase / (Decrease) vs.
FY24 Average Selling Price FY25 % Increase / (Decrease) vs.
Concentrations of Sourcing Risk In fiscal 2024, imported products sourced from Vietnam accounted for 88% of our import purchases and our top five suppliers in Vietnam accounted for 60% of our fiscal 2024 import purchases.
Concentrations of Sourcing Risk In fiscal 2025, imported products sourced from Vietnam accounted for 76% of our import purchases and our top five suppliers in Vietnam accounted for 62% of our fiscal 2025 import purchases.
The effective tax rates for fiscal 2024 and fiscal 2023 were 20.7% and 29.9%, respectively.
The effective tax rates for fiscal 2025 and fiscal 2024 were 23.9% and 20.7%, respectively.
Dividends We declared and paid dividends of $0.89 per share or approximately $9.7 million in fiscal 2024, an increase of 8.5% or $0.07 per share compared to $0.82 per share in fiscal 2023.
Dividends We declared and paid dividends of $0.92 per share or approximately $9.9 million in fiscal 2025, an increase of 3.4% or $0.03 per share compared to $0.89 per share or approximately $9.7 million in fiscal 2024.
Net Income / (Loss) and Earnings (Loss) Per Share Fifty-two weeks ended January 28, 2024 January 29, 2023 $ Change % Change Net income / (loss) % Net Sales % Net Sales Consolidated $ 9,865 2.3 % $ (4,312 ) -0.7 % $ 14,177 328.8 % Diluted earnings / (loss) per share $ 0.91 $ (0.37 ) The analysis and discussion of fiscal 2023 compared to fiscal 2022 results are available in Item 7 of our 2023 Annual Report on Form-10K available through Hooker Furnishings and SEC websites.
Net (Loss) / Income and (Loss) / Earnings Per Share 53 weeks ended 52 weeks ended February 2, 2025 January 28, 2024 $ Change % Change Net (loss) / income % Net Sales % Net Sales Consolidated $ (12,507 ) -3.1 % $ 9,865 2.3 % $ (22,372 ) -226.8 % Diluted (loss) / earnings per share $ (1.19 ) $ 0.91 27 Table of Contents The analysis and discussion of fiscal 2024 compared to fiscal 2023 results are available in Item 7 of our 2024 Annual Report on Form-10K available through Hooker Furnishings and SEC websites.
Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. Specific areas requiring the application of management’s estimates and judgments include, among others, revenue recognition and inventory valuation.
Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations.
Income Taxes Fifty-two weeks ended January 28, 2024 January 29, 2023 $ Change % Change % Net Sales % Net Sales Consolidated income tax expense / (benefit) $ 2,573 0.6 % $ (1,837 ) -0.3 % $ 4,410 240.1 % Effective Tax Rate 20.7 % 29.9 % We recorded income tax expense of $2.6 million for fiscal 2024, compared to income tax benefit of $1.8 million for fiscal 2023.
Income Taxes 53 weeks ended 52 weeks ended February 2, 2025 January 28, 2024 $ Change % Change % Net Sales % Net Sales Consolidated income tax (benefit) / expense $ (3,919 ) -1.0 % $ 2,573 0.6 % $ (6,492 ) -252.3 % Effective Tax Rate 23.9 % 20.7 % We recorded income tax benefit of $3.9 million for fiscal 2025, compared to income tax expense of $2.6 million for fiscal 2024.
Furnishings sales account for all of our net sales. For financial reporting purposes, we are organized into three reportable segments- Hooker Branded, Home Meridian and Domestic Upholstery, with our other businesses included in All Other.
For financial reporting purposes, we are organized into three reportable segments- Hooker Branded, Home Meridian and Domestic Upholstery, with our other businesses included in All Other. 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.
Financial Condition, Liquidity and Capital Resources Summary Cash Flow Information – Operating, Investing and Financing Activities Fifty-Two Weeks Ended January 28, January 29, January 30, 2024 2023 2022 Net cash provided by/(used in) operating activities $ 55,471 $ (21,718 ) $ 19,209 Net cash used in investing activities (8,558 ) (29,965 ) (6,862 ) Net cash (used in)/provided by financing activities (22,756 ) 1,319 (8,822 ) Net increase/(decrease) in cash and cash equivalents $ 24,157 $ (50,364 ) $ 3,525 30 Table of Contents During fiscal 2024, we used a portion of the $55.5 million cash generated from operations and $1.0 million life insurance proceeds to fund $11.7 million share repurchases, $9.7 million in cash dividends to our shareholders, $6.8 million capital expenditures including investments in our new showrooms, $5.1 million for development of our cloud-based ERP system, $2.4 million on the BOBO acquisition, and $406,000 in life insurance premiums on Company-owned life insurance policies.
Financial Condition, Liquidity and Capital Resources Summary Cash Flow Information – Operating, Investing and Financing Activities 53 Weeks Ended 52 Weeks Ended 52 Weeks Ended February 2, January 28, January 29, 2025 2024 2023 Net cash (used in) / provided by operating activities $ (23,016 ) $ 55,471 $ (21,718 ) Net cash used in investing activities (2,699 ) (8,558 ) (29,965 ) Net cash (used in) / provided by financing activities (11,149 ) (22,756 ) 1,319 Net (decrease) / increase in cash and cash equivalents $ (36,864 ) $ 24,157 $ (50,364 ) During fiscal 2025, we used cash on hand and $936,000 life insurance proceeds to fund $9.9 million in cash dividends to shareholders, $8.9 million increase in inventory levels, $3.2 million capital expenditures, $3.0 million toward the development of the ERP system, $480,000 debt issuance cost and $395,000 in life insurance premiums on Company-owned life insurance policies.
During fiscal 2024, we used $55.5 million generated from operating activities to fund $11.7 million repurchase of 620,634 shares, $9.7 million cash dividends to our shareholders, $6.8 million capital expenditures including investments in our new High Point, Atlanta and Vegas showrooms, $5.1 million for continued implementation of our new ERP system, $2.8 million principal and interests payments on term loans, and $2.4 million for the BOBO acquisition.
During fiscal 2024, we used a portion of the $55.5 million cash generated from operations and $1.0 million life insurance proceeds to fund $11.7 million share repurchases, $9.7 million in cash dividends to our shareholders, $6.8 million capital expenditures including investments in our new showrooms, $5.1 million for development of our cloud-based ERP system, $2.4 million on the BOBO acquisition, and $406,000 in life insurance premiums on Company-owned life insurance policies.
Consolidated S&A expenses increased as a percentage of net sales due to a decrease in net sales. ■ Hooker Branded segment’s S&A expenses increased both in absolute terms and as a percentage of net sales.
Consolidated S&A expenses increased as a percentage of net sales also due to a decrease in net sales. ◾ Hooker Branded segment’s S&A expenses increased by $5.3 million, or 540 bps, compared to the previous year.
Selling and Administrative Expenses ( “ S&A ” ) Fifty-two weeks ended January 28, 2024 January 29, 2023 $ Change % Change % Segment Net Sales % Segment Net Sales Hooker Branded $ 40,829 26.1 % $ 38,840 18.9 % $ 1,989 5.1 % Home Meridian 28,575 19.9 % 33,215 15.4 % (4,640 ) -14.0 % Domestic Upholstery 20,582 16.2 % 21,584 13.8 % (1,002 ) -4.6 % All Other 2,692 42.9 % 2,176 52.9 % 516 23.7 % Consolidated $ 92,678 21.4 % $ 95,815 16.4 % $ (3,137 ) -3.3 % 28 Table of Contents Consolidated selling and administrative expenses decreased in absolute terms due to reduced costs at Home Meridian and Domestic Upholstery segments, though partially offset by increased expenses in the Hooker Branded segment.
Selling and Administrative Expenses (“S&A”) 53 weeks ended 52 weeks ended February 2, 2025 January 28, 2024 $ Change % Change % Segment Net Sales % Segment Net Sales Hooker Branded $ 46,149 31.5 % $ 40,829 26.1 % $ 5,320 13.0 % Home Meridian 29,593 22.6 % 28,575 19.9 % 1,018 3.6 % Domestic Upholstery 21,287 18.6 % 20,582 16.2 % 705 3.4 % All Other 3,186 53.4 % 2,692 42.9 % 494 18.4 % Consolidated $ 100,215 25.2 % $ 92,678 21.4 % $ 7,537 8.1 % Consolidated S&A expenses increased by $7.5 million or 380 bps compared to the previous year due to increases in all three segments and All Other.
As of January 28, 2024, unamortized loan costs of $26,250 were netted against the carrying value of our term loans on our consolidated balance sheets.
We incurred $480,000 in debt issuance costs in connection with our term loans. As of February 2, 2025, unamortized loan costs of $464,000 were netted against the carrying value of our term loans on our consolidated balance sheets.
Share Repurchase Authorization In fiscal 2023, our Board of Directors authorized the repurchase of up to $20 million of the Company’s common shares.
There were no additional borrowings outstanding under the Amended and Restated Loan Agreement as of February 2, 2025. 29 Table of Contents Share Repurchase Authorization In fiscal 2023, our Board of Directors authorized the repurchase of up to $20 million of the Company’s common shares.
Our other significant accounting policies are described in Note 1 – Summary of Significant Accounting Policies to our Consolidated Financial Statements beginning at page F-11 in this report.
Our other significant accounting policies are described in Note 1 – Summary of Significant Accounting Policies to our Consolidated Financial Statements beginning at page F-10 in this report. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”.
Due to the highly-customized nature of our hospitality products, we typically require substantial prepayments on these orders, with the balance due within 30 days of delivery. 34 Table of Contents Inventory Inventories, consisting of finished furniture for sale, raw materials, manufacturing supplies and furniture in process, are stated at the lower of cost, or market value, with cost determined using the last-in, first-out (LIFO) method.
If the assumptions that we use in these calculations differ from actual results, we may realize impairment on our intangible assets that may have a material-adverse effect on our results of operations and financial condition. 32 Table of Contents Inventory Inventories, consisting of finished furniture for sale, raw materials, manufacturing supplies and furniture in process, are stated at the lower of cost, or market value, with cost determined using the last-in, first-out (LIFO) method.
See Note 10 Intangible Assets and Goodwill to our Consolidated Financial Statements for additional information about our amortizable intangible assets.
The $2.8 million non-cash impairment charge was related to certain indefinite-lived trade names in the Home Meridian segment. See Note 10 Intangible Assets and Goodwill to our Consolidated Financial Statements for additional information about the impairment charges and our amortizable intangible assets.
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.
We may prepay any outstanding principal amounts borrowed under the Amended and Restated Loan Agreement at any time, without penalty provided that any payment is accompanied by all accrued interest owed. Subject to the Borrowers having sufficient borrowing base capacity and customary conditions precedent to borrowing, amounts repaid may be reborrowed.
We lease office space, warehousing facilities, showroom space and office equipment under leases expiring over the next five years. Future minimum annual commitments under leases and operating agreements are $9.5 million in fiscal 2025, $9.6 million in fiscal 2026, $9.4 million in fiscal 2027, $7.8 million in fiscal 2028 and $7.3 in fiscal 2029.
As of February 2, 2025, future minimum annual commitments under leases and operating agreements are $10.0 million in fiscal 2026, $10.1 million in fiscal 2027, $8.4 million in fiscal 2028, $7.7 million in fiscal 2029, and $7.3 million in fiscal 2030. In March 2025, we announced the decision to exit the Savannah, Georgia distribution center.
Accordingly, a different financial presentation could result depending on the judgments, estimates or assumptions that are used.
Specific areas requiring the application of management’s estimates and judgments include, among others, revenue recognition, inventory valuation, assumptions pertaining to valuation of goodwill and intangible assets and useful lives of long-lived assets. Accordingly, a different financial presentation could result depending on the judgments, estimates or assumptions that are used.
Despite the sales decrease, consolidated gross profit increased by $15.4 million and gross margin improved by 910 bps, compared to the prior fiscal year, due primarily to the one-time $24.4 million inventory write-down in fiscal 2023 at Home Meridian, as well as increased gross margin at Hooker Branded in fiscal 2024.
However, this decrease was partially offset by improved gross profit and margin at Home Meridian. ◾ The Hooker Branded segment’s gross profit decreased by $13.2 million compared to the previous fiscal year, primarily due to a $10.1 million decrease in net sales.
Overview Executive Summary- Fiscal 2024 Results of Operations Fiscal 2024 consolidated net sales were $433.2 million, a decrease of $149.9 million or 25.7%, compared to the previous fiscal year.
See Note 16 to our consolidated financial statements for additional financial information regarding our segments. Executive Summary- Fiscal 2025 Results of Operations Fiscal 2025 consolidated net sales totaled $397.5 million, reflecting a decrease of $35.8 million, or 8.3%, compared to the previous fiscal year.
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%.
Outstanding loans under the Amended and Restated Loan Agreement will bear interest at a rate per annum equal to the then-current Term SOFR Rate for a period of one month plus 0.10% plus a margin of 1.75%. The Term SOFR Rate will be adjusted on a monthly basis.
Direct labor costs decreased as a result of reduced production during the year to align with current demand and backlog levels.
Weak demand for home furnishings led to decreased incoming orders and reduced production schedules at Bradington Young, HF Custom and Shenandoah to align with backlog levels. As a result, direct labor costs decreased in absolute terms but remained flat as a percentage of net sales.
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”).
The Amended and Restated Loan Agreement amends, restates and replaces the Second Amended and Restated Loan Agreement, dated as of September 29, 2017, between the Borrowers and BofA, as amended (the “Existing Loan Agreement”).
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.
The Amended and Restated Loan Agreement does not restrict the Company’s ability to pay cash dividends on, or repurchase, shares of its common stock, subject to (a) no default existing prior to or resulting from such dividend or repurchase, (b) Availability is not less than 15% of the Revolving Commitment for each of the preceding 45 days prior to announcement of such dividend or repurchase and after giving pro forma effect to such dividend or repurchase and (c) if Availability is less than 20% of the Revolving Commitment on any day in such 45-day period, the Borrowers are in compliance with the financial covenant described above after giving effect to such dividend or repurchase.
These increases were partially offset by decreased commissions due to lower sales, decreased bad debt reserves on lower AR balances, and lower executive officers’ bonus as budgeted profit goals were unmet. ■ Home Meridian segment’s S&A expenses decreased in absolute terms due to various factors, including decreased compensation expenses resulting from organizational restructuring and personnel changes within the segment, decreased commissions due to lower sales, cost savings achieved through business repositioning, such as lower insurance costs associated with decreased inventory levels, lower depreciation expenses resulting from a reduced footprint and less equipment at warehouses, and other cost-cutting initiatives.
However, these increases were partially offset by several factors: a $1.2 million decrease in compensation expenses due to organizational restructuring and personnel changes, a $400,000 reduction in selling costs due to lower sales, a $300,000 decrease in insurance costs due to reduced inventory levels, and savings from other cost reduction initiatives. ◾ Domestic Upholstery segment’s S&A expenses increased by $705,000, or 240 bps, compared to the previous year.
However, the favorable price variances were not sufficient to offset the sales volume loss. 27 Table of Contents Gross Profit/(Loss) and Margin Fifty-two weeks ended January 28, 2024 January 29, 2023 $ Change % Change % Segment Net Sales % Segment Net Sales Hooker Branded $ 57,671 36.8 % $ 60,871 29.6 % $ (3,200 ) -5.3 % Home Meridian 24,367 17.0 % (2,620 ) -1.2 % 26,987 1030.0 % Domestic Upholstery 24,048 19.0 % 32,633 20.8 % (8,585 ) -26.3 % All Other 2,606 41.5 % 2,410 58.6 % 196 8.1 % Consolidated $ 108,692 25.1 % $ 93,294 16.0 % $ 15,398 16.5 % Despite sales decreases across segments, consolidated gross profit and margin both increased as compared to the prior year, primarily attributable to the absence of the inventory write-down at the Home Meridian segment in the current period. ■ The Hooker Branded segment’s gross profit decreased in fiscal 2024 due to a decline in net sales, while gross margin significantly increased due to lower product costs driven by reduced ocean freight expenses.
Gross Profit and Margin 53 weeks ended 52 weeks ended February 2, 2025 January 28, 2024 $ Change % Change % Segment Net Sales % Segment Net Sales Hooker Branded $ 45,187 30.9 % $ 58,387 37.3 % $ (13,200 ) -22.6 % Home Meridian 25,386 19.4 % 24,367 17.0 % 1,019 4.2 % Domestic Upholstery 18,289 16.0 % 24,048 19.0 % (5,759 ) -23.9 % All Other (214 ) -3.6 % 1,890 30.1 % (2,104 ) -111.3 % Consolidated $ 88,648 22.3 % $ 108,692 25.1 % $ (20,044 ) -18.4 % Consolidated gross profit and margin decreased, primarily due to decreases in the Hooker Branded and Domestic Upholstery segments, as well as approximately $1.2 million inventory write-downs and restructuring costs at All Other related to the consolidation of the BOBO business.
Removed
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 and Domestic Upholstery segments.
Added
All three reportable segments experienced sales decreases, driven by weak demand, a depressed housing market, and broader macroeconomic uncertainties impacting the broader home furnishings industry.
Removed
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 and fiscal 2023 results discussed below have been recast to reflect this change. The Home Meridian segment is unchanged.
Added
The Company reported a consolidated operating loss of $18.1 million, primarily due to lower sales volumes, $4.9 million in restructuring costs related to its cost reduction plan, $3.1 million in bad debt expense from a major customer’s bankruptcy, and $2.8 million in a non-cash tradename impairment. Consolidated net loss amounted to $12.5 million, or $1.19 per diluted share.
Removed
Additionally, based on our analysis and the requirements of ASC 280: Segment Reporting, the operational results of the newly acquired BOBO Intriguing Objects division are included in All Other starting in the second quarter of fiscal 2024 on a prospective basis. See Note 18 to our consolidated financial statements for additional financial information regarding our segments.
Added
Despite the operating loss, the Company achieved significant milestones in fiscal 2025. These included the Margaritaville licensing agreement, the launch of Hooker Branded’s new merchandising strategy, Sunset West’s east coast expansion, key inventory investments, and market share gains amid a tough market.
Removed
This decline was attributed to industry-wide soft demand and the exit of unprofitable product lines in the Home Meridian segment, the latter of which resulted in an approximate $21 million reduction in revenue.
Added
Additionally, the Company secured a new credit agreement, ensuring sufficient financial resources to sustain operations and pursue growth initiatives.
Removed
All three segments experienced sales declines with Home Meridian’s net sales down by $72.8 million or 33.7%, Hooker Branded’s net sales down by $49.3 million or 24.0%, and Domestic Upholstery’s net sales down by $29.9 million or 19.1%, all compared to each respective segment’s prior fiscal year sales.
Added
FY24 Hooker Branded 2.9 % Hooker Branded -5.7 % Home Meridian -29.9 % Home Meridian 24.4 % Domestic Upholstery -8.0 % Domestic Upholstery -1.4 % All Other -32.8 % All Other -28.6 % Consolidated -21.8 % Consolidated 16.1 % Because we report on a fiscal year that ends on the Sunday closest to January 31 st of each year, the 2025 fiscal year was one week longer than the comparable 2024 fiscal year.
Removed
The Company recorded a consolidated operating income of $12.4 million compared to an operating loss of $6.0 million in the prior fiscal year. Consolidated net income was $9.9 million, or $0.91 per diluted share, compared to a net loss of $4.3 million or ($0.37) per diluted share in the prior fiscal year.
Added
The following table presents average net sales per shipping day in thousands for the 2025 and 2024 fiscal years: Average Net Sales Per Shipping Day 53 weeks ended 52 weeks ended February 2, 2025 January 28, 2024 $ Change % Change Hooker Branded $ 570 $ 621 $ (51 ) -8.3 % Home Meridian 509 570 (61 ) -10.6 % Domestic Upholstery 444 503 (59 ) -11.7 % All Other 23 25 (2 ) -6.8 % Consolidated $ 1,547 $ 1,719 $ (173 ) -10.0 % Shipping Days 257 252 24 Table of Contents Consolidated net sales decreased year-over-year due to the ongoing soft market conditions affecting all segments. ◾ Hooker Branded segment’s net sales decreased by $10.1 million, or 6.5%, compared to the prior fiscal year.
Removed
Our fiscal 2024 performance is discussed in greater detail below under “Review” and “Results of Operations”. 24 Table of Contents Review Fiscal 2024 marked the third full fiscal year since the initial COVID crisis and was a pivotal year for us.
Added
This decrease was primarily driven by a 5.7% decrease in ASP, which was partially offset by a 2.9% increase in unit volume. Net sales decreased during the first three quarters but recovered with a 10% increase in the fourth quarter, partially due to one additional week, though this recovery was not enough to reverse the annual decrease.
Removed
Since 2020, we have navigated through some of the most challenging years of our 100-year history: the economic downturn of the pandemic, a demand surge for home furnishings, supply chain disruptions, inventory unavailability, historical high ocean freight costs, significant, persistent inflation and higher interest rates, a slow housing market, and a temporary shift in consumer discretionary spending away from home furnishings.
Added
The lower ASP resulted from price reductions implemented to align with decreased freight costs compared to the historic high in the prior two years. In addition, discounts increased by 140 bps compared to the prior year due to the effort to rebalance our inventory mix and levels.
Removed
Against the backdrop of these historical disruptions and anemic industry demand, we were able to leverage the strength of our balance sheet and make necessary strategic investments in our business in fiscal 2024 while improving profitability, strengthening our balance sheet and continuing our over 50-year history of dividend payments, including our eighth consecutive annual dividend increase.
Added
While unit volume increased by 2.9% for the year, driven by a 14% surge in the fourth quarter, this increase was insufficient to fully offset the impact of the lower ASP. ◾ Home Meridian segment’s net sales decreased by $12.7 million, or 8.9%, compared to the prior fiscal year, primarily due to a 29.9% decrease in unit volume.
Removed
On top of that, we completed a $25 million share re-purchase program during fiscal 2024.
Added
The absence of sales from previously exited unprofitable product lines accounted for $11.5 million, representing 78% of the total unit volume decrease. Traditional channels, including mass merchants, independent furniture stores, and major furniture chains, all experienced sales decreases due to challenges in the home furnishings industry driven by the sustained industry downturn attributed to macroeconomic headwinds.
Removed
Among other investments in fiscal 2024 were: (1) a new cloud-based Enterprise Resource Planning system, which went live in our Legacy Hooker divisions in early September 2023, (2) expanding our showroom footprints by investing in the much larger and better-located showroom in High Point and new showrooms in Atlanta and Las Vegas, (3) acquiring BOBO Intriguing Objects, an accessories and home décor resource (4) adding east coast distribution to the Sunset West outdoor product line, including leveraging our existing facilities at both HF Custom and our Savannah distribution facility by adding assembly operations at each to support east coast distribution.
Added
The loss of a major customer due to its bankruptcy accounted for approximately 22% of the sales decrease in these channels. These channel decreases were partially offset by a 58% increase in hospitality sales, driven by double-digit growth in both unit volume and ASP, as a result of the continued growth in the hospitality industry.
Removed
In addition to these investments, we made substantial progress at Home Meridian by liquidating the inventory from its exited low-margin e-commerce division and setting it on an expected path of sustainable profitability. We believe these investments and improvements will act as a springboard to much improved profitability once demand improves.
Added
The segment’s ASP increased by 24.4%, as discounts decreased by 1,190 bps due to the absence of liquidation sales from the previously exited businesses. ◾ Domestic Upholstery’s net sales decreased by $12.6 million, or 9.9%, compared to the prior year.
Removed
We were pleased to report a consolidated profit for fiscal 2024 despite a challenging and difficult environment for home furnishings. The Hooker Branded segment ’ s net sales decreased by $49.3 million or 24.0% compared to the prior fiscal year due to soft demand for home furnishings.
Added
This decrease was driven by sales decreases at Bradington Young, Shenandoah, and HF Custom, partially offset by a 6.8% sales increase at Sunset West. Sunset West’s sales growth was driven by its expansion on the East Coast, which helped support a 15.6% increase in orders for the year.
Removed
This decrease was further amplified by the strong sales in the prior year, driven by a surge in demand after the COVID crisis and fulfillment of historically high order backlog carried over from fiscal 2022. Hooker Branded’s fiscal 2024 net sales were at 97% of the pre-pandemic level in fiscal 2020.
Added
In addition, Sunset West also benefited from the stabilization of its ERP system. While the ASP remained relatively stable across all four divisions, unit volume decreased at Bradington Young, HF Custom and Shenandoah, but increased by 9.6% at Sunset West.
Removed
The sales decline resulted in a decrease of $3.2 million in gross profit; however, gross margin increased by 720 bps due to the combination of reduced ocean freight costs and the lingering effect of price increases implemented in the prior year.
Added
Additionally, the cost of goods sold (COGS) increased by $3.1 million, or 570 bps, largely because the prior year’s COGS were unusually low, benefiting from the combination of higher selling prices and lower ocean freight costs. This made the year-over-year comparison more significant. To a lesser extent, reduced profit on discounted sales also contributed to the decrease in gross margin.
Removed
We implemented price decreases and promotions on orders effective from August 2023 onward to align with lower ocean freight costs and the current discounting levels within the home furnishings market.
Added
While warehousing and distribution expenses remained unchanged in absolute terms, they increased by 70 bps due to the decrease in net sales. 25 Table of Contents ◾ The Home Meridian segment’s gross profit increased by $1.0 million, and its gross margin improved by 240 bps, despite a decrease in net sales.
Removed
Warehousing and distribution costs decreased due to lower demurrage expenses and lower labor costs attributed to decreased inventory volume resulting from adjusted inventory planning, as inventory levels decreased by $20.7 million compared to the previous year-end. The easing of port and warehouse congestion was the primary reason for lower demurrage expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt current borrowing levels, a 1% increase in the BSBY rate would result in an annual increase in interest expenses on our terms loans of approximately $223,000. 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.
Biggest changeRaw 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.
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.
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.
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.
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. Since we transact our imported product purchases in U.S.
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.
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 manage our exposure to this risk through our normal operating activities. Interest Rate Risk Borrowings under the Existing Revolver, 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.
We manage our exposure to this risk through our normal operating activities. Interest Rate Risk Borrowings under the Amended and Restated Loan Agreement will bear interest at a rate per annum equal to the then-current Term SOFR Rate for a period of one month plus 0.10% plus a margin of 1.75%.
Removed
There was no outstanding balance under the Existing Revolver as of January 28, 2024 other than standby letters of credit in the amount of $6.7 million. As of January 28, 2024, $22.9 million was outstanding under our term loans.
Added
The Term SOFR Rate will be adjusted on a monthly basis. As such, these debt instruments expose us to market risk for changes in interest rates. As of February 2, 2025, we had $22.1 million principal amount of outstanding loans.
Added
At current borrowing levels, a 1% increase in the SOFR rate would result in an annual increase in interest expenses of approximately $221,000. There were no additional borrowings outstanding under the Amended and Restated Loan Agreement as of February 2, 2025.

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