Hooker Furniture Corp. (NASDAQ:HOFT) Q1 2019 Earnings Conference Call Transcript

Jun 12, 2019 • 03:00 pm ET

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Hooker Furniture Corp. (NASDAQ:HOFT) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings, ladies and gentlemen, and welcome to the Hooker Furniture Quarterly Investor Conference Call reporting it's Operating Results for the Fiscal 2020 First Quarter End Year. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference call is being recorded.

It is now my pleasure to introduce your host, Paul Huckfeldt, Vice President, Finance, and Chief Financial Officer for Hooker Furniture Corporation.

Executive
Paul A. Huckfeldt

Thank you Ashley. Good afternoon and welcome to our quarterly conference call to review our financial results for the fiscal 2020 first quarter, which ended May 5th 2019. We certainly appreciate your participation this afternoon. Paul Toms, our Chairman and CEO and Lee Boone, Co-President of our Home Meridian division will join me for our prepared remarks. For the question-and-answer portion of the call, several other of our business unit heads will be available to take questions including Michael Delgatti, President of our Hooker Domestic Upholstery and Emerging Channels; Home Meridian Co-President, Doug Townsend; Jeremy Hoff, President of our Hooker Branded Segment; and Anne Jacobsen, our Chief Administrative Officer.

During our call we may make forward looking statements which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our press release and SEC filing announcing our fiscal 2020 first quarter results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call.

This morning, we reported consolidated net sales of $135.5 million and net income of $2 million or $0.17 per diluted share for our fiscal 2020 first quarter ended May 5, 2019. Compared to last year, our net sales decreased 5.2%, or $7.4 million. And net income decreased 72%, or $5.2 million. Earnings per diluted share decreased from $0.61 a year ago.

Paul Toms will comment on our fiscal 2020 first quarter results.

Executive
Paul B. Toms

Thank you, Paul, and good afternoon everyone. Our disappointing earnings performance in the first quarter was driven primarily by several cost-related issues in our Home Meridian HMI Segment. Reduced demand and soft retail conditions across the home furnishings industry drove the consolidated 5% sales dip, which also weighed on our earnings for the quarter. Given the sales decline and the impact of a 10% tariff on furniture and furniture component parts imported from China, our Hooker Branded Segment and All Other performed reasonably well for the quarter. So, we have strategies for improvement in all of our businesses.

The cost-related issues at Home Meridian included a large quality chargeback, higher freight, and demurrage costs as well as costs associated with our inventories. In addition, Home Meridian's margins were more affected by the 10% tariff on imports from China and our other business units due to the nature of HMI's customer base as many of its customers had large orders already in the pipeline at lower pre-tariff