HOOKER FURNISHINGS CORPORATION Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934" This is the title of the Form 10-K filing submitted by Hooker Furnishings Corporation to the Securities and Exchange Commission (SEC) for the fiscal year ended February 2, 2025.

Fiscal 2025 Results of Operations

Executive Summary

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. 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. 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.

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. Additionally, the Company secured a new credit agreement, ensuring sufficient financial resources to sustain operations and pursue growth initiatives.

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. FY24,,,,Average Selling Price,,FY25 % Increase / (Decrease) 
                                                                             vs. 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,%,

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. This decrease was primarily driven by a 5.7% decrease in ASP, which was partially offset by a 2.9% increase in unit volume.

• 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. The absence of sales from previously exited unprofitable product lines accounted for $11.5 million, representing 78% of the total unit volume decrease.

• Domestic Upholstery’s net sales decreased by $12.6 million, or 9.9%, compared to the prior year. 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.

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. 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. 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.

• 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. This progress reflected years of restructuring efforts aimed at achieving sustainable profitability in this segment.

• Domestic Upholstery segment gross profit decreased by $5.8 million, primarily due to lower net sales, while its gross margin decreased by 300 bps, due to the under-absorption of overhead caused by reduced net sales and higher warehousing and distribution expenses.

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. 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. This increase was driven by several key factors, including severance costs, higher corporate expenses, and increased bad debt provision.

• Home Meridian segment’s S&A expenses increased by $1.0 million, or 270 bps, compared to the previous year. This increase was primarily due to a $3.1 million bad debt expense resulting from the bankruptcy of a major customer.

• Domestic Upholstery segment’s S&A expenses increased by $705,000, or 240 bps, compared to the previous year. This increase included approximately $640,000 in severance costs.

• All Other’s S&A expenses increased by $494,000 compared to the previous year, primarily due to approximately $850,000 in restructuring costs associated with the consolidation of the BOBO business.

Intangible Asset Impairment and Amortization

,,53 weeks ended,,,,,,,,52 weeks ended,,,,,,,,,,,,,,, ,,February 2 2025,,,,,,,,January 28 2024,,,,,,,,$ Change,,,,% Change,,, ,,,,,,% Net Sales,,,,,,,,% Net Sales,,,,,,,,,,, Tradenames impairment,,$,2 831,,,,0.7,%,,$,-,,,,0.0,%,,$,(2 831,),,,-100,%, Intangible asset amortization,,,3 687,,,,0.9,%,,,3 656,,,,0.8,%,,,31,,,,0.8,%,

Intangible asset amortization expense stayed flat in fiscal 2025. The $2.8 million non-cash impairment charge was related to certain indefinite-lived trade names in the Home Meridian segment.

Operating (Loss) / Income and Margin

,,53 weeks ended,,,,,,,,52 weeks ended,,,,,,,,,,,,,,, ,,February 2 2025,,,,,,,,January 28 2024,,,,,,,,$ Change,,,,% Change,,, ,,,,,,%Segment Net Sales,,,,,,,,%Segment Net Sales,,,,,,,,,,, Hooker Branded,,$,(962,),,,-0.7,%,,$,17 560,,,,11.2,%,,$,(18 522,),,,-105.5,%, Home Meridian,,,(8 349,),,,-6.4,%,,,(5 530,),,,-3.9,%,,,(2 819,),,,-51.0,%, Domestic Upholstery,,,(5 374,),,,-4.7,%,,,1 131,,,,0.9,%,,,(6 505,),,,-575.2,%, All Other,,,(3 400,),,,-57.0,%,,,(803,),,,-12.8,%,,,(2 597,),,,-323.4,%, Consolidated,,$,(18 085,),,,-4.6,%,,$,12 358,,,,2.9,%,,$,(30 443,),,,-246.3,%,

The Company reported an operating loss of $18.1 million in fiscal 2025 due to decreased sales volume, $4.9 million in restructuring costs, $3.1 million in bad debt, and $2.8 million in intangible asset impairment, as well as other factors discussed above.

Interest Expense, net

,,53 weeks ended,,,,,,,,52 weeks ended,,,,,,,,,,,,,,, ,,February 2 2025,,,,,,,,January 28 2024,,,,,,,,$ Change,,,,% Change,,, ,,,,,,% Net Sales,,,,,,,,% Net Sales,,,,,,,,,,, Consolidated interest expense,,$,1 274,,,,0.3,%,,$,1 573,,,,0.4,%,,$,(300,),,,-19.1,%,

Consolidated interest expense decreased slightly in fiscal 2025 due to decreased principal balance, as well as reduced interest rates in the second half of the year.

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. The effective tax rates for fiscal 2025 and fiscal 2024 were 23.9% and 20.7%, respectively.

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,,,,,,,,,,,,,,

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.

Loan Agreements and Revolving Credit Facility

On December 5, 2024, the Company and its wholly owned subsidiaries entered into an Amended and Restated Loan and Security Agreement with Bank of America, N.A. The Amended and Restated Loan Agreement provides for a revolving credit facility in a committed principal amount of up to $70,000,000, including a subline of $8,000,000 for letters of credit, and an option to increase the Revolving Commitment by up to $30,000,000.

As of February 2, 2025, we had $22.1 million principal amount of outstanding loans and $6.7 million face amount of letters of credit. We had $41.2 million of Availability based on the current Borrowing