HOFT - Hooker Furnishings slides as factory closures rising costs weigh on earnings

Hooker Furnishings (HOFT -7.3%) shares drop after the company reports earnings below consensus due to supply chain challenges and and input cost inflation. Sales fell 11% driven by significantly reduced shipments in the Home Meridian segment due to COVID-related factory closures in Vietnam and Malaysia. Factories did not begin opening until the end of the quarter and then only operated at 25% capacity. Management expects capacity to approach 50% in the near future. The HMI sales decrease was partially offset by double-digit sales increases in the Hooker Branded and Domestic Upholstery segments versus the prior year period. “Industry-wide inflationary pressures also were a factor in reduced income,” said management, as the company exited its ready-to-assemble furniture category to focus on more profitable categories. SA contributor Ricardo Naya believes that the market is overreacting to the headwinds faced by Hooker Furnishings Corporation, making the stock an attractive buy.

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Hooker Furnishings slides as factory closures, rising costs weigh on earnings