What changed in this filing

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Item 1. Financial Statements

2025-12-12 compared with 2025-09-12 · 461 added, 293 removed, 293 unchanged (72% of the section changed)

Financial Statements

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

HOOKER FURNISHINGS CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

BALANCE SHEETS

(In thousands)

4 unchanged sentences

Prepaid expenses and other current assets

Current assets held for sale

Total current assets

4 unchanged sentences

Intangible assets, net

Non-current assets held for sale

Total non-current assets

7 unchanged sentences

Other accrued expenses

Current liabilities held for sale

Total current liabilities

2 unchanged sentences

Operating lease liabilities

Long-term liabilities held for sale

Total long-term liabilities

12 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Cost of sales

Selling and administrative expenses

Goodwill and trade name impairment charges

Intangible asset amortization

2 unchanged sentences

Interest expense, net

(Loss) / income before income taxes

(Loss) / income from continuing operations before income taxes

Income tax (benefit) / expense

Net income / (loss) from continuing operations

Net income / (loss) from discontinued operations, net of taxes

Net (loss) / income

(Loss) / earnings per share

Loss from continuing operations per share

Loss from discontinued operations per share

Basic loss per share

Loss from continuing operations per share

Loss from discontinued operations per share

Diluted loss per share

Weighted average shares outstanding:

2 unchanged sentences

the unaudited condensed consolidated financial statements.

HOOKER FURNISHINGS CORPORATION AND

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE (LOSS) / INCOME

HOOKER FURNISHINGS CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME

(In thousands)

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Net (loss) / income

9 unchanged sentences

(In thousands)

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Operating Activities:

Net (loss) / income

Loss from discontinued operations, net of taxes

Adjustments to reconcile net income to net cash provided by operating activities:

1 unchanged sentence

Deferred income tax expense

Goodwill and tradename impairment

Noncash restricted stock and performance awards

22 unchanged sentences

Proceeds from revolving credit facility

Payments on revolving credit facility

Payments for long-term loans

2 unchanged sentences

Net cash used in financing activities

Discontinued Operations

Cash used in operating activities

Cash used in investing activities

Cash provided by / (used in) discontinued operations

Net decrease in cash and cash equivalents

2 unchanged sentences

Supplemental disclosure of cash flow information:

Cash paid for / (refund of) income taxes, net of refund

Cash paid for / (refund of) income taxes, net

Cash paid for interest, net

1 unchanged sentence

Increase in lease liabilities arising from changes in right-of-use assets

(Decrease) in lease liabilities arising from

changes in right-of-use assets for terminated leases

Increase in property and equipment through accrued purchases

1 unchanged sentence

the unaudited condensed consolidated financial statements.

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

HOOKER FURNISHINGS CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’ EQUITY

(In thousands, except per

Comprehensive

Shareholders’

Balance at April 28, 2024

Net loss for the 13 weeks ended July 28, 2024

Balance at July 28, 2024

Net loss for the 13 weeks ended October 27, 2024

Actuarial adjustments on defined benefit plan, net of tax of $ 14

2 unchanged sentences

Restricted stock compensation cost

Performance-based restricted stock units cost

Balance at July 28, 2024

Balance at May 4, 2025

Net loss for the 13 weeks ended August 3, 2025

Performance-based restricted stock

Balance at October 27, 2024

Balance at August 3, 2025

Net loss for the 13 weeks ended November

Actuarial adjustments on defined benefit plan, net of tax of $ 11

2 unchanged sentences

Restricted stock compensation cost

Performance-based restricted stock units cost

Balance at August 3, 2025

The accompanying notes are an integral part of the unaudited condensed

consolidated financial statements.

HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

Performance-based

restricted stock units cost

Balance at November 2, 2025

The accompanying notes are an integral part of

the unaudited condensed consolidated financial statements.

HOOKER FURNISHINGS CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’ EQUITY (CONT.)

(In thousands, except per

Comprehensive

2 unchanged sentences

Balance at January 28, 2024

Net loss for the 26 weeks ended July 28, 2024

Net loss for the 39 weeks ended October , 2024

Actuarial adjustments on defined benefit plan, net of tax of $ 42

2 unchanged sentences

Restricted stock compensation cost

Performance-based restricted stock units costs

Balance at July 28, 2024

Performance-based restricted stock

Balance at October 27, 2024

Balance at February 2, 2025

Net loss for the 26 weeks ended August 3, 2025

Net loss for the 39 weeks ended November

Actuarial adjustments on defined benefit plan, net of tax of $ 32

2 unchanged sentences

Restricted stock compensation cost

Performance-based restricted stock units costs

Balance at August 3, 2025

Performance-based

restricted stock units costs

Balance at November 2, 2025

The accompanying notes are an integral part of

4 unchanged sentences

share amounts, in thousands unless otherwise indicated)

For the Twenty-Six Weeks Ended August 3, 2025

For the Thirty-Nine Weeks Ended November 2, 2025

Preparation of Interim Financial Statements

21 unchanged sentences

being filed as part of a quarterly report on Form 10-Q covering the 2026 fiscal year thirteen-week period (also referred to as “three

months,” “three-month period,” “quarter,” “second quarter” or “quarterly period”)

that began May 5, 2025, and the twenty-six week period (also referred to as “six months,” “six-month period” or

“first half”) that began February 3, 2025, which both ended August 3, 2025.

This report discusses our results of operations

for these periods compared to the 2025 fiscal year thirteen-week period that began April 29, 2024, and the twenty-six-week period that

began January 29, 2024, which both ended July 28, 2024;

and our financial condition as of August 3, 2025 compared to February 2, 2025.

months,” “three-month period,” “quarter,” “third quarter” or “quarterly period”)

that began August 4, 2025 and the thirty-nine-week period (also referred to as “nine months”, “nine-month period”

or “year-to-date period”) that began February 3, 2025, which both ended November 2, 2025.

This report discusses our results

of operations for these periods compared to the 2025 fiscal year thirteen-week period that began July 29, 2024, and the thirty-nine-week

period that began January 29, 2024, which both ended October 27, 2024;

and our financial condition as of November 2, 2025 compared to

February 2, 2025.

References in these notes to the condensed consolidated

financial statements of the Company to:

2026 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began February 3, 2025 and will end February 1,

2026 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began

February 3, 2025 and will end February 1, 2026;

2025 fiscal year and comparable terminology mean the fifty-three-week fiscal year that began

1 unchanged sentence

Recently Adopted Accounting Policies

In December 2023, the FASB issued Accounting Standards

Updates “ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the FASB issued Accounting

Standards Updates “ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

The new guidance requires enhanced

effective tax rate reconciliation and income taxes paid disclosures.

ASU 2023-09 is effective for annual periods beginning after December

15, 2024 (our fiscal 2026).

The new guidance requires

enhanced effective tax rate reconciliation and income taxes paid disclosures.

ASU 2023-09 is effective for annual periods beginning after

December 15, 2024 (our fiscal 2026).

We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated

11 unchanged sentences

consolidated financial statements as a result of future adoption.

Discontinued Operations

During the third quarter of fiscal 2026, we determined

that the Home Meridian segment no longer aligned with our long-term strategy to streamline our portfolio and enhance profitability by

focusing on brands that generate consistent earnings.

As a result, we initiated a process to sell two brands in the segment.

1, 2025, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with a buyer to sell the Company’s

Pulaski Furniture (“PFC”) and Samuel Lawrence (“SLF”) casegoods brands, including specified assets and liabilities

associated with those brands.

We will retain the Samuel Lawrence brand in connection with the operation of its hospitality business.

We believe this transaction represents a single

disposal plan that constitutes a strategic shift expected to have a material effect on our operations and financial results.

the PFC and SLF businesses qualify for presentation as assets and liabilities held for sale and as discontinued operations in accordance

As such, the financial results of the PFC and SLF businesses are reflected in our unaudited condensed consolidated statements

of operations as discontinued operations for all periods presented.

Current and non-current assets and liabilities of the discontinued

operations are reflected in our unaudited condensed consolidated balance sheets for both periods presented.

Assets and liabilities classified as held for sale are required to

be recorded at the lower of carrying value or fair value less costs to sell.

As of November 2, 2025, we determined that the fair value

of the PFC and SLF businesses, including costs to sell was lower than its carrying value and we recorded $ 6.5 million valuation allowance

against the assets held for sale.

The $ 6.5 million non-cash valuation allowance was recorded within “Loss from classification to

held for sale” in the summarized statements of operations information of discontinued operations.

The following table represents

summarized balance sheet information of carrying amounts of major classes of assets and liabilities included as part of discontinued operations

held for sale as of November 2, 2025 and February 2, 2025:

Trade accounts receivable

Less allowances

Other current assets

Property, plant and equipment, net

Intangible assets

Operating lease right-of-use assets

Valuation allowance to adjust assets to estimated fair value

Total assets held for sale

Accounts payable

Accrued expenses and other current liabilities

Operating lease liabilities

Total liabilities of discontinued operations

The following table represents summarized statements

of operations information of carrying amounts of major classes of line items constituting pretax loss of discontinued operations included

as part of discontinued operations held for sale as of November 2, 2025 and October 27, 2024:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

Cost of sales

Selling and administrative expenses

Trade name impairment charges

Intangible asset amortization

Other income items that are not major

Pretax loss of discontinued operations related to major classes

Pretax loss from classification to held for sale

(Loss) / income from discontinued operations before income taxes

Income tax (benefit) / expense

Net income / (loss) from discontinued operations

The significant components included in our Consolidated

Statements of Cash Flows for the discontinued operations are as follows:

For the Thirty-Nine Weeks Ended

Operating Activities:

Loss from discontinued operations, net of tax

Depreciation and amortization

Tradename impairment

Loss from classification on assets held-for-sale

Loss / (gain) on disposal of assets

Changes in assets and liabilities:

Trade accounts receivable, net

Trade accounts payable

Other assets and liabilities

Cash provided by / (used in) operating activities from discontinued operations

Investing Activities:

Purchase of properties and equipment

Cash used in investing activities from discontinued operations

Accounts Receivable

9 unchanged sentences

Property, Plant and Equipment

Depreciable Lives

Buildings and land improvements

10 unchanged sentences

Cloud Computing Hosting Arrangement

We are implementing a common Enterprise Resource Planning (ERP) system

across all divisions.

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.

Based on the provisions of ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use

Software, we capitalize implementation costs associated with hosting arrangements that are service contracts.

These costs are recorded

in “other noncurrent assets” of our consolidated balance sheets.

We amortize on a straight-line basis over 10-years term.

The amortization expenses are recorded as a component of selling and administrative expenses in our consolidated statements of operations.

During the second quarter of fiscal 2026, we capitalized

$ 287,000 of implementation costs and interest, related to the ERP system and a new supply chain planning software, compared with $ 1.2

million in the second quarter of fiscal 2025.

For the six-month periods, capitalized implementation costs and interest totaled $ 551,000

in fiscal 2026 and $ 2.6 million in fiscal 2025.

Amortization expense was $ 368,000 in the second quarter of fiscal 2026 and $ 292,000 in

the second quarter of fiscal 2025, and $ 735,000 and $ 582,000 for the respective six-month periods.

The capitalized implementation costs at August

We have implemented a common Enterprise Resource

Planning (ERP) system across all divisions.

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.

Based on the provisions of ASU 2018-15, Intangibles — Goodwill and Other

— Internal-Use Software, we capitalize implementation costs associated with hosting arrangements that are service contracts.

costs are recorded in “other noncurrent assets” of our consolidated balance sheets.

We amortize these costs on a straight-line

basis over a 10-year term.

The amortization expenses are recorded as a component of selling and administrative expenses in our consolidated

statements of operations.

During the third quarter of fiscal 2026, we

capitalized $ 267,000 of implementation costs and interest, primarily related to the new supply chain planning

software, compared with $ 451,000 in the third quarter of fiscal 2025.

For the nine-month periods, capitalized implementation costs

and interest totaled $ 818,000 in fiscal 2026 and $ 3.0 million in fiscal 2025.

Amortization expense was $ 329,000 in the third quarter

of fiscal 2026 and $ 291,000 in the third quarter of fiscal 2025, and $ 1.1 million and $ 874,000 for the respective nine-month

The capitalized implementation costs at November

2, 2025 and February 2, 2025 were as follows:

August 3, 2025

February 2, 2025

Gross carrying

Gross carrying amount

Accumulated amortization

Implementation Costs

12 unchanged sentences

an entity to develop its own assumptions.

As of August 3, 2025 and February 2, 2025, Company-owned

life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

The fair value of the Company-owned life insurance

is determined by inputs that are readily available in public markets or can be derived from information available in publicly quoted markets.

Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change in fair value

is reflected in income for that period.

As of November 2, 2025 and February 2, 2025,

Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

The fair value of the Company-owned

life insurance is determined by inputs that are readily available in public markets or can be derived from information available in publicly

quoted markets.

Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change

in fair value is reflected in income for that period.

Our assets measured at fair value on a recurring

basis at August 3, 2025 and February 2, 2025, were as follows:

Fair value at August 3, 2025

basis at November 2, 2025 and February 2, 2025, were as follows:

Fair value at November 2, 2025

Fair value at February 2, 2025

10 unchanged sentences

Details of our intangible assets are as follows:

August 3, 2025

November 2, 2025

February 2, 2025

Gross carrying amount

Impairment / Accumulated Amortization

Gross carrying amount

Impairment / Accumulated Amortization

Intangible assets with indefinite lives:

8 unchanged sentences

The amounts are net of impairment charges of $ 16.4 million related

to Shenandoah goodwill and $ 7.6 million related to certain Home Meridian segment trade names, of which $ 4.8 million were recorded in

fiscal 2021 and $ 2.8 million were recorded in fiscal 2025.

to Shenandoah goodwill, $ 14.5 million related to Sunset West goodwill, and $ 5.2 million related to certain trade names not related to

PFC and SLF, of which $ 2.6 million were recorded in fiscal 2021 and $ 2.5 million were recorded in fiscal 2025.

During the third quarter of fiscal 2026, adverse

economic conditions, including declines in our market value, as well as other changes in market dynamics, triggered

an evaluation of our goodwill and intangible assets.

We engaged an independent third-party valuation firm to assist in performing this

The valuation procedures were performed with consideration of applicable accounting guidance, including Accounting Standards

Codification (“ASC”) Topic 350, Goodwill and Other Intangible Assets and ASC Topic 820, Fair Value Measurement.

The determination of the fair value of our Home

Meridian and Domestic Upholstery reporting units incorporated three valuation approaches:

(i) the Discounted Cash Flow method, which

utilized management’s cash flow projections and growth assumptions over an eight-year forecast period;

(ii) the Guideline Public

Company Method, which considered market data for comparable publicly traded companies;

and (iii) the Guideline Transaction Method, which

considered market multiples derived from transactions involving comparable businesses under varying risk profiles, geographies, and market

Based on the results of this valuation analysis, we recorded aggregate

non-cash impairment charges of $ 15.6 million relating to continuing operations.

These charges consisted of $ 14.5 million related to the

impairment of Sunset West goodwill within the Domestic Upholstery segment, $ 558,000 for the trade name in the remaining HMI business classified

in All Other, and $ 556,000 for the Bradington-Young trade name in the Domestic Upholstery segment.

Amortization expenses for intangible assets with

definite lives were $ 872,000 and $ 924,000 for the second quarters of fiscal 2026 and 2025, respectively, and $ 1.8 million for the first

half of both fiscal 2026 and 2025.

For the remainder of fiscal 2026, amortization expense is expected to be approximately $ 1.7 million.

definite lives were $ 623,000 and $ 687,000 for the third quarters of fiscal 2026 and 2025, respectively, and $ 1.9 million and $ 2.1 million

for the nine-month periods of fiscal 2026 and 2025.

For the remainder of fiscal 2026, amortization expense is expected to be approximately

We have operating leases for warehouses, showrooms,

manufacturing facilities, offices and equipment.

Sub-lease income totaled $ 119,000 in the second quarter and $ 200,000 for the first half

of fiscal 2026, compared with $ 18,000 and $ 71,000 , respectively, in fiscal 2025 periods.

The components of lease cost and supplemental

cash flow information for leases for the second quarters and six-months of fiscal 2026 and 2025 were:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Sub-lease income totaled $ 12,000 in the third quarter and $ 212,000 for the nine-month

period of fiscal 2026, compared with $ 36,000 and $ 107,000 , respectively, in the comparable fiscal 2025 periods.

The sub-lease income

was related to the showroom and warehouse which served the discontinued PFC and SLF businesses.

components of lease cost and supplemental cash flow information for leases for the third quarters and nine months of fiscal 2026 and

operating lease cost

Variable lease cost

Short-term lease cost

Total operating lease cost

Operating cash outflows

The right-of-use assets and lease liabilities

recorded on our condensed consolidated balance sheets as of August 3, 2025 and February 2, 2025 were as follows:

Property and equipment

Total operating leases right-of-use assets

Current portion of operating lease liabilities

Long term operating lease liabilities

Total operating lease liabilities

The weighted-average discount rate is 5.53 %.

weighted-average remaining lease term is 5.8 years.

The following table reconciles the undiscounted

future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on

August 3, 2025:

Remainder of fiscal 2026

cash outflows

right-of-use assets and lease liabilities recorded on our condensed consolidated balance sheets as of November 2, 2025 and February 2,

2025 were as follows:

and equipment

operating leases right-of-use assets

portion of operating lease liabilities

term operating lease liabilities

operating lease liabilities

weighted-average discount rate is 4.86 %.

The weighted-average remaining lease term is 5.7 years as of November 2, 2025.

following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in

the condensed consolidated balance sheet on November 2, 2025:

Future Operating Lease Payments

of fiscal 2026

and thereafter

Total lease payments

lease payments

impact of discounting

Present value of lease payments

During the fiscal 2026 second quarter, we entered

into an agreement to terminate and surrender the Georgia warehouse by October 31, 2025.

This amendment is expected to reduce right-of-use

assets by approximately $ 10.1 million, lease liabilities by $ 10.7 million, and lease payments by $ 13.4 million over the remaining lease

Since the agreement has not yet commenced, the modification is not reflected in the table above.

value of lease payments

Long-Term Debt

On December 5, 2024, the Company and its wholly

owned subsidiaries, Bradington-Young, LLC, Sam Moore Furniture LLC and Home Meridian Group, LLC (together with the Company, the “Borrowers”),

entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”) with Bank of

America, N.A.

December 5, 2024, the Company and its wholly owned subsidiaries, Bradington-Young, LLC, Sam Moore Furniture LLC and Home Meridian Group,

LLC (together with the Company, the “Borrowers”), entered into an Amended and Restated Loan and Security Agreement (the “Amended

and Restated Loan Agreement”) with Bank of America, N.A.

(“BofA”), as lender.

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 outstanding principal amount of loans and letters of credit issued under the Existing Loan Agreement and used to collateralize certain

insurance arrangements and for imported product purchases will remain outstanding as loans and letters of credit under the Amended and

Restated Loan Agreement.

The Amended and Restated Loan Agreement provides

for a revolving credit facility in a committed principal amount of up to $ 70,000,000 (the “Revolving Commitment”), including

subline of $ 8,000,000 for letters of credit, and an option to increase the Revolving Commitment by up to $ 30,000,000 upon meeting certain

conditions, including agreement by BofA to increase the Revolving Commitment by such amount.

Proceeds of loans and letters of credit under

the Amended and Restated Loan Agreement will be available (a) on entry into the Amended and Restated Loan Agreement to replace the outstanding

loans and letters of credit outstanding under the Existing Loan Agreement and to pay fees and expenses related to entry into the

Amended and Restated Loan Agreement and (b) from

and after entry into the Amended and Restated Loan Agreement, for general working capital and other corporate purposes of the Borrower.

Availability of loans and letters of credit under

the Revolving Commitment is capped by a borrowing base formula calculated as of any date as the sum for the Borrowers of (a) the value

of their accounts receivable, (b) the value of their inventory, (c) the value of their in-transit inventory and (d) the life insurance

cash surrender value of company-owned life insurance policies, in each case subject to eligibility requirements, advance rates, valuation

metrics, reductions for write-offs and other dilutive items and reserves (the “Borrowing Base”).

The lesser of the Revolving

Commitment and the Borrowing Base, in each case net of the principal amount of outstanding loans and the face amount of letters of credit,

constitutes “Availability” under the Amended and Restated Credit Agreement.

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 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 outstanding principal amount of loans and letters of credit issued

under the Existing Loan Agreement and used to collateralize certain insurance arrangements and for imported product purchases remain

outstanding as loans and letters of credit under the Amended and Restated Loan Agreement.

Amended and Restated Loan Agreement provides for a revolving credit facility in a committed principal amount of up to $ 70,000,000 (the

“Revolving Commitment”), 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 upon meeting certain conditions, including agreement by BofA to increase the Revolving Commitment by

Proceeds of loans and letters of credit under the Amended and Restated Loan Agreement were available (a) on entry into the

Amended and Restated Loan Agreement to replace the outstanding loans and letters of credit outstanding under the Existing Loan Agreement

and to pay fees and expenses related to entry into the Amended and Restated Loan Agreement and (b) from and after entry into the Amended

and Restated Loan Agreement, for general working capital and other corporate purposes of the Borrower.

of loans and letters of credit under the Revolving Commitment is capped by a borrowing base formula calculated as of any date as the

sum for the Borrowers of (a) the value of their accounts receivable, (b) the value of their inventory, (c) the value of their in-transit

inventory and (d) the life insurance cash surrender value of company-owned life insurance policies, in each case subject to eligibility

requirements, advance rates, valuation metrics, reductions for write-offs and other dilutive items and reserves (the “Borrowing

The lesser of the Revolving Commitment and the Borrowing Base, in each case net of the principal amount of outstanding

loans and the face amount of letters of credit, constitutes “Availability” under the Amended and Restated Credit Agreement.

loans under the Amended and Restated Loan Agreement 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.

Letters of credit are subject to a letter of credit fee equal

to the actual daily amount of undrawn letters of credit multiplied by a per annum rate of 1.75 % and a fronting fee equal to the actual

daily amount of undrawn letters of credit multiplied by a per annum rate of 0.125 %.

We must also pay a monthly unused commitment fee that

is based on the average daily unused amount of Revolving Commitment multiplied by a per annum rate of 0.25 %.

All accrued interest and

fees are payable in cash monthly in arrears.

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.

The Revolving Commitment will terminate, and all amounts outstanding thereunder will be due and payable, on

December 5, 2029.

The obligations under the Amended and Restated

Loan Agreement are secured by a first priority security interest in substantially all of the assets of the Borrowers, other than real

estate, including all Company-owned life insurance policies, all accounts receivable, all inventory, all intellectual property, all equipment

and all other personal property.

The Amended and Restated Loan Agreement includes

customary representations and warranties and requires the Borrowers to comply with customary affirmative and negative covenants, including,

among other things, a financial covenant requiring the maintenance of a ratio of (x) EBITDA net of capital expenditures (to the extent

not paid using Borrowed Money) to (y) the sum of debt service and dividends paid, in each case as of the last day of each month for the

trailing twelve-month period ending on such day, of at least 1.0 to 1.0, if an event of default has occurred and is continuing or Availability

has fallen below 10% of the Revolving Commitment at any time (until such time as both Availability is 10% or greater and no event of default

exists, for the 30 consecutive days prior to such month end).

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.

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.

We incurred $ 480,000 in fiscal 2025 and an additional

$ 33,000 in fiscal 2026 first half in debt issuance costs in connection with our term loans.

As of August 3, 2025, unamortized loan costs

of $ 447,000 were netted against the carrying value of our term loans on our consolidated balance sheets.

As of August 3, 2025, we had $ 5.6 million principal

amount of outstanding loans and $ 6.7 million face amount of letters of credit.

We had $ 57.7 million of Availability based on the current

Borrowing Base.

There were no additional borrowings outstanding under the Amended and Restated Loan Agreement as of August 3, 2025.

Letters of credit are

subject to a letter of credit fee equal to the actual daily amount of undrawn letters of credit multiplied by a per annum rate of 1.75 %

and a fronting fee equal to the actual daily amount of undrawn letters of credit multiplied by a per annum rate of 0.125 %.

pay a monthly unused commitment fee that is based on the average daily unused amount of Revolving Commitment multiplied by a per annum

rate of 0.25 %.

All accrued interest and fees are payable in cash monthly in arrears.

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.

The Revolving Commitment will terminate, and all amounts

outstanding thereunder will be due and payable, on December 5, 2029.

obligations under the Amended and Restated Loan Agreement are secured by a first priority security interest in substantially all of the

assets of the Borrowers, other than real estate, including all Company-owned life insurance policies, all accounts receivable, all inventory,

all intellectual property, all equipment and all other personal property.

Amended and Restated Loan Agreement includes customary representations and warranties and requires the Borrowers to comply with customary

affirmative and negative covenants, including, among other things, a financial covenant requiring the maintenance of a ratio of (x) EBITDA

net of capital expenditures (to the extent not paid using Borrowed Money) to (y) the sum of debt service and dividends paid, in each

case as of the last day of each month for the trailing twelve-month period ending on such day, of at least 1.0 to 1.0, if an event of

default has occurred and is continuing or Availability has fallen below 10% of the Revolving Commitment at any time (until such time

as both Availability is 10% or greater and no event of default exists, for the 30 consecutive days prior to such month end).

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.

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.

incurred $ 480,000 in fiscal 2025 and an additional $ 38,000 in fiscal 2026 year-to-date in debt issuance costs in connection with our term

As of November 2, 2025, unamortized loan costs of $ 426,000 were netted against the carrying value of our term loans on our consolidated

balance sheet.

of November 2, 2025, we had $ 4.1 million principal amount of outstanding loans and $ 2.1 million face amount of letters of credit.

had $ 63.8 million of Availability based on the current Borrowing Base.

Earnings Per Share

We refer you to the discussion of Earnings Per

Share in Note 1.

Summary of Significant Accounting Policies, in the financial statements included in our 2025 Annual Report, for additional

information concerning the calculation of earnings per share (EPS).

All stock awards are designed to encourage retention

and to provide an incentive for increasing shareholder value.

We have issued restricted stock awards to non-employee members of the board

of directors since 2006 and to certain non-executive employees since 2014.

We have issued RSUs to certain senior executives since fiscal

2012 under the Company’s Stock Incentive Plan.

Each RSU entitles an executive to receive one share of the Company’s common

stock if the executive remains continuously employed with the Company through the applicable vesting date.

The RSUs may be paid in shares

of our common stock, cash or both at the discretion of the Compensation Committee of our board of directors.

We have issued PSUs to certain

senior executives since fiscal 2019 under the Company’s Stock Incentive Plan.

Each PSU entitles the executive officer to receive

one share of our common stock based on the achievement of two specified performance conditions if the executive officer remains continuously

employed through the end of the three-year performance period.

Historically, one target is based on our annual average growth in our EPS

over the performance period and the other target is based on EPS growth over the performance period compared to our peers.

issued under the Company’s 2024 Plan in fiscal 2025 and afterwards, one target is the Company’s annual EPS growth over the

performance period and the other target is the Company’s total shareholder return during the performance period compared to the

Company’s peer group.

The payout or settlement of the PSUs will be made in shares of our common stock.

We expect to continue to grant these types of

awards annually in the future.

The following table sets forth the number of outstanding restricted stock awards and RSUs and PSUs, net

of forfeitures and vested shares, as of the fiscal period-end dates indicated:

refer you to the discussion of Earnings Per Share in Note 1.

Summary of Significant Accounting Policies, in the financial statements

included in our 2025 Annual Report, for additional information concerning the calculation of earnings per share (EPS).

stock awards are designed to encourage retention and to provide an incentive for increasing shareholder value.

We have issued restricted

stock awards to non-employee members of the board of directors since 2006 and to certain non-executive employees since 2014.

issued RSUs to certain senior executives since fiscal 2012 under the Company’s Stock Incentive Plan.

Each RSU entitles an executive

to receive one share of the Company’s common stock if the executive remains continuously employed with the Company through the

applicable vesting date.

The RSUs may be paid in shares of our common stock, cash or both at the discretion of the Compensation Committee

of our board of directors.

We have issued PSUs to certain senior executives since fiscal 2019 under the Company’s Stock Incentive

Each PSU entitles the executive officer to receive one share of our common stock based on the achievement of two specified performance

conditions if the executive officer remains continuously employed through the end of the three-year performance period.

Historically,

one target is based on our annual average growth in our EPS over the performance period and the other target is based on EPS growth over

the performance period compared to our peers.

For the PSUs issued under the Company’s 2024 Plan in fiscal 2025 and afterwards,

one target is the Company’s annual EPS growth over the performance period and the other target is the Company’s total shareholder

return during the performance period compared to the Company’s peer group.

The payout or settlement of the PSUs will be made in

shares of our common stock.

expect to continue to grant these types of awards annually in the future.

The following table sets forth the number of outstanding restricted

stock awards and RSUs and PSUs, net of forfeitures and vested shares, as of the fiscal period-end dates indicated:

Restricted shares

RSUs and PSUs

All restricted shares, RSUs and PSUs awarded that

have not yet vested are considered when computing diluted earnings per share.

The following table sets forth the computation

of basic and diluted earnings per share:

restricted shares, RSUs and PSUs awarded that have not yet vested are considered when computing diluted earnings per share.

following table sets forth the computation of basic and diluted earnings per share:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Net (loss) / income

Thirty-Nine Weeks Ended

Unvested participating restricted stock dividends

Net earnings allocated to unvested participating restricted stock

(Loss) / Earnings available for common shareholders

(Loss) / Earnings from continuing operations available for common shareholders

(Loss) / Earnings from discontinued operations available for common shareholders

Net (loss) / earnings available for common shareholders

Weighted average shares outstanding for basic earnings per share

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Weighted average shares outstanding for diluted earnings per share

Basic (loss) / earnings from continuing operations per share

Basic (loss) / earnings from discontinued operations per share

Basic (loss) / earnings per share

Diluted (loss) / earnings from continuing operations per share

Diluted (loss) / earnings from discontinued operations per share

Diluted (loss) / earnings per share

Due to net losses, approximately 106,000 shares and 115,000 shares

for the second quarter and first half of fiscal 2026, and 169,000 shares and 176,000 shares for the second quarter and first half of fiscal

2025, respectively, would have been antidilutive and are therefore excluded from the calculation of earnings per share, respectively.

We recorded an income tax benefit of $ 1.2

million for the fiscal 2026 second quarter, compared to an income tax expense of $ 85 ,000 in the fiscal 2025 second quarter.

effective tax rates for these periods were 26.9 % and ( 4.5 %), respectively.

The fiscal 2025 second quarter reflected an income tax

expense despite a pretax loss due to the effective tax rate annualization method.

For the first half of fiscal 2026, we recorded

income tax benefits of $ 2.0 million compared to $ 731 ,000 in the prior-year period, with effective tax rates of 23.7 % and 10.8 %,

respectively.

The differences in the rates reflect the impacts of favorable tax adjustments, specifically the cash surrender value

gain of company-owned life insurance, over expected pretax income in fiscal 2025 as opposed to an expected pretax loss in fiscal

2026 under the annualization method.

No material and non-routine positions have been

identified as uncertain tax positions.

Tax years ending January 29, 2023 through February 2, 2025 remain subject

to examination by federal and state taxing authorities.

to net losses, approximately 62,000 shares and 118,000 shares for the third quarter and nine-month period of fiscal 2026, and 174,000

shares and 184,000 shares for the third quarter and nine-month period of fiscal 2025, respectively, would have been antidilutive and

are therefore excluded from the calculation of earnings per share, respectively.

For the third quarters of fiscal 2026 and fiscal

2025, we recorded income tax benefits of $ 3.6 million and $ 1.2 million on the pretax loss from continuing operations, and tax benefits

of $ 3.3 million and $ 1.6 million on the pretax loss from discontinued operations.

The consolidated effective tax rates for these periods

were 24.5 % and 40.7 %, respectively.

The higher fiscal 2025 third-quarter effective tax rate was primarily due to the annualization method,

which resulted in the recognition of additional income tax benefits from previous quarters.

For the nine-month periods of fiscal 2026 and

fiscal 2025, we recorded income tax benefits of $ 3.9 million and $ 2.0 million on the pretax loss from continuing operations, and tax

benefits of $ 4.9 million and $ 1.5 million on the pretax loss from discontinued operations.

Of the $ 4.9 million in tax benefits from discontinued

operations, $ 3.3 million relates to discontinued operations and $ 1.6 million relates to assets held for sale.

The consolidated effective

tax rates for these periods were 24.3 % and 26.0 %, respectively.

The higher fiscal 2025 effective tax rate reflects the impact of favorable

tax adjustments including the cash surrender value gain on company-owned life insurance applied to a lower pretax loss.

material and non-routine positions have been identified as uncertain tax positions.

years ending January 29, 2023 through February 2, 2025 remain subject to examination by federal and state taxing authorities.

Segment Information

As a public entity, we are required to present

disaggregated information by segment using the management approach.

The objective of this approach is to allow users of our financial

statements to see our business through the eyes of management based upon the way management reviews performance and makes decisions.

management approach requires segment information to be reported based on how management internally evaluates the operating performance

of the Company’s business units or segments.

The objective of this approach is to meet the basic principles of segment reporting

as outlined in ASC 280 Segments (“ASC 280”), which are to allow the users of our financial statements to:

a public entity, we are required to present disaggregated information by segment using the management approach.

The objective of this

approach is to allow users of our financial statements to see our business through the eyes of management based upon the way management

reviews performance and makes decisions.

The management approach requires segment information to be reported based on how management

internally evaluates the operating performance of the Company’s business units or segments.

The objective of this approach is to

meet the basic principles of segment reporting as outlined in ASC 280 Segments (“ASC 280”), which are to allow the

users of our financial statements to:

understand our performance;

1 unchanged sentence

more informed judgments about us as a whole.

We define our segments as those operations our

chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.

The Company’s

CODM is the Chief Executive Officer.

The CODM regularly reviews net sales, gross profit, and operating income by segment as the primary

measures of segment performance.

The CODM reviews net sales as a primary indicator of operational performance, assessing how much revenue

is brought in from core business activities, after returns, allowances, and discounts, which reflects demand and execution of each segment’s

Gross profit, which is derived from net sales and cost of sales, is reviewed by the CODM as a diagnostic metric, particularly

useful in evaluating margin trends.

Operating income is the key profitability metric used to assess performance across segments and make

decisions related to resource allocation, including capital expenditures, headcount, and other investment initiatives.

Each of these metrics

are considered in budgeting, forecasting, and operational planning decisions.

For financial reporting purposes, we are organized

into three reportable segments and “All Other”, which includes the remainder of our businesses:

define our segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance

and allocate resources.

The Company’s CODM is the Chief Executive Officer.

The CODM regularly reviews net sales, gross profit,

and operating income by segment as the primary measures of segment performance.

The CODM reviews net sales as a primary indicator of

operational performance, assessing how much revenue is brought in from core business activities, after returns, allowances, and discounts,

which reflects demand and execution of each segment’s strategy.

Gross profit, which is derived from net sales and cost of sales,

is reviewed by the CODM as a diagnostic metric, particularly useful in evaluating margin trends.

Operating income is the key profitability

metric used to assess performance across segments and make decisions related to resource allocation, including capital expenditures,

headcount, and other investment initiatives.

Each of these metrics are considered in budgeting, forecasting, and operational planning

financial reporting purposes, we are organized into two reportable segments and “All Other”, which includes the remainder

of our businesses:

Branded , consisting of the operations of our imported Hooker Casegoods and Hooker Upholstery

Meridian , is a stand-alone, mostly autonomous business that serves a different type or

class of customer than do our other operating segments and at much lower margins;

Upholstery, which includes the domestic upholstery manufacturing operations of Bradington-Young,

5 unchanged sentences

Fiscal 2025 results discussed below have been recast to reflect this change.

The following tables present segment information

for the periods, and as of the dates, indicated.

Subsequent to

the third quarter of fiscal 2026, the Company entered into an Asset Purchase Agreement to

sell the Pulaski Furniture (“PFC”) and Samuel Lawrence (“SLF”) casegoods

brands, formerly part of the Home Meridian segment.

As the PFC and SLF businesses have been

classified as discontinued operations, the remaining business does not qualify as a reportable

segment, therefore, the Home Meridian segment will be eliminated.

The Samuel Lawrence Hospitality

product line, along with the remaining Home Meridian businesses, will be reported within

following tables present segment information for the periods, and as of the dates, indicated.

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

Hooker Branded

Domestic Upholstery

Cost of Sales

Hooker Branded

Domestic Upholstery

Hooker Branded

Domestic Upholstery

Selling and Administrative Expenses

assets amortization

(Loss) / Income

expense - Corporate

taxes - Corporate

(loss) / income - Corporate

We recorded $ 2.0 million in consolidated restructuring

costs in the second quarter of fiscal 2026.

These costs included $ 1.3 million in severance and warehouse consolidation expenses and approximately

$ 700,000 in inventory liquidation losses at the Georgia warehouse.

For the first half of fiscal 2026, total restructuring costs were $ 2.5

million, consisting of $ 1.7 million in severance and warehouse consolidation expenses and $ 821,000 in inventory liquidation losses at

the same facility.

As of August 3, 2025 and February 2, 2025, we had accrued restructuring charges of approximately $ 300,000 and $ 174,000 ,

respectively.

The balance as of August 3, 2025 is expected to be paid during the next five months.

The restructuring costs were recorded under cost of sales and selling

and administrative expenses in the statements of operations.

Hooker Branded

Domestic Upholstery

Goodwill and Intangible assets impairment

Domestic Upholstery

Operating (Loss) / Income

Hooker Branded

Domestic Upholstery

Other Income, net

Hooker Branded

Domestic Upholstery

Interest expense - Corporate

Income taxes - Corporate

Net (loss) / income from continuing operations - Corporate

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

November 2, 2025

October 27, 2024

November 2, 2025

October 27, 2024

Restructuring Costs

Hooker Branded

Home Meridian

Domestic Upholstery

1 unchanged sentence

Hooker Branded

Home Meridian

Domestic Upholstery

1 unchanged sentence

Hooker Branded

Home Meridian

Domestic Upholstery

recorded $ 597,000 and $ 1.7 million in restructuring costs in the third quarter and nine-month period of fiscal 2026, respectively, primarily

related to severance and warehouse consolidation initiatives.

Within discontinued operations, we recorded expenses of $ 2.6 million

in the fiscal 2026 third quarter and $ 4.1 million year-to-date related to the exit of HMI’s Savannah warehouse, which primarily

supported the discontinued PFC and SLF businesses, including fixed-asset write-offs, inventory liquidation, severance, and moving costs.

We also recorded a $ 6.5 million loss from classification to held-for-sale in the fiscal 2026 third quarter.

As of November 2, 2025 and February 2, 2025, we had

accrued restructuring charges of approximately $ 490,000 and $ 174,000 , respectively.

The balance as of November 2, 2025 is expected

to be paid during the next 12 months.

The restructuring costs were recorded under cost of sales and selling and administrative

expenses in the statements of operations.

Hooker Branded

Home Meridian

Domestic Upholstery

Assets Held for Sale, net

Consolidated Assets

2 unchanged sentences

Total Consolidated Assets

Sales by product type are as follows:

by product type are as follows:

Net Sales (in thousands)

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

November 2, 2025

October 27, 2024

November 2, 2025

October 27, 2024

Subsequent Events

On September 9, 2025 , our board of directors declared

a quarterly cash dividend of $ 0.23 per share which will be paid on September 30, 2025 to shareholders of record at September 19, 2025 .

On December 11, 2025 , our board of directors declared

a quarterly cash dividend of $ 0.115 per share which will be paid on December 31, 2025 to shareholders of record at December 21, 2025 .

Sale of Certain Casegoods Brands

On December 1, 2025, the Company entered into

an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Magnussen Home Furnishings, Inc.

(“Magnussen”)

to sell the Company’s Pulaski Furniture (“PFC”) and Samuel Lawrence (“SLF”) casegoods brands, including

specified assets and liabilities related to those brands.

Pursuant to the terms of the Asset Purchase Agreement, at closing, an estimated

purchase price will be determined and paid based upon the net book value of the assets being sold in the transaction.

As of November 2,

2025, the Company’s fiscal third quarter-end, the currently estimated purchase price is approximately $ 4.6 million subject to final

adjustment to closing values, pursuant to the terms of the Asset Purchase Agreement.

Magnussen will also assume approximately $ 4.8 million

of the lease liabilities related to HMI’s High Point showroom.

The Company will retain the Samuel Lawrence brand in connection with

the operation of its hospitality business.

The transaction is subject to customary closing

conditions, including third party consents, and is currently expected to close by mid-December 2025.

Ten percent of the purchase price

paid at closing will be subject to a holdback for 210 days for customary indemnification and final purchase price adjustments.

The transactions

contemplated by the Asset Purchase Agreement do not require the approval of the Company’s or Magnussen’s shareholders.

The Company’s HMI segment currently had

three brands:

PFC, SLF and Samuel Lawrence Hospitality (“SLH”) and the Company is retaining the SLH product line, which has

been retroactively included in the “All other” segment.

To accommodate the Company’s continued use of the “Samuel

Lawrence Hospitality” name, Magnussen will license back the use of the name to the Company pursuant to an exclusive, worldwide,

royalty-free, fully-paid license agreement.

Under the Asset Purchase Agreement, Magnussen has agreed, for a period of three (3) years

following the closing, not to, directly or indirectly, engage or participate in the hospitality business in the U.S.

or in any jurisdiction

in which the Company or any successor or assign operates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements