HOOKER FURNISHINGS Corp 10-Q

Item 1. Financial Statements HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) August 2, 2026 February 1, As of (unaudited) 2026 Assets Current assets Cash and cash equivalents $ 18,660 $ 1,112 Trade accounts receivable, net 26,275 37,786 Inventories 43,414 48,684 Income tax recoverable - 30 Prepaid expenses and other current assets 5,729 5,283 Total current assets 94,078 92,895 Property, plant and equipment, net 22,181 25,207 Cash surrender value of life insurance policies 31,491 30,422 Deferred taxes 24,305 24,941 Operating leases right-of-use assets 22,051 23,015 Intangible assets, net 11,905 12,994 Goodwill 575 575 Other assets 17,856 15,842 Total non-current assets 130,364 132,996 Total assets $ 224,442 $ 225,891 Liabilities and Shareholders’ Equity Current liabilities Trade accounts payable $ 12,180 $ 11,002 Accrued salaries, wages and benefits 4,882 3,730 Accrued income taxes 117 42 Customer deposits 6,435 5,291 Current portion of operating lease liabilities 5,089 5,445 Other accrued expenses 2,327 2,083 Total current liabilities 31,030 27,593 Long term debt - 3,223 Deferred compensation 5,960 6,365 Operating lease liabilities 18,865 19,468 Total long-term liabilities 24,825 29,056 Total liabilities 55,855 56,649 Shareholders’ equity Common stock, no par value, 20,000 shares authorized, 10,727 and 10,764 shares issued and outstanding on each date 51,311 51,361 Retained earnings 117,028 117,603 Accumulated other comprehensive income 248 278 Total shareholders’ equity 168,587 169,242 Total liabilities and shareholders’ equity $ 224,442 $ 225,891 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 1 Table of Contents HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) For the For the Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, August 3, August 2, August 3, 2026 2025 2026 2025 Net sales $ 63,250 $ 69,243 $ 132,702 $ 140,427 Cost of sales 43,151 52,001 92,011 105,250 Gross profit 20,099 17,242 40,691 35,177 Selling and administrative expenses 18,272 17,127 36,741 34,894 Intangible asset amortization 544 625 1,089 1,292 Operating income / (loss) 1,283 ( 510 ) 2,861 ( 1,009 ) Other income, net 376 22 349 120 Interest expense, net 116 171 237 549 Income / (Loss) from continuing operations before income taxes 1,543 ( 659 ) 2,973 ( 1,438 ) Income tax expense / (benefit) 338 ( 114 ) 664 ( 278 ) Net income / (loss) from continuing operations 1,205 ( 545 ) 2,309 ( 1,160 ) Net income / (loss) from discontinued operations, net of taxes 465 ( 2,732 ) 422 ( 5,169 ) Net income / (loss) $ 1,670 $ ( 3,277 ) $ 2,731 $ ( 6,329 ) Basic: Earnings / (Loss) from continuing operations per share $ 0.12 $ ( 0.06 ) $ 0.21 $ ( 0.11 ) Earnings / (Loss) from discontinued operations per share 0.04 ( 0.25 ) 0.04 ( 0.49 ) Basic earnings / (loss) per share $ 0.16 $ ( 0.31 ) $ 0.25 $ ( 0.60 ) Diluted: Earnings / (Loss) from continuing operations per share $ 0.11 $ ( 0.06 ) $ 0.21 $ ( 0.11 ) Earnings / (Loss) from discontinued operations per share 0.04 ( 0.25 ) 0.04 ( 0.49 ) Diluted loss per share $ 0.15 $ ( 0.31 ) $ 0.25 $ ( 0.60 ) Weighted average shares outstanding: Basic 10,644 10,612 10,644 10,587 Diluted 10,760 10,612 10,774 10,587 Cash dividends declared per share $ 0.115 $ 0.23 $ 0.230 $ 0.46 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 2 Table of Contents HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS) (In thousands) (Unaudited) For the Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, August 3, August 2, August 3, 2026 2025 2026 2025 Net income / (loss) $ 1,670 $ ( 3,277 ) $ 2,731 $ ( 6,329 ) Other comprehensive income: Actuarial adjustments ( 20 ) ( 45 ) ( 39 ) ( 89 ) Income tax effect on adjustments 5 11 9 21 Adjustments to net periodic benefit cost ( 15 ) ( 34 ) ( 30 ) ( 68 ) Total comprehensive income / (loss) $ 1,655 $ ( 3,311 ) $ 2,701 $ ( 6,397 ) The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 3 Table of Contents HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Twenty-Six Weeks Ended August 2, August 3, 2026 2025 Operating Activities: Net income / (loss) $ 2,731 $ ( 6,329 ) Less: Income / (Loss) from discontinued operations, net of taxes 422 ( 5,169 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,629 3,499 Deferred income tax expense / (benefit) 645 ( 1,990 ) Noncash restricted stock and performance awards 408 144 Provision for / (benefit from) doubtful accounts and sales allowances 193 ( 182 ) Gain on life insurance policies ( 874 ) ( 724 ) Loss on disposal of assets 7 15 Changes in assets and liabilities: Trade accounts receivable 10,706 13,008 Inventories 5,270 10,225 Income tax recoverable 30 482 Prepaid expenses and other assets ( 787 ) ( 2,563 ) Trade accounts payable 584 ( 1,284 ) Accrued salaries, wages, and benefits 1,153 614 Accrued income taxes ( 47 ) ( 16 ) Customer deposits 1,144 1,125 Operating lease assets and liabilities 5 124 Other accrued expenses 106 38 Deferred compensation ( 444 ) ( 431 ) Net cash provided by operating activities $ 24,037 $ 20,924 Investing Activities: Purchases of property and equipment ( 1,094 ) ( 1,570 ) Premiums paid on life insurance policies ( 325 ) ( 326 ) Proceeds received on life insurance policies 540 - Proceeds from sales of assets 6 - Net cash used in investing activities $ ( 873 ) $ ( 1,896 ) Financing Activities: Proceeds from revolving credit facility 3,216 32,440 Payments for long-term loans ( 6,770 ) ( 48,956 ) Cash dividends paid ( 2,486 ) ( 5,011 ) Purchase and retirement of common stock ( 1,265 ) - Debt issuance costs - ( 33 ) Net cash used in financing activities $ ( 7,305 ) $ ( 21,560 ) Discontinued Operations Cash provided by / (used in) operating activities 1,689 ( 2,818 ) Cash used in investing activities - ( 124 ) Cash provided by / (used in) discontinued operations $ 1,689 $ ( 2,942 ) Net Increase / (decrease) in cash and cash equivalents 17,548 ( 5,474 ) Cash and cash equivalents - beginning of year 1,112 6,295 Cash and cash equivalents - end of quarter $ 18,660 $ 821 Supplemental schedule of cash flow information: Income taxes paid / (refund), net $ 35 $ ( 443 ) Interest paid, net 6 609 Supplemental schedule of noncash investing activities: Increase in lease liabilities arising from obtaining right-of-use assets $ 1,799 $ 10 Increase in property and equipment through accrued purchases 41 152 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 4 Table of Contents HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands, except per share data) (Unaudited) Accumulated Other Total Common Stock Retained Comprehensive Shareholders’ Shares Amount Earnings Income Equity Balance at May 4, 2025 10,712 $ 50,831 $ 147,787 $ 539 $ 199,157 Net loss for the 13 weeks ended August 3, 2025 ( 3,277 ) ( 3,277 ) Actuarial adjustments on defined benefit plan, net of tax of $ 11 ( 34 ) ( 34 ) Cash dividends paid and accrued ($ 0.23 per share) ( 2,514 ) ( 2,514 ) Restricted stock grants, net of forfeitures 38 - - Restricted stock compensation cost 218 218 Performance-based restricted stock units cost ( 430 ) ( 430 ) Balance at August 3, 2025 10,750 $ 50,619 $ 141,996 $ 505 $ 193,120 Balance at May 3, 2026 10,770 $ 51,479 $ 117,352 $ 263 $ 169,094 Net income for the 13 weeks ended August 2, 2026 1,670 1,670 Actuarial adjustments on defined benefit plan, net of tax of $ 5 ( 15 ) ( 15 ) Cash dividends paid and accrued ($ 0.115 per share) ( 1,232 ) ( 1,232 ) Purchase and retirement of common stock ( 84 ) $ ( 421 ) ( 762 ) ( 1,183 ) Restricted stock grants, net of forfeitures 41 ( 17 ) ( 17 ) Restricted stock compensation cost 343 343 Performance-based restricted stock units cost ( 73 ) ( 73 ) Balance at August 2, 2026 10,727 $ 51,311 $ 117,028 $ 248 $ 168,587 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 5 Table of Contents HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONT.) (In thousands, except per share data) (Unaudited) Accumulated Other Total Common Stock Retained Comprehensive Shareholders’ Shares Amount Earnings Income Equity Balance at February 2, 2025 10,703 $ 50,474 $ 153,336 $ 573 $ 204,383 Net loss for the 26 weeks ended August 3, 2025 ( 6,329 ) ( 6,329 ) Actuarial adjustments on defined benefit plan, net of tax of $ 21 ( 68 ) ( 68 ) Cash dividends paid and accrued ($ 0.46 per share) ( 5,011 ) ( 5,011 ) Restricted stock grants, net of forfeitures 47 ( 211 ) ( 211 ) Restricted stock compensation cost 635 635 Performance-based restricted stock units cost ( 279 ) ( 279 ) Balance at August 3, 2025 10,750 $ 50,619 $ 141,996 $ 505 $ 193,120 Balance at February 1, 2026 10,764 $ 51,361 $ 117,603 $ 278 $ 169,242 Net income for the 26 weeks ended August 2, 2026 2,731 2,731 Actuarial adjustments on defined benefit plan, net of tax of $ 9 ( 30 ) ( 30 ) Cash dividends paid and accrued ($ 0.23 per share) ( 2,486 ) ( 2,486 ) Purchase and retirement of common stock ( 92 ) $ ( 458 ) ( 820 ) ( 1,278 ) Restricted stock grants, net of forfeitures 55 ( 369 ) ( 369 ) Restricted stock compensation cost 687 687 Performance-based restricted stock units cost 90 90 Balance at August 2, 2026 10,727 $ 51,311 $ 117,028 $ 248 $ 168,587 6 Table of Contents HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar and share amounts in tables, except per share amounts, in thousands unless otherwise indicated) (Unaudited) For the Twenty-Six Weeks Ended August 2, 2026 1. Preparation of Interim Financial Statements The condensed consolidated financial statements of Hooker Furnishings Corporation and subsidiaries (referred to as “we,” “us,” “our,” “Hooker” or the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management these statements include all adjustments necessary for a fair statement of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) are condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of our results of operations and financial position. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended February 1, 2026 (“2026 Annual Report”). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect both the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates. Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year. The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the 2027 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “second quarter” or “quarterly period”) that began May 4, 2026, and the twenty-six week period (also referred to as “six months,” “six-month period” or “first half”) that began February 2, 2026, which both ended August 2, 2026. This report discusses our results of operations for these periods compared to the 2026 fiscal year thirteen-week period that began May 5, 2025 and the twenty-six week period that began February 3, 2025, which both ended August 3, 2025; and our financial condition as of August 2, 2026 compared to February 1, 2026. References in these notes to the condensed consolidated financial statements of the Company to: ◾ the 2027 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began February 2, 2026 and will end January 31, 2027; and ◾ the 2026 fiscal year and comparable terminology mean the fifty-two-week fiscal year that began February 3, 2025 and ended February 1, 2026. 2. Recently Adopted Accounting Policies In November 2024, the FASB issued ASU 2024-03, “Disaggregation of income statement expenses”. The new guidance requires new tabular disclosures to disaggregate prescribed natural expenses underlying any income statement caption. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 (our fiscal 2028). We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements and will add necessary disclosures upon adoption. We reviewed all other newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on our consolidated financial statements as a result of future adoption. 3. 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. On December 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 retain the Samuel Lawrence brand in connection with the operation of its hospitality business. 7 Table of Contents On December 12, 2025, the Company completed the sale and received cash proceeds of approximately $ 5.5 million, representing the estimated net book value of the assets at closing, less a holdback amount of approximately $ 0.6 million, in accordance with the terms of the purchase agreement. Final transaction pricing, including working capital adjustments, resulted in approximately $ 0.3 million below the estimated fair value less costs to sell determined at the measurement date and the final net proceeds received. Following the sale, the Home Meridian segment was eliminated, with its remaining Samuel Lawrence Hospitality brand reclassified into the “All Other” category. We believe this transaction represented a single disposal plan that constituted a strategic shift that materially affects our operations and financial results. Accordingly, the financial results of the PFC and SLF businesses are reflected in our consolidated financial statements as discontinued operations for all periods presented. Although the divestiture was completed in the prior fiscal year, current-period activity in discontinued operations primarily reflected tariff recoveries the Company received during the second quarter of fiscal 2027 associated with the divested business. Approximately $ 612,000 to be credited to customers were recorded as a reduction of revenue, while $ 1.6 million recoveries of tariff costs previously recognized in cost of sales were recorded as a reduction of cost of sales. The Company also recorded $ 54,000 of interest income. Current-period activity also included approximately $ 0.5 million of additional charges arising from the net settlement of various divestiture-related balances with the buyer. These charges consisted of a $ 327,000 reduction of revenue for sales allowances, a $ 132,000 increase in cost of sales and a $ 74,000 additional loss on the divestiture related to final working capital adjustments. The following table represents summarized statements of operations information of carrying amounts of major classes of line items constituting pretax income or loss of discontinued operations included as part of discontinued operations: For the For the Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, August 3, August 2, August 3, 2026 2025 2026 2025 Net sales $ ( 939 ) $ 12,905 $ ( 939 ) $ 27,038 Cost of sales ( 1,546 ) 13,095 ( 1,503 ) 25,945 Gross profit / (loss) 607 ( 190 ) 564 1,093 Selling and administrative expenses - 3,455 - 7,557 Intangible asset amortization - 246 - 492 Other income items that are not major ( 54 ) ( 70 ) ( 54 ) ( 98 ) Pretax income / (loss) of discontinued operations related to major classes 661 ( 3,821 ) 618 ( 6,858 ) Loss on sale of the discontinued operations 74 - 74 - Income / (Loss) from discontinued operations before income taxes 587 ( 3,821 ) 544 ( 6,858 ) Income tax expense / (benefit) 122 ( 1,089 ) 122 ( 1,689 ) Net income / (loss) from discontinued operations 465 ( 2,732 ) 422 ( 5,169 ) 8 Table of Contents The significant components included in our condensed consolidated statements of cash flows for the discontinued operations are as follows: For the Twenty-Six Weeks Ended August 2, August 3, 2026 2025 Operating Activities: Income / (Loss) from discontinued operations, net of tax $ 422 $ ( 5,169 ) Depreciation and amortization - 876 Changes in assets and liabilities: Trade accounts receivable, net 612 4,055 Inventories 1,999 Trade accounts payable 533 ( 4,752 ) Other assets and liabilities 122 173 Cash provided by / (used in) operating activities from discontinued operations $ 1,689 $ ( 2,818 ) Investing Activities: Purchase of properties and equipment - ( 124 ) Cash used in investing activities from discontinued operations $ - $ ( 124 ) 4. Accounts Receivable August 2, February 1, 2026 2026 Gross accounts receivable $ 31,635 $ 43,327 Customer allowances ( 496 ) ( 354 ) Allowance for doubtful accounts ( 4,864 ) ( 5,187 ) Trade accounts receivable $ 26,275 $ 37,786 5. Inventories August 2, February 1, 2026 2026 Finished furniture $ 55,445 $ 61,178 Furniture in process 1,581 1,497 Materials and supplies 11,804 11,879 Inventories at FIFO 68,830 74,554 Reduction to LIFO basis ( 25,416 ) ( 25,870 ) Inventories $ 43,414 $ 48,684 9 Table of Contents 6. Property, Plant and Equipment Depreciable Lives August 2, February 1, (In years) 2026 2026 Buildings and land improvements 15 - 30 $ 34,566 $ 34,566 Machinery and equipment 10 11,872 11,852 Computer software and hardware 3 - 10 8,232 8,286 Leasehold improvements Term of lease 7,659 7,630 Furniture and fixtures 3 - 8 3,086 3,067 Other 5 691 701 Total depreciable property at cost 66,106 66,102 Less accumulated depreciation ( 47,376 ) ( 46,060 ) Total depreciable property, net 18,730 20,042 Land 1,077 1,077 Construction-in-progress 2,374 4,088 Property, plant and equipment, net $ 22,181 $ 25,207 7. Internal-Use Software Our internal-use software includes our Enterprise Resource Planning (“ERP”) system across all divisions, as well as our new website and integrated B2B online marketplace, which was placed into service at the beginning of fiscal 2027. The gross carrying amount of capitalized implementation costs related to our cloud computing hosting arrangements increased by $ 2.7 million during the first quarter of fiscal 2027, primarily due to the reclassification of costs associated with our new digital platform from implementation costs in process upon being placed into service. 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” in our condensed 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 condensed consolidated statements of operations. No material implementation costs or interest expense were capitalized in fiscal 2027. Implementation costs and interest expenses of $ 287,000 and $ 551,000 were capitalized in fiscal 2026 second quarter and first half, respectively. Amortization expense was $ 555,000 in the second quarter of fiscal 2027 and $ 368,000 in the second quarter of fiscal 2026, and $ 1.1 million and $ 735,000 for the respective six-month periods. The capitalized implementation costs at August 2, 2026 and February 1, 2026 were as follows: August 2, 2026 February 1, 2026 Gross carrying amount Accumulated amortization Gross carrying amount Accumulated amortization Implementation Costs $ 20,215 $ ( 4,003 ) $ 17,479 $ ( 2,963 ) Interest Expenses 783 ( 98 ) 782 ( 49 ) 8. Fair Value Measurements Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability (an exit price) in an orderly transaction between market participants on the applicable measurement date. We use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: ◾ Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; ◾ Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and ◾ Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. 10 Table of Contents As of August 2, 2026 and February 1, 2026, 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 2, 2026 and February 1, 2026, were as follows: Fair value at August 2, 2026 Fair value at February 1, 2026 Description Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (In thousands) Assets measured at fair value Company-owned life insurance $ - $ 31,491 $ - $ 31,491 $ - $ 30,422 $ - $ 30,422 9. Intangible Assets Our intangible assets with indefinite lives consist of: goodwill related to the Shenandoah and BOBO Intriguing Objects acquisitions; and trademarks and tradenames related to the acquisitions of Bradington-Young, Home Meridian and BOBO Intriguing Objects. Our intangible assets with definite lives are recorded in the Domestic Upholstery segment, consisting of Shenandoah and Sunset West trade names and customer relations. Details of our intangible assets are as follows: August 2, 2026 February 1, 2026 Gross carrying amount Impairment / Accumulated Amortization Gross carrying amount Impairment / Accumulated Amortization Intangible assets with indefinite lives: Goodwill Domestic Upholstery - Shenandoah * 490 - 490 - All Other - BOBO Intriguing Objects 85 - 85 - Goodwill 575 - 575 - Trademarks and Trade names * 2,019 ( 1,114 ) 2,019 ( 1,114 ) Intangible assets with definite lives: Customer Relationships 23,601 ( 13,648 ) 23,601 ( 12,620 ) Trademarks and Trade names 2,334 ( 1,286 ) 2,334 ( 1,225 ) Intangible assets, net 27,954 ( 16,048 ) 27,954 ( 14,959 ) *: The amounts are net of impairment charges of $ 16.4 million related to Shenandoah goodwill; $ 5.7 million related to certain Home Meridian trade names unrelated to PFC and SLF, including $ 2.6 million recorded in fiscal 2021, $ 2.5 million recorded in fiscal 2025, and $ 558,000 recorded in fiscal 2026; and $ 556,000 related to the Bradington-Young trade name in the Domestic Upholstery segment. Amortization expenses for intangible assets with definite lives were $ 544,000 and $ 625,000 for the second quarters of fiscal 2027 and 2026, and $ 1.1 million and $ 1.3 million for the first half of fiscal 2027 and 2026, respectively. For the remainder of fiscal 2027, amortization expense is expected to be approximately $ 1.1 million. 10. Leases We have operating leases for warehouses, showrooms, manufacturing facilities, offices and equipment. Sub-lease income totaled $ 64,000 in the second quarter and $ 129,000 for the first half of fiscal 2027, compared with $ 119,000 and $ 200,000 , respectively, in fiscal 2026 periods. 11 Table of Contents The components of lease cost and supplemental cash flow information for leases for the second quarters and six-months of fiscal 2027 and 2026 were: Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, 2026 August 3, 2025 August 2, 2026 August 3, 2025 Operating lease cost $ 1,708 $ 2,147 $ 3,366 $ 4,319 Variable lease cost 103 74 182 163 Short-term lease cost 47 49 94 99 Total operating lease cost $ 1,858 $ 2,270 $ 3,642 $ 4,581 Operating cash outflows $ 1,867 $ 2,223 $ 3,636 $ 4,456 The right-of-use assets and lease liabilities recorded on our condensed consolidated balance sheets as of August 2, 2026 and February 1, 2026 were as follows: August 2, 2026 February 1, 2026 Real estate $ 21,488 $ 22,328 Property and equipment 563 687 Total operating leases right-of-use assets $ 22,051 $ 23,015 Current portion of operating lease liabilities $ 5,089 $ 5,445 Long term operating lease liabilities 18,865 19,468 Total operating lease liabilities $ 23,954 $ 24,913 The weighted-average discount rate is 5.1 %. The weighted-average remaining lease term is 5.4 years as of August 2, 2026. 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 2, 2026: Undiscounted Future Operating Lease Payments Remainder of fiscal 2027 $ 3,400 2028 4,976 2029 4,214 2030 4,189 2031 4,230 2032 and thereafter 6,580 Total lease payments $ 27,589 Less: impact of discounting ( 3,635 ) Present value of lease payments $ 23,954 11. 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. (“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. 12 Table of Contents 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 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 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 $ 598,000 in previous fiscal years in debt issuance costs in connection with our term loans. As of August 2, 2026, unamortized loan costs of $ 415,000 were recorded in other assets on our condensed consolidated balance sheets. As of August 2, 2026, there were no outstanding loans, other than $ 3.2 million face amount of letters of credit. We had $ 51.8 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 2, 2026. 13 Table of Contents 12. 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 2026 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 and vests in three equal annual installments, with one-third vesting at the end of each service period, if the executive remains continuously employed with the Company through the end of a three-year service period. 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 one of two specified performance conditions if the executive officer remains continuously employed through the end of the three-year performance period, one performance condition is the Company’s annual EPS growth over the performance period and the other performance condition 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: August 2, February 1, 2026 2026 Restricted shares 104 140 RSUs and PSUs 194 155 298 295 All restricted shares, RSUs and PSUs awarded that have not yet vested are considered when computing diluted earnings per share. During the fiscal 2027 first half, we purchased and retired 92,357 shares of our common stock (at an average price of $ 13.68 per share) under the $ 5 million share repurchase authorization approved by our board of directors in fiscal 2026, with approximately $ 3.7 million remaining available for future purchases under the authorization. These repurchases reduced our total outstanding shares and, consequently, reduced the weighted outstanding shares used in our calculation of earnings per share for the fiscal 2027 second quarter and first half shown below. 14 Table of Contents The following table sets forth the computation of basic and diluted earnings per share: Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, August 3, August 2, August 3, 2026 2025 2026 2025 Net income / (loss) from continuing operations $ 1,205 $ ( 545 ) $ 2,309 $ ( 1,160 ) Less: Unvested participating restricted stock dividends 13 29 28 62 Net earnings allocated to unvested participating restricted stock 17 - 31 - Earnings / (loss) from continuing operations available for common shareholders 1,175 ( 574 ) 2,250 ( 1,222 ) Earnings / (loss) from discontinued operations available for common shareholders 465 ( 2,732 ) 422 ( 5,169 ) Net earnings / (loss) available for common shareholders 1,640 ( 3,306 ) 2,672 ( 6,391 ) Weighted average shares outstanding for basic earnings per share 10,644 10,612 10,644 10,587 Dilutive effect of unvested restricted stock, RSU and PSU awards 116 - 130 - Weighted average shares outstanding for diluted earnings per share 10,760 10,612 10,774 10,587 Basic earnings / (loss) from continuing operations per share $ 0.12 $ ( 0.06 ) $ 0.21 $ ( 0.11 ) Basic earnings / (loss) from discontinued operations per share 0.04 ( 0.25 ) 0.04 ( 0.49 ) Basic earnings / (loss) per share $ 0.16 $ ( 0.31 ) $ 0.25 $ ( 0.60 ) Diluted earnings / (loss) from continuing operations per share $ 0.11 $ ( 0.06 ) $ 0.21 $ ( 0.11 ) Diluted earnings / (loss) from discontinued operations per share 0.04 ( 0.25 ) 0.04 ( 0.49 ) Diluted earnings / (loss) per share $ 0.15 $ ( 0.31 ) $ 0.25 $ ( 0.60 ) Due to net losses, approximately 106,000 shares and 115,000 shares for the second quarter and first half of fiscal 2026, would have been antidilutive and are therefore excluded from the calculation of earnings per share, respectively. 13. Income Taxes In the fiscal 2027 second quarter, we recorded income tax expenses of $ 338,000 under continuing operations and $ 122,000 under the discontinued operations. In the fiscal 2026 second quarter, we recorded income tax benefits of $ 114,000 under continuing operations and $ 1.1 million under discontinued operations. The effective tax rate for continuing operations was 21.3 % for the second quarter of fiscal 2027 compared to 17.3 % for the second quarter of fiscal 2026. The increase was primarily due to a prior-year state net operating loss valuation allowance adjustment, along with the shifting tax impact of company-owned life insurance gains and restricted stock compensation relative to prior-year pretax losses versus current-year pretax income. In the fiscal 2027 first half, we recorded income tax expenses of $ 664,000 under continuing operations and $ 122,000 under the discontinued operations. In the fiscal 2026 first half, we recorded income tax benefits of $ 278,000 under continuing operations and $ 1.7 million under discontinued operations. The effective tax rate for continuing operations was 22.3 % for the first six months of fiscal 2027 compared to 19.3 % for the first six months of fiscal 2026. The increase in the effective tax rate for the year-to-date period was driven by the same factors noted above. No material and non-routine positions have been identified as uncertain tax positions. Tax years ending January 29, 2023 through February 1, 2026 remain subject to examination by federal and state taxing authorities. 15 Table of Contents 14. 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. 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: ● better understand our performance; ● better assess our prospects for future net cash flows; and ● make 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 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 decisions. For financial reporting purposes, we are organized into two reportable segments and “All Other”, which includes the remainder of our businesses. The following tables present segment information for the periods, and as of the dates, indicated. ● Hooker Branded , consisting of the operations of our imported Hooker Casegoods and Hooker Upholstery businesses; ● Domestic Upholstery , which includes the domestic upholstery manufacturing operations of Bradington-Young, HF Custom (formerly Sam Moore), Shenandoah Furniture and Sunset West; and ● All Other, consisting of Samuel Lawrence Hospitality, intercompany eliminations and operating segments that are not individually reportable. 16 Table of Contents The following tables present segment information for the periods, and as of the dates, indicated. Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, 2026 August 3, 2025 August 2, 2026 August 3, 2025 % Net % Net % Net % Net Net Sales Sales Sales Sales Sales Hooker Branded $ 34,620 54.7 % $ 36,250 52.4 % $ 69,950 52.7 % $ 73,359 52.2 % Domestic Upholstery 27,152 42.9 % 28,677 41.4 % 55,506 41.8 % 57,590 41.0 % All Other 1,478 2.3 % 4,316 6.2 % 7,246 5.5 % 9,478 6.7 % Consolidated $ 63,250 100 % $ 69,243 100 % $ 132,702 100 % $ 140,427 100 % Cost of Sales Hooker Branded $ 20,899 60.4 % $ 25,709 70.9 % $ 42,311 60.5 % $ 51,754 70.5 % Domestic Upholstery 20,919 77.0 % 23,372 81.5 % 44,308 79.8 % 47,005 81.6 % All Other 1,333 90.2 % 2,920 67.7 % 5,392 74.4 % 6,491 68.5 % Consolidated $ 43,151 68.2 % $ 52,001 75.1 % $ 92,011 69.3 % $ 105,250 74.9 % Gross Profit Hooker Branded $ 13,722 39.6 % $ 10,541 29.1 % $ 27,639 39.5 % $ 21,605 29.5 % Domestic Upholstery 6,233 23.0 % 5,305 18.5 % 11,198 20.2 % 10,585 18.4 % All Other 144 9.7 % 1,396 32.3 % 1,854 25.6 % 2,987 31.5 % Consolidated $ 20,099 31.8 % $ 17,242 24.9 % $ 40,691 30.7 % $ 35,177 25.1 % Selling and Administrative Expenses Hooker Branded $ 12,852 37.1 % $ 10,532 29.1 % $ 25,563 36.5 % $ 21,569 29.4 % Domestic Upholstery 4,856 17.9 % 5,169 18.0 % 9,966 18.0 % 10,458 18.2 % All Other 564 38.2 % 1,426 33.0 % 1,212 16.7 % 2,867 30.2 % Consolidated $ 18,272 28.9 % $ 17,127 24.7 % $ 36,741 27.7 % $ 34,894 24.8 % Intangible Asset Amortization Domestic Upholstery 544 2.0 % $ 544 1.9 % 1,089 2.0 % $ 1,130 2.0 % All Other - 0.0 % 81 1.9 % - 0.0 % 162 1.7 % Consolidated $ 544 0.9 % $ 625 0.9 % $ 1,089 0.8 % $ 1,292 0.9 % Operating Income / (Loss) Hooker Branded $ 870 2.5 % $ 10 0.0 % $ 2,076 3.0 % $ 37 0.1 % Domestic Upholstery 833 3.1 % ( 408 ) - 1.4 % 144 0.3 % ( 1,004 ) - 1.7 % All Other ( 420 ) - 28.4 % ( 112 ) - 2.6 % 641 8.8 % ( 42 ) - 0.4 % Consolidated $ 1,283 2.0 % $ ( 510 ) - 0.7 % $ 2,861 2.2 % $ ( 1,009 ) - 0.7 % Other Income, net Hooker Branded $ 285 0.8 % $ 13 0.0 % $ 226 0.3 % $ 94 0.1 % Domestic Upholstery 35 0.1 % - 0.0 % 35 0.1 % - 0.0 % All Other 56 3.8 % 9 0.2 % 88 1.2 % 26 0.3 % Consolidated $ 376 0.6 % $ 22 0.0 % $ 349 0.3 % $ 120 0.1 % Interest expense - Corporate $ 116 0.2 % $ 171 0.2 % $ 237 0.2 % $ 549 0.4 % Income taxes - Corporate $ 338 0.5 % $ ( 114 ) - 0.2 % $ 664 0.5 % $ ( 278 ) - 0.2 % Net income / (loss) from continuing operations - Corporate $ 1,205 1.9 % $ ( 545 ) - 0.8 % $ 2,309 1.7 % $ ( 1,160 ) - 0.8 % During the second quarter of fiscal 2027, the Company received $ 7.9 million in recoveries of tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) from the implementation of the tariffs through the U.S. Supreme Court’s decision in early February 2026. In continuing operations, the Company recorded $ 4.3 million as a reduction of cost of sales and $ 201,000 as interest income in the second quarter of fiscal 2027, partially offset by a $ 522,000 reduction of revenue. In discontinued operations, the Company recorded $ 1.6 million as a reduction of cost of sales and $ 54,000 interest income, partially offset by a $ 612,000 reduction of revenue. Additionally, approximately $ 1.8 million of the tariff recoveries had not yet impacted costs of sales and was recorded as a reduction of the carrying value of inventories at quarter end. The Company does not expect to receive material additional tariff recoveries. The following table presents the tariff recoveries recorded by segment during the second quarter of fiscal 2027. 17 Table of Contents TARIFF RECOVERIES BY SEGMENT 13 Weeks Ended 26 Weeks Ended August 2, 2026 August 2, 2026 % Net % Net Net sales Sales Sales Hooker Branded $ ( 65 ) - 0.2 % $ ( 65 ) - 0.1 % Domestic Upholstery - 0.0 % - 0.0 % All Other ( 457 ) - 30.9 % ( 457 ) - 6.3 % Consolidated $ ( 522 ) - 0.8 % $ ( 522 ) - 0.4 % Cost of sales Hooker Branded $ ( 2,503 ) - 7.2 % $ ( 2,503 ) - 3.6 % Domestic Upholstery ( 805 ) - 3.0 % ( 805 ) - 1.5 % All Other ( 961 ) - 65.0 % ( 961 ) - 13.3 % Consolidated $ ( 4,269 ) - 6.7 % $ ( 4,269 ) - 3.2 % Interest Income Hooker Branded $ 138 0.4 % $ 138 0.2 % Domestic Upholstery 40 0.1 % 40 0.1 % All Other 23 1.6 % 23 0.3 % Consolidated $ 201 0.3 % $ 201 0.2 % Discontinued Operations Net sales $ ( 612 ) $ ( 612 ) Cost of sales ( 1,635 ) ( 1,635 ) Interest Income 54 54 As of August 2, 2026 Inventories Hooker Branded $ ( 1,511 ) Domestic Upholstery ( 276 ) All Other - Consolidated $ ( 1,787 ) Discontinued Operations $ - Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, 2026 August 3, 2025 August 2, 2026 August 3, 2025 Restructuring Costs Hooker Branded $ 153 $ 655 $ 157 $ 782 Domestic Upholstery - 152 114 265 All Other 5 153 11 194 Consolidated $ 158 $ 960 $ 282 $ 1,241 Capital Expenditures Hooker Branded $ 647 $ 749 $ 984 $ 1,424 Domestic Upholstery 34 79 100 122 All Other 10 24 10 24 Consolidated $ 691 $ 852 $ 1,094 $ 1,570 Depreciation & Amortization Hooker Branded $ 715 $ 536 $ 1,426 $ 1,068 Domestic Upholstery 1,012 998 2,028 2,033 All Other 86 199 175 398 Consolidated $ 1,813 $ 1,733 $ 3,629 $ 3,499 Restructuring costs, primarily related to severance, were $ 158,000 and $ 960,000 during the second quarters of fiscal 2027 and fiscal 2026, and $ 282,000 and $ 1.2 million during the first six months of those fiscal years, respectively. As of August 2, 2026 and February 1, 2026, we had accrued restructuring charges of approximately $ 157,000 and $ 298,000 , respectively. The balance as of August 2, 2026 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 condensed consolidated statements of operations. 18 Table of Contents As of August 2, As of February 1, 2026 %Total 2026 %Total Assets Assets Assets Hooker Branded $ 154,741 73.0 % $ 140,732 66.3 % Domestic Upholstery 52,881 24.9 % 55,083 25.9 % All Other 4,340 2.1 % 16,507 7.8 % Consolidated Assets $ 211,962 100 % $ 212,322 100 % Consolidated Goodwill and Intangibles 12,480 13,569 Total Consolidated Assets $ 224,442 $ 225,891 Sales by product type are as follows: Net Sales (in thousands) Thirteen Weeks Ended Twenty-Six Weeks Ended August 2, 2026 %Total August 3, 2025 %Total August 2, 2026 %Total August 3, 2025 %Total Casegoods $ 30,520 48 % $ 34,610 50 % $ 65,969 50 % $ 69,950 50 % Upholstery 32,730 52 % 34,633 50 % 66,733 50 % 70,477 50 % $ 63,250 100 % $ 69,243 100 % $ 132,702 100 % $ 140,427 100 % 15. Subsequent Events Dividends On September 3, 2026 , our board of directors declared a quarterly cash dividend of $ 0.115 per share which will be paid on September 30, 2026 to shareholders of record at September 15, 2026 . 19 Table of Contents