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Home furnishings provider Hooker Furnishings Corporation (NASDAQ:HOFT) is planning to close its distribution center in Savannah, Georgia.
This action is part of the company’s broader strategy to optimize its operations and consolidate its facilities. The closure follows a series of operational difficulties at the Savannah location, which opened in October 2021.
The distribution center was originally established to support the Home Meridian segment’s Accentrics Home (ACH) brand.
Hooker Furnishings encountered challenges as the increase in container freight rates post-COVID, which surged from approximately $4,000 to more than $25,000 per container, weakened the competitive standing of the ACH brand.
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“The sharp rise in container freight rates made ACH’s once-thriving line of high-volume, lower-priced, low-margin accent items unsustainable,” said CEO Jeremy R. Hoff.
“Despite the temporary elevation in freight rates, it became obvious ACH’s business model would continue to be high-risk and low reward. In 2024, we liquidated its inventory and closed ACH, part of a larger plan to exit unprofitable businesses at HMI.”
As part of the exit process, Hooker Furnishings is evaluating the financial effects and has indicated that it expects net charges ranging from $1.6 million to $2.0 million for fiscal 2025, with additional charges of $3.0 million to $4.0 million for fiscal 2026.
The company also forecasts net operating expense savings between $750,000 and $1.0 million for fiscal 2026. Further information will be available in the earnings release scheduled for April 17, 2025.
Looking ahead, the company anticipates annual savings of $4.0 million to $4.5 million starting in fiscal 2027, once the operations are fully consolidated into the remaining facilities.
Meanwhile, these estimates are preliminary, and final costs and savings will depend on the timing of the distribution center’s closure and other variables.
Price Action: HOFT shares traded lower by 0.95% at $11.50 at last check Monday.
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Photo: Courtesy of sakhorn via Shutterstock.
Posted In: HOFT
