Hooker Furnishings reported QQ1 2026 net sales of $85.316 million, down 8.8% versus the year-ago period, as demand softened in the mid-priced/MID-market segment (notably Home Meridian Brands). Despite weaker volumes, the company narrowed operating losses and improved gross margins through a multi-phase cost-reduction program and operational efficiencies. Management reiterated a strategic objective to realize approximately $25 million in annualized cost savings by FY2027, with Phase 1 already delivering more than $3 million in savings in fiscal 2025 and Phase 2 expected to yield $3.4 million in net savings in fiscal 2026 (net of charges), progressing toward the $14 million annualized savings in 2026 and the full $25 million by 2027. A key structural lever is the Vietnam warehouse opened in May 2025, designed to cut lead times from six months to 4–6 weeks and reduce total supply-chain costs, potentially supporting improved sell-through and margins. We note that May 2025 order dynamics were favorable for Hooker Legacy and Hooker Branded, with Hooker Legacy orders up ~33% YoY and Hooker Branded orders up ~40% YoY, suggesting early validation of merchandising and product initiatives (Collected Living and Live Your Way). The quarter also reflected ongoing macro headwinds—soft housing demand, tariffs, and consumer confidence weakness—offset by disciplined capital allocation, ongoing dividend payments, and robust operating cash flow generation (operating cash flow of $14.66 million and free cash flow of $13.81 million). These factors shape an investment thesis that is constructive on a gradual margin recovery and improved cash generation, but remains contingent on tariff clarity, housing-market stabilization, and sustained execution of cost-structure optimization.