Financial Analysis

NOTE 18 COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS Commitments and Off-Balance Sheet Arrangements We had letters of credit outstanding totaling $3.6 million on February 1, 2026. We utilize letters of credit to collateralize certain imported inventory purchases and certain insurance arrangements. In the ordinary course of our business, we may become involved in legal proceedings involving contractual and employment relationships, product liability claims, intellectual property rights and a variety of other matters. We do not believe that any pending legal proceedings will have a material impact on our financial position or results of operations. Our business is subject to a number of significant risks and uncertainties, including our reliance on offshore sourcing, any of which can adversely affect our business, results of operations, financial condition or future prospects. …

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NOTE 14 SHARE-BASED COMPENSATION Our Stock Incentive Plan permits incentive awards of restricted stock, restricted stock units, stock appreciation rights and performance grants to key employees. The Stock Incentive Plan also provides for annual restricted stock awards to non-employee directors. We have issued restricted stock awards to our non-employee directors since January 2006 and certain other management employees since 2014. The Companys 2024 Amendment and Restatement of the Hooker Furnishings Corporation Stock Incentive Plan (the 2024 Plan) was approved by shareholders on June 4, 2024 at the annual shareholders meeting. The 2024 plan preserves key elements and historical award practices, while reserving 900,000 new shares of the Companys common stock. We account for restricted stock awards as non-vested equity shares until the awards vest or are forfeited. Restricted stock awards to non-employee directors and certain other management employees vest if the director/employee remains on the board/employed generally over 1 to 3 years. Annual restricted stock awards for non-employee directors do not vest unless the director remains in service to the next annual meeting following annual shareholder meeting. The fair value of each share of restricted stock is the market price of our common shares on the grant date. We have awarded time-based restricted stock units to certain senior executives since 2011. Each restricted stock unit, or RSU, entitles the executive to receive on …

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NOTE 10 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. As of February 1, 2026 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 February 1, 2026 and February 2, 2025 were as follows: Fair value at February 1, 2026 Fair value at February 2, 2025 Description Level 1 Level 2 Level 3 Total Level 1 …

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NOTE 16 INCOME TAXES Our provision for income taxes was as follows for the periods indicated: 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended February 1, February 2, January 28, 2026 2025 2024 Current expense Federal $ - $ - $ 6 Foreign 15 41 47 State 18 42 - Total current expense 33 83 53 Deferred taxes Federal (3,463 ) (1,852 ) 2,887 State (824 ) (133 ) 416 Total deferred taxes (4,287 ) (1,985 ) 3,303 Income tax (benefit)/expense $ (4,254 ) $ (1,902 ) $ 3,356 Total tax benefit for fiscal 2026 was $8.9 million, of which $4.3 million benefit was allocated to continuing operations, $4.5 million benefit was allocated to discontinued operations, and $94,000 tax benefit was allocated to other comprehensive income. Total tax benefit for fiscal 2025 was $4.0 million, of which $1.9 million benefit was allocated to continuing operations, $2.0 million benefit was allocated to discontinued operations, and $51,000 tax benefit was allocated to other comprehensive income. Total tax expense for fiscal 2024 was $2.6 million, of which $3.4 million expense was allocated to continuing operations, $.8 million benefit allocated to discontinued operations, and $41,000 tax benefit was allocated to other comprehensive income. The effective income tax rate differed from the federal statutory tax rate as follows for the periods indicated: 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended February 1, February 2, January 28, 2026 2025 2024 Amounts Percentages Amounts Percentages Amounts Percentages Income taxe …

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NOTE 11 LEASES In fiscal 2020, we adopted Accounting Standards Codification Topic 842 Leases. See Leases under Note 1 for a discussion of our accounting policies and elections under Topic 842. The analysis below includes office space, warehousing facilities, showroom space, and office equipment related to our continuing operations. Leases and sub-leases associated with the discontinued operations of the PFC and SLF businesses, as well as the former Home Meridian segment, have been excluded for all periods presented. We have a sub-lease at one of our warehouses and we recognized sub-lease income of $252,000 in fiscal 2026. The components of lease cost and supplemental cash flow information for leases in fiscal 2026, 2025, and 2024 were: 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended February 1, 2026 February 2, 2025 January 28, 2024 Operating lease cost $ 6,587 $ 6,648 $ 6,223 Variable lease cost 325 354 248 Short-term lease cost 193 325 399 Total operating lease cost $ 7,105 $ 7,327 $ 6,870 Operating cash outflows $ 6,956 $ 7,007 $ 6,360 The right-of-use assets and lease liabilities recorded on our Consolidated Balance Sheets as of February 1, 2026 and February 2, 2025 were: February 1, 2026 February 2, 2025 Real estate $ 22,328 $ 38,329 Property and equipment 687 935 Total operating leases right-of-use assets $ 23,015 $ 39,264 Current portion of operating lease liabilities $ 5,445 $ 6,311 Long term operating lease liabilities 19,468 35,331 Total operating lease liabilities $ 2 …

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NOTE 12 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. 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 are available for general working capital and other corporate purposes of the Borrower. Availability of loans and letters of …

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Recently Adopted Accounting Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new guidance requires enhanced reportable segment disclosures to include significant segment expenses. The Company adopted this ASU on January 29, 2024. The adoption did not have an impact on our Consolidated Financial Statements. See Note 18. Segment Information. 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. The Company adopted this ASU on February 3, 2025 on a prospective basis. The adoption of this guidance did not have a material impact on the Companys consolidated financial statements, but resulted in expanded income tax disclosures. See Note 16, Income Taxes. 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 pronounceme …

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NOTE 13 EMPLOYEE BENEFIT PLANS Employee Savings Plans We sponsor a tax-qualified 401(k) retirement plan covering substantially all employees. This plan assists employees in meeting their savings and retirement planning goals through employee salary deferrals and discretionary employer matching contributions. Our contributions to the plan amounted to $1.5 million in fiscal 2026 and $1.8 million in fiscal 2025 and 2024. Executive Benefits SRIP and SERP Overview We maintain two frozen retirement plans, which are paying benefits and may include active employees among the participants but we do not expect to add participants to these plans in the future. The two plans include: a supplemental retirement income plan (SRIP) for certain former and current executives of Hooker Furnishings Corporation; and the Pulaski Furniture Corporation Supplemental Executive Retirement Plan (SERP) for certain former executives. This is excluded from the disposal group classified as held for sale. SRIP and SERP The SRIP provides monthly payments to participants or their designated beneficiaries based on a participants final average monthly earnings and specified percentage participation level as defined in the plan, subject to a vesting schedule that may vary for each participant. The benefit is payable for a 15-year period following the participants termination of employment due to retirement, disability or death. In addition, the monthly retirement benefit for each participant, regardless of age, b …

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NOTE 20 - RELATED PARTY TRANSACTIONS We lease the four properties utilized in Shenandoahs operations. One of our employees has an ownership interest in the entities that own these properties. The leases commenced on September 29, 2017 with an option to renew each for an additional seven years. All four leases include annual rent escalation clauses with respect to minimum lease payments after the initial 84-month term of the lease is completed. In addition to monthly lease payments, we also incur expenses for property taxes, routine repairs and maintenance and other operating expenses. The total amount of the lease expenses and other expenses do not have a material effect on our consolidated financial statements. …

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NOTE 17 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 companys 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 Companys 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 segments strategy. Gross profit, which is derived from net sales and cost o …

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Hooker Furnishings Corporation and subsidiaries (the Company, we, us and our) design, import, manufacture and market residential household furniture, hospitality and contract furniture, lighting, accessories, and home decor for sale to wholesale and retail merchandisers located principally in North America. Consolidation The consolidated financial statements include the accounts of Hooker Furnishings Corporation and our wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. All references to the Company refer to the Company and our consolidated subsidiaries, unless specifically referring to segment information. Operating Segments 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 Companys 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 ass …

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NOTE 21 - SUBSEQUENT EVENTS Cash Dividend On March 5, 2026, our Board of Directors declared a quarterly cash dividend of $0.115 per share, payable on March 31, 2026 to shareholders of record at March 16, 2026.

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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. 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 L …

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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 e …

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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. 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 liabil …

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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. 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 …

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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. …

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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 Companys 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 Companys 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 segments strategy. Gross profit, which is derived from net sales and cost of sa …

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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. …

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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.

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