All references to the “Company,” “we,” “us” and “our” in this document refer to Hooker Furnishings Corporation and its consolidated subsidiaries, unless specifically referring to segment information. The Hooker Branded segment includes Hooker Casegoods and Hooker Upholstery. The Domestic Upholstery segment includes Bradington-Young, HF Custom (formerly Sam Moore), Shenandoah Furniture and Sunset West. “All Other” includes Samuel Lawrence Hospitality product line, intercompany eliminations and operating segments that are not individually reportable.   Forward-Looking Statements   Certain statements made in this report, including statements under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the notes to the condensed consolidated financial statements included in this report, are not based on historical facts, but are forward-looking statements. These statements reflect our reasonable judgment with respect to future events and typically can be identified by the use of forward-looking terminology such as “believes,” “expects,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “would,” “could,” or “anticipates,” or the negatives thereof, or other variations thereof, or comparable terminology, or by discussions of strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Those risks and uncertainties include but are not limited to:   (1) adverse political acts or developments affecting the international markets from which we import products and certain components used in our Domestic Upholstery segment, including the imposition of duties or tariffs by the U.S. or foreign governments, such as the tariffs under Section 301, antidumping and countervailing duty orders on raw materials like timber and lumber, the potential for additional or higher reciprocal tariffs on imports from key sourcing countries, uncertainty regarding tariff refunds, and other trade restrictions, could affect our supply chain and increase our costs, and adversely affect our sales, earnings, and liquidity;   (2) general economic or business conditions, both domestically and internationally, including the current macroeconomic uncertainties and challenges to the retail environment for home furnishings along with instability in the financial and credit markets, in part due to elevated interest rates and housing market volatility, which can affect consumer discretionary spending, existing home sales, and demand for home furnishings, including their potential impact on (i) our sales, operating costs and access to financing, (ii) our customers, and (iii) our suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses;   (3) the impairment of our long-lived assets, which can result in reduced earnings and net worth;   (4) the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit;   (5) achieving and managing growth and change, and the risks associated with new business lines including the Margaritaville launch, acquisitions, the selection of suitable acquisition targets, restructurings, strategic alliances and international operations;   (6) risks associated with the ultimate outcome of our cost reduction efforts, including the amounts and timing of savings realized and the ability to scale the business appropriately as customer demand increases or decreases based on the macroeconomic environment;   18 Table of Contents   (7) risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, customs issues, tariffs, freight and fuel costs, including the price and availability of shipping containers, ocean vessels, domestic trucking, and warehousing costs and the risk that a disruption in our supply chain or the transportation and handling industries, including labor stoppages, strikes, slowdowns, or geopolitical conflicts or instability affecting key global shipping routes and our suppliers, could adversely affect our ability to timely fulfill customer orders;   (8) interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the internet or other related issues including unauthorized disclosures of confidential information, hacking or other cybersecurity threats or inadequate levels of cyber insurance or risks not covered by cyber insurance;   (9) difficulties in forecasting demand for our imported products and raw materials used in our domestic operations;   (10) our inability to collect amounts owed to us or significant delays in collecting such amounts;   (11) the risks associated with our Amended and Restated Loan Agreement, including the fact that our asset-based lending facility is secured by substantially all of our assets and contains provisions which limit the amount of our future borrowings under the facility, as well as financial and negative covenants that, among other things, may limit our ability to incur additional indebtedness;   (12) risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs, availability of skilled labor, and environmental compliance and remediation costs;   (13) risks associated with our self-insured healthcare and workers compensation plans, which utilize stop-loss insurance for aggregate claims above specified thresholds and can be impacted by higher healthcare inflation and expenditures, all of which may cause our healthcare and workers compensation costs to rise unexpectedly, adversely affecting our earnings, financial condition, and liquidity;   (14) disruptions and damage (including those due to weather) affecting our Virginia or North Carolina warehouses, our Virginia, North Carolina or California administrative and manufacturing facilities, our High Point, Las Vegas, and Atlanta showrooms or our representative office or warehouse in Vietnam;   (15) changes in U.S. and foreign government regulations and in the political, social and economic climates of the countries from which we source our products;   (16) risks associated with product defects, including higher than expected costs associated with product quality and safety, regulatory compliance costs related to the sale of consumer products and costs related to defective or non-compliant products, product liability claims and costs to recall defective products and the adverse effects of negative media coverage;   (17) the direct and indirect costs and time spent by our associates related to the implementation of our Enterprise Resource Planning system (“ERP”), including costs resulting from unanticipated disruptions to our business;   (18) risks associated with distribution through third-party retailers, such as non-binding dealership arrangements;   (19) changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials;   (20) price competition in the furniture industry;   (21) changes in consumer preferences, including increased demand for lower-priced furniture, especially in light of recently imposed tariffs on imported furniture;   (22) the risks specifically related to the concentrations of a material part of our sales and accounts receivable in only a few customers, including the loss of several large customers through business consolidations, failures or other reasons, or the loss of significant sales programs with major customers;   19 Table of Contents   (23) decisions concerning the allocation of capital including the extent to which we repurchase shares of our common stock which will affect shares outstanding and earnings per share (EPS); and   (24) future actions by activist stockholders that could divert management attention, create uncertainty around our strategic direction, disrupt relationships with key shareholders, increase our costs, drive stock price volatility, and otherwise materially impact our business, financial condition, results of operations, and cash flows.   Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in this report could turn out to be materially different. Any forward-looking statement we make speaks only as of the date of that statement, and we undertake no obligation, except as required by law, to update any forward-looking statements whether as a result of new information, future events or otherwise and you should not expect us to do so.   Also, our business is subject to significant risks and uncertainties, any of which can adversely affect our business, results of operations, financial condition or future prospects. For a discussion of risks and uncertainties that we face, see the Forward-Looking Statements detailed above and Item 1A, “Risk Factors” in our 2026 Annual Report.   Investors should also be aware that while we occasionally communicate with securities analysts and others, it is against our policy to selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, investors should not assume that we agree with any projection, forecast or report issued by any analyst regardless of the content of the statement or report, as we have a policy against confirming information issued by others.   Quarterly Reporting   This quarterly report on Form 10-Q includes our unaudited condensed consolidated financial statements for the 2027 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “first quarter” or “quarterly period”) that began February 2, 2026 and ended May 3, 2026. This report discusses our results of operations for this period compared to the 2026 fiscal year thirteen-week period that began February 3, 2025 and ended May 4, 2025; and our financial condition as of May 3, 2026 compared to February 1, 2026.   References in this report to:   ◾ the 2027 fiscal year and comparable terminology mean the fiscal year that began February 2, 2026, and will end January 31, 2027; and   ◾ the 2026 fiscal year and comparable terminology mean the fiscal year that began February 3, 2025, and ended February 1, 2026.   Dollar amounts presented in the tables below are in thousands except for per share data.   The following discussion should be read in conjunction with the condensed consolidated financial statements, including the related notes, contained elsewhere in this quarterly report. We also encourage users of this report to familiarize themselves with all our recent public filings made with the SEC, especially our 2026 Annual Report. Our 2026 Annual Report contains critical information regarding known risks and uncertainties that we face, critical accounting policies and information on commitments and contractual obligations that are not reflected in our condensed consolidated financial statements, as well as a more thorough and detailed discussion of our corporate strategy and new business initiatives.   Our 2026 Annual Report and other public filings made with the SEC are available, without charge, at www.sec.gov and at http://investors.hookerfurnishings.com.   Overview   Hooker Furnishings Corporation, incorporated in Virginia in 1924, is a designer, marketer, and importer of casegoods (wooden and metal furniture), leather furniture, fabric-upholstered furniture, lighting, accessories, and home décor for the residential, hospitality and contract markets. We also domestically manufacture premium residential custom leather, custom fabric-upholstered furniture and outdoor furniture.   20 Table of Contents   Orders and Backlog   In the discussion below and herein, we reference changes in sales orders or “orders” and sales order backlog (unshipped orders at a point in time) or “backlog” over and compared to certain periods of time and changes discussed are in sales dollars and not units of inventory, unless stated otherwise. We believe orders are generally good current indicators of sales momentum and business conditions. If the items ordered are in stock and the customer has requested immediate delivery, we generally ship products in about seven days or less from receipt of order; however, orders may be shipped later if they are out of stock or there are production or shipping delays or the customer has requested the order to be shipped at a later date or has requested that we ship the order “in-full”, meaning all products ordered for the end-user must ship together. It is our policy and industry practice to allow order cancellation for casegoods up to the time of shipment or, in the case of container direct orders, up until the time the container is booked with the ocean freight carrier; therefore, customer orders for casegoods are not firm. However, domestically produced upholstered products are predominantly custom-built and consequently, cannot be cancelled once the leather or fabric has been cut. Additionally, our hospitality products are highly customized and are generally not cancellable. Similarly, for our outdoor furnishings, most orders require a deposit upon order and the balance before production is started and hence are generally not cancellable.   For the Hooker Branded and Domestic Upholstery segments, we generally consider backlogs to be one helpful indicator of sales for the upcoming 30-day period, but because of our relatively quick delivery and our cancellation policies, we do not consider order backlogs to be a reliable indicator of expected long-term sales.   At May 3, 2026, our backlog of unshipped orders was as follows:       Order Backlog       (Dollars in 000s)   Reporting Segment   May 3, 2026     February 1, 2026     May 4, 2025                       Hooker Branded   $ 17,491     $ 16,490     $ 13,479   Domestic Upholstery     19,952       19,557       19,401   All Other     1,692       7,807       4,563                             Consolidated   $ 39,135     $ 43,854     $ 37,443     Consolidated backlog at the end of the first quarter of fiscal 2027 increased 4.5% compared to the prior-year first quarter. The increase was primarily driven by higher backlog in Hooker Branded. Domestic Upholstery backlog increased modestly compared to both the prior-year first quarter and fiscal 2026 year-end, driven by higher private label orders. All Other backlog decreased significantly compared to both periods, primarily due to large hospitality shipments during the current quarter and the project-based nature of the hospitality business.   Executive Summary   Despite continued weakness in the housing market, soft furniture and home furnishings retail sales, and persistent macroeconomic challenges, the Company generated operating income of $1.6 million in the first quarter of fiscal 2027, compared to an operating loss of $498,000 in the prior-year period. This $2.1 million improvement was achieved despite a 2.4% decrease in consolidated net sales and reflects the impact of improved gross margin and cost-reduction initiatives implemented in prior periods, and the Company’s progress toward becoming a leaner, higher-margin business with a lower break-even point.   Consolidated net sales decreased $1.7 million, or 2.4%, in the first quarter of fiscal 2027 due to lower sales in Hooker Branded and Domestic Upholstery, partially offset by higher shipments in the All Other hospitality business. Despite a decrease in net sales, consolidated gross profit increased $2.7 million and gross margin improved 440 basis points, primarily driven by improved profitability in Hooker Branded. The Company generated operating income of $1.6 million for the quarter, driven by operating income in Hooker Branded and All Other, partially offset by an operating loss in Domestic Upholstery. Consolidated net income from continuing operations was $1.1 million, or $0.10 per diluted share.   21 Table of Contents   In addition to improved profitability, the Company significantly improved its liquidity and financial flexibility during the quarter. Cash and cash equivalents increased to $10.6 million at quarter-end, with no outstanding term loan balance, compared to $1.1 million of cash and $3.6 million outstanding under the term loan at prior fiscal year-end. In April 2026, the Company began repurchasing shares under its previously authorized $5 million share repurchase program.   Tariff Update   In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were not authorized by statute. In March 2026, the U.S. Court of International Trade directed U.S. Customs and Border Protection to implement a process for refunding previously collected duties.   During the fiscal 2027 first quarter, the Company submitted refund claims totaling approximately $8 million. Due to uncertainty regarding the ultimate recoverability, timing and amount of any refunds, the Company did not recognize a receivable or any reduction of cost of sales or inventory related to these claims in its unaudited condensed consolidated financial statements for the first quarter of fiscal 2027. Under U.S. GAAP, the Company is applying a gain contingency model to evaluate potential tariff refunds, recognizing such amounts only when recovery is realized or realizable. The Company continues to monitor the recoverability of potential tariff refunds and the potential impact of any new or additional tariffs imposed under other legal authorities.   Our fiscal 2027 first quarter performance is discussed in greater detail below under “Results of Operations – Continuing Operations” and “Results of Operations – Discontinued Operations”.   Results of Operations – Continuing Operations   The following table sets forth the percentage relationship to net sales of certain items included in the condensed consolidated statements of income included in this report.       Thirteen Weeks Ended       May 3,     May 4,       2026     2025   Net sales     100 %     100 % Cost of sales     70.4       74.8   Gross profit     29.6       25.2   Selling and administrative expenses     26.6       25.0   Intangible asset amortization     0.8       0.9   Operating income / (loss)     2.3       (0.7 ) Other (expense) / income     (0.1 )     0.1   Interest expense     0.2       0.5   Income / (Loss) from continuing operations before income taxes     2.0       (1.1 ) Income tax expense / (benefit)     0.5       (0.2 ) Net income / (loss) from continuing operations     1.5       (0.9 )   22 Table of Contents   Fiscal 2027 First Quarter Compared to Fiscal 2026 First Quarter       Net Sales       Thirteen Weeks Ended       May 3, 2026         May 4, 2025                         % Net  Sales           % Net  Sales     $ Change     % Change   Hooker Branded   $ 35,329       50.9 %   $ 37,108       52.1 %   $ (1,779 )     -4.8 % Domestic Upholstery     28,355       40.8 %     28,913       40.6 %     (558 )     -1.9 % All Other     5,768       8.3 %     5,163       7.3 %     605       11.7 % Consolidated   $ 69,452       100 %   $ 71,184       100 %   $ (1,732 )     -2.4 %   Unit Volume   FY27 Q1 vs. FY26 Q1 Change     Average Selling Price (“ASP”)   FY27 Q1 vs. FY26 Q1 Change                     Hooker Branded     -20.0 %   Hooker Branded     15.9 % Domestic Upholstery     -6.2 %   Domestic Upholstery     4.0 % All Other     161.3 %   All Other     -52.2 % Consolidated     4.7 %   Consolidated     -7.6 %    Consolidated net sales decreased $1.7 million, or 2.4%, in the first quarter of fiscal 2027, driven primarily by lower net sales at Hooker Branded and, to a lesser extent, Domestic Upholstery. These decreases were partially offset by increased net sales in All Other, primarily due to significantly higher shipments during the quarter.   ◾ The Hooker Branded segment’s net sales decreased $1.8 million, or 4.8%, in the first quarter of fiscal 2027, driven by lower unit volume, partially offset by higher average selling prices resulting from price increases implemented to mitigate higher product costs and tariffs. Approximately 70% of the net sales decrease was attributable to the imported upholstery line, primarily due to inventory constraints, including lower in-stock positions, production delays, product mix transitions and softer retail demand. The casegoods line also experienced production delays earlier in the year, which improved by the end of the quarter.   ◾ The Domestic Upholstery segment’s net sales decreased $558,000, or 1.9%, in the first quarter of fiscal 2027. Results varied by division, with a 28% increase in private-label sales, supported by strong incoming orders that began in the prior fiscal year, and flat net sales in custom fabric upholstery. These results were more than offset by a 35% sales decrease in upscale leather furniture and a slight decrease in the outdoor furnishings business.   ◾ All Other net sales increased $605,000, or 11.7%, in the first quarter of fiscal 2027, primarily driven by a sales increase of more than 20% in the hospitality business due to higher shipments during the current quarter. Net sales in the project-based business vary based on the timing of shipments, which may cause fluctuations between periods.   23 Table of Contents       Gross Profit and Margin       Thirteen Weeks Ended       May 3, 2026         May 4, 2025                         % Net   Sales           % Net   Sales     $ Change     %Change   Hooker Branded   $ 13,918       39.4 %   $ 11,065       29.8 %   $ 2,853       25.8 % Domestic Upholstery     4,965       17.5 %     5,280       18.3 %     (315 )     -6.0 % All Other     1,709       29.6 %     1,590       30.8 %     119       7.5 % Consolidated   $ 20,592       29.6 %   $ 17,935       25.2 %   $ 2,657       14.8 %   Consolidated gross profit exceeded prior-year period by $2.7 million or 440 basis points, driven by a significant increase at Hooker Branded.     ◾ The Hooker Branded segment’s gross profit increased $2.9 million in the first quarter of fiscal 2027, and gross margin increased 960 basis points, despite a 4.8% decrease in net sales. The increases in gross profit and margin were primarily attributable to higher average selling prices. The increase was partially offset by warehousing and distribution expenses, which increased by 90 basis points compared to the prior-year quarter, primarily due to costs associated with the Company’s Vietnam warehouse, which was launched during the second quarter of last year and not present in the comparable prior-year period.     ◾ The Domestic Upholstery segment’s gross profit decreased $315,000, and gross margin decreased 80 basis points, in the first quarter of fiscal 2027. Gross profit and margin improved in three of the segment’s four divisions, primarily due to lower cost of sales. These improvements were more than offset by lower gross profit and margin in the upscale leather furniture division, driven by higher material costs, increased standard labor rates and lower absorption of indirect costs resulting from a significant decline in its net sales. Warehousing and distribution expenses increased $142,000, or 60 basis points, primarily due to higher overhead.     ◾ All Other gross profit increased $119,000 due to higher net sales in the hospitality business, while gross margin decreased 120 basis points due to higher freight-out expense.       Selling and Administrative Expenses (S&A)       Thirteen Weeks Ended       May 3, 2026         May 4, 2025                         % Net Sales           % Net Sales     $ Change     % Change   Hooker Branded   $ 12,711       36.0 %   $ 11,037       29.7 %   $ 1,674       15.2 % Domestic Upholstery     5,110       18.0 %     5,290       18.3 %     (180 )     -3.4 % All Other     648       11.2 %     1,439       27.9 %     (791 )     -55.0 % Consolidated   $ 18,469       26.6 %   $ 17,766       25.0 %   $ 703       4.0 %   Consolidated selling and administrative (“S&A”) expenses increased in absolute terms and as a percentage of net sales, driven by higher expenses in Hooker Branded and partially offset by decreases in Domestic Upholstery and All Other.   ◾ The Hooker Branded segment’s S&A expenses increased $1.7 million, or 630 basis points, compared to the prior-year first quarter. Higher compensation expense accounted for nearly 60% of the increase, primarily due to the planned retention and reassignment of certain former Home Meridian segment employees and, to a lesser extent, bonus accruals based on current year’s profitability. The remaining increase was primarily attributable to higher consulting and IT-related expenses to support the ERP system, as well as amortization expense related to the Company’s new website. These increases were partially offset by lower selling costs due to decreased net sales and lower severance expense compared to the prior-year period.   ◾ The Domestic Upholstery segment’s S&A expenses decreased slightly by $180,000, or 30 basis points, in the first quarter of fiscal 2027. The decrease was primarily driven by lower salary expenses resulting from previously implemented cost-reduction actions and, to a lesser extent, lower selling costs. These decreases were partially offset by bonus accruals based on current-year’s profitability, higher professional services expenses and other operating expenses, including sample costs, new product development costs and travel expenses.   24 Table of Contents     ◾ All Other S&A expenses decreased $791,000 due to lower operating expenses in the hospitality business following the consolidation of certain operations and the absence of S&A expense allocations from the former Home Meridian segment.       Intangible Asset Amortization       Thirteen Weeks Ended       May 3, 2026         May 4, 2025                         % Net Sales           % Net Sales     $ Change     % Change   Intangible asset amortization     545       0.8 %     667       0.9 %     -122       -18.3 %   Intangible asset amortization decreased compared to the prior-year first quarter, primarily due to the absence of amortization related to the Home Meridian trade name allocated to the hospitality business, which was reclassified to All Other, and the Sam Moore trade name amortization. See Note 9 to our condensed consolidated financial statements for additional information.       Operating Profit / (Loss) and Margin       Thirteen Weeks Ended       May 3, 2026         May 4, 2025                         % Net Sales           % Net Sales     $ Change     % Change   Hooker Branded   $ 1,206       3.4 %   $ 27       0.1 %   $ 1,179       4366.7 % Domestic Upholstery     (689 )     -2.4 %     (595 )     -2.1 %     (94 )     -15.8 % All Other     1,061       18.4 %     70       1.4 %     991       1415.7 %   Consolidated   $ 1,578       2.3 %   $ (498 )     -0.7 %   $ 2,076       416.9 %   In the first quarter of fiscal 2027, the Company recorded operating income of $1.6 million, which included operating income of $1.2 million in the Hooker Branded segment, driven by improved gross profit, and $1.1 million in All Other, driven by higher shipments in the hospitality business. These results were partially offset by an operating loss of $689,000 in the Domestic Upholstery segment, driven by its indoor residential furnishings businesses.       Income taxes       Thirteen Weeks Ended       May 3, 2026         May 4, 2025                         % Net Sales           % Net Sales     $ Change     % Change                                         Consolidated income tax expense / (benefit)   $ 326       0.5 %   $ (164 )     -0.2 %   $ 490       298.8 %                                                   Effective Tax Rate     23.5 %             21.1 %                           25 Table of Contents   We recorded income tax expense of $326,000 and tax benefit of $164,000 for the fiscal 2027 and 2026 first quarters from continuing operations. The effective tax rates for the fiscal 2027 and 2026 first quarters were 23.5% and 21.1%, respectively. The increase in the effective tax rate for the current fiscal quarter was primarily due to the relative impact of restricted stock compensation when compared to operating profits in the current year period and operating losses in the prior year period, as well as a change in valuation allowance recorded in the prior year period for a state loss carryforward.       Net Income / (Loss) from Continuing Operations       Thirteen Weeks Ended       May 3, 2026         May 4, 2025                         % Net Sales           % Net Sales     $ Change     % Change   Net income / (loss) from Continuing Operations   $ 1,061       1.5 %   $ (614 )     -0.9 %   $ 1,675       272.8 %                                                   Diluted earnings / (loss) from continuing operations per share   $ 0.10             $ (0.06 )                             Results of Operations – Discontinued Operations   The following table sets forth the percentage relationship to net sales of certain items included in the condensed consolidated statements of income included in this report.       For the       Thirteen Weeks Ended       May 3, 2026         May 4,  2025                         % Net Sales           % Net Sales     $ Change     % Change   Net sales   $ -                      $ 14,133       100.0 %   $ (14,133 )     -100.0 % Gross profit     -               1,283       9.1 %     (1,283 )     -100.0 % S&A expenses     -               4,102       29.0 %     (4,102 )     -100.0 % Intangible asset amortization     -               246       1.7 %     (246 )     -100.0 % Operating loss     -               (3,065 )     -21.7 %     3,065       -100.0 % Other income     -               28       0.2 %     (28 )     -100.0 % Loss from discontinued operations before income taxes     -               (3,037 )     -21.5 %     3,037       -100.0 % Income tax benefits     -               (599 )     -4.2 %     599       -100.0 % Net loss from discontinued operations     -               (2,438 )     -17.3 %     2,438       -100.0 %   Outlook   Consolidated incoming orders increased 8% in May compared to the prior-year period, while backlog was up 14% year-over-year. The improvement was primarily driven by Margaritaville orders, which had its initial shipment in May.   However, housing activity remains pressured, and recent consumer confidence readings continue to reflect a very cautious consumer environment. The Department of Commerce’s April advance monthly estimates showed retail sales for furniture and home furnishings stores declined 2.0% from March and 3.6% from the prior year. Additionally, we continue to monitor tariff developments. Based on currently available information, we expect certain tariffs to be levied on our imported goods later this fiscal year, which will replace, at least in part, the tariffs overturned by the U.S. Supreme Court earlier this year.   26 Table of Contents   Our outlook for the fiscal 2027 second quarter is cautious, given the current macro-economic pressures. While we do not expect meaningful near-term improvement in market conditions, our more efficient cost structure and streamlined portfolio should help us to deliver improved results versus the prior-year period, even if current conditions persist.   Our advantage is a sharper focus on our core businesses, a more disciplined operating model, and an organization aligned around profitable growth. While macroeconomic conditions remain challenging and tariff uncertainty persists, we believe the actions taken over the past year have positioned the Company to generate improved and more consistent earnings as market conditions improve.   Retailer commitments to Margaritaville products, galleries, and free-standing stores continue to exceed our expectations, with commitments to 100 in-store galleries and 10 free-standing retail stores to-date, as compared with about half those numbers when we reported in December. Meaningful shipments are expected to begin in the second half of fiscal 2027 and expected to build through the end of the current fiscal year and beyond. Combined with continued momentum in incoming orders across our core businesses, we believe we are well positioned to capitalize on opportunities as demand recovers.   Financial Condition, Liquidity and Capital Resources   Summary Cash Flow Information – Operating, Investing and Financing Activities       Thirteen Weeks Ended       May 3,     May 4,       2026     2025   Net cash provided by operating activities     14,409       19,216   Net cash provided by / (used in) investing activities     21       (843 ) Net cash used in financing activities     (4,924 )     (1,980 ) Net cash used in discontinued operations     -       (4,677 ) Net increase in cash and cash equivalents   $ 9,506     $ 11,716      During fiscal 2027 first quarter, cash increased by $9.5 million, from $1.1 million at the beginning of the period to $10.6 million at period-end. The increase in cash was primarily driven by strong cash provided by operating activities, partially offset by cash used in financing activities.   ● Cash provided by operating activities totaled $14.4 million for the fiscal 2027 first quarter, compared to $19.2 million for the prior-year first quarter. The decrease in operating cash flow was primarily driven by less favorable working capital changes in the current-year period, partially offset by higher net income from continuing operations and favorable non-cash adjustments.   o Trade receivables: Collections of trade accounts receivable provided cash inflows of $6.4 million and $12.8 million in the current-year and prior-year periods, respectively. The cash inflows in both periods were primarily due to collections of large, project-based receivables, with the higher cash inflow in the prior-year period reflecting higher receivables outstanding at the beginning of that period.   o Inventories: provided $3.7 million of cash inflows in the current year period, compared to $5.3 million in the prior-year period. The decrease in inventories continued to be a significant source of cash; however, the benefit was lower than in the prior-year period.   o Accrued salaries, wages and benefits: provided cash inflows of $0.9 million in the current-year period, compared to $0.2 million in the prior-year period, primarily due to the timing of payments.   o Prepaid expenses and other assets: used $0.4 million of cash in the current-year period, compared to $1.1 million in the prior-year period, primarily due to collections of miscellaneous receivables that partially offset other cash uses.   27 Table of Contents   Cash provided by investing activities totaled $21,000 for the current quarter, compared to cash used in investing activities of $0.8 million in the prior-year period. The change was primarily due to $0.5 million of proceeds received on life insurance policies in the current-year period and lower purchases of property and equipment.   Cash used in financing activities was $4.9 million compared to $2.0 million for the prior-year period. Financing cash flows included proceeds from the revolving credit facility of $3.2 million, which were more than offset by repayments of $6.7 million. The Company also paid cash dividends of $1.3 million, compared to $2.5 million in the prior-year period, and used $96,000 for the purchase and retirement of common stock.   Liquidity, Financial Resources and Capital Expenditures   Our sources of liquidity are:   ◾ available cash and cash equivalents, which are highly dependent on incoming order rates and our operating performance;   ◾ expected cash flow from operations;   ◾ available lines of credit; and   ◾ cash surrender value of Company-owned life insurance.   The most significant components of our working capital are inventory, accounts receivable and cash and cash equivalents reduced by accounts payable and accrued expenses.   Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for inventory, lease payments and payroll), quarterly dividend payments and capital expenditures related primarily to our showroom renovations and upgrading systems, buildings and equipment. The timing of our working capital needs can vary greatly depending on demand for and availability of raw materials and imported finished goods but is generally the greatest in mid-summer as a result of inventory build-up for the traditional fall selling season. Long-term cash requirements relate primarily to funding lease payments.   Loan Agreements and Revolving Credit Facility   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 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.   28 Table of Contents   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 May 3, 2026, unamortized loan costs of $444,000 were recorded in other assets on our condensed consolidated balance sheets.   As of May 3, 2026, there were no outstanding loans, other than $3.2 million face amount of letters of credit. We had $54.2 million of Availability based on the current Borrowing Base. There were no additional borrowings outstanding under the Amended and Restated Loan Agreement as of May 3, 2026.   Share Repurchase Authorization   In fiscal 2026, our Board of Directors authorized the repurchase of up to $5 million of the Company’s common shares. The authorization did not obligate us to acquire a specific number of shares during any period and did not have an expiration date, but it could be modified, suspended, or discontinued at any time at the discretion of our Board of Directors. Repurchases could be made from time to time in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, and subject to our cash requirements for other purposes, compliance with the covenants under the Amended and Restated Loan Agreement and other factors we deem relevant.   During fiscal 2027 first quarter, we used approximately $96,000 of the authorization to purchase 7,615 of our common shares (at an average price of $12.53 per share), with approximately $4.9 million remaining available for future purchases under the authorization.   Capital Expenditures   We expect to spend approximately $2.5 million in capital expenditures in the remainder of fiscal 2027 to maintain and enhance our operating systems and facilities.   Dividends   On June 9, 2026, our board of directors declared a quarterly cash dividend of $0.115 per share which will be paid on June 30, 2026, to shareholders of record at June 19, 2026.   29 Table of Contents   Critical Accounting Policies   There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2026 Annual Report.