Hooker Furniture Corporation (NASDAQ:HOFT) Q1 2020 Earnings Conference Call June 12, 2019 3:00 PM ET
Hooker Furniture Corporation（纳斯达克股票代码：[HOFT]）2020年第一季度收益电话会议2019年6月12日美国东部时间下午3:00
Paul Huckfeldt - VP, Finance and CFO
Paul Toms - Chairman and CEO
Lee Boone - Co-President of Home Meridian Segment
Michael Delgatti - President of Hooker Domestic Upholstery and Emerging Channels
Doug Townsend - Co-President of Home Meridian Segment
Jeremy Hoff - President of Hooker Branded Segment
Anne Jacobson - Chief Administrative Officer
- Paul Huckfeldt - 财务和首席财务官副总裁
- Paul Toms - 董事长兼首席执行官
- Lee Boone - Home Meridian Segment的联席总裁
- Michael Delgatti - Hooker国内室内装潢和新兴渠道总裁
- Doug Townsend - Home Meridian Segment的联席总裁
- 杰里米霍夫 - 胡克品牌部门总裁
- Anne Jacobson - 首席行政官
Anthony Lebiedzinski - Sidoti & Company
- Anthony Lebiedzinski - Sidoti＆Company
Greetings, ladies and gentlemen, and welcome to the Hooker Furniture Quarterly Investor Conference Call reporting it's Operating Results for the Fiscal 2020 First Quarter and Year. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded.
It is now my pleasure to introduce your host, Paul Huckfeldt, Vice President, Finance, and Chief Financial Officer for Hooker Furniture Corporation.
问候，女士们，先生们，欢迎参加胡克家具季度投资者电话会议，报告其2020财年第一季度和年度的经营业绩。 此时，所有参与者都处于只听模式。 一个简短的问答环节将在正式的演讲之后进行。 [操作员说明]提醒一下，正在录制此电话会议。
现在，我很高兴向您介绍Hooker Furniture Corporation的主持人Paul Huckfeldt，财务副总裁兼首席财务官。
Thank you, Ashley. Good afternoon, and welcome to our quarterly conference call to review our financial results for the fiscal 2020 first quarter, which ended May 5, 2019. We certainly appreciate your participation this afternoon. Paul Toms, our Chairman and CEO; and Lee Boone, Co-President of our Home Meridian division, will join me for our prepared remarks. For the question-and-answer portion of the call, several other of our business units heads will be available to take questions, including Michael Delgatti, President of our Hooker Domestic Upholstery and Emerging Channels; Home Meridian Co-President, Doug Townsend; Jeremy Hoff, President of our Hooker Branded Segment; and Anne Jacobson, our Chief Administrative Officer.
During our call, we may make forward-looking statements, which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our press release and SEC filing announcing our fiscal 2020 first quarter results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call.
This morning, we reported consolidated net sales of $135.5 million and net income of $2 million or $0.17 per diluted share for our fiscal 2020 first quarter ended May 5, 2019. Compared to last year, our net sales decreased 5.2% or $7.4 million, and net income decreased 72% or $5.2 million. Earnings per diluted share decreased from $0.61 a year ago.
Paul Toms will comments on our fiscal 2020 first quarter results.
谢谢，阿什利。下午好，欢迎参加我们的季度电话会议，回顾我们在2019年5月5日结束的2020财年第一季度的财务业绩。我们非常感谢您今天下午的参与。 Paul Toms，我们的董事长兼首席执行官
Thank you, Paul, and good afternoon everyone. Our disappointing earnings performance in the first quarter was driven primarily by several cost-related issues in our Home Meridian HMI Segment. Reduced demand and soft retail conditions across the home furnishings industry drove the consolidated 5% sales dip, which also weighed on our earnings for the quarter. Given the sales decline and the impact of a 10% tariff on furniture and furniture component parts imported from China, our Hooker Branded Segment and All Other performed reasonably well for the quarter. So, we have strategies for improvement in all of our businesses.
The cost-related issues at Home Meridian included a large quality chargeback, higher freight, and demurrage costs as well as costs associated with our inventories. In addition, Home Meridian's margins were more affected by the 10% tariff on imports from China and our other business units due to the nature of HMI's customer base as many of its customers had large orders already in the pipeline at lower pre-tariff prices. However, increased pricing and resourcing strategies are in place. Our planned shift of production out of China to non-tariff countries is mostly on schedule. In fact, the shift is accelerating during the current quarter, and is expected to be mostly complete by the end of the fiscal third quarter.
As we reported in our fourth quarter earnings release in mid-April, orders and backlogs were down in February and March, and continue to be down throughout April. Reduced demand negatively impacted sales across all our business units and was experienced consistently across the industry according to the reporting of most public furniture companies and what we've heard from conversations with our retail customers. We've been encouraged however by the mid single-digit uptick in orders during the fiscal May period in our Hooker Branded Segment. We believe Home Meridian's order rates remain below prior year due to many of their larger customers still delaying receipt of shipments and placement of reorders in response to the softer retail environment faced in the early part of the year. We expect to see Home Meridian orders start to improve during the fiscal 2020 second quarter, and for our second-half performance to be much better for this segment.
Due primarily to loss of margin in the HMI Segment, gross profit and operating income both decreased approximately $6.5 million in the quarter. The decreased operating profit in the Hooker Branded Segment was mainly attributable to lower net sales. We're addressing all these challenges with strategies to improve profitability in each of our businesses. While we do expect the challenges to persist throughout the summer, we're more optimistic about the fall selling season. We believe that many of these issues negatively impacting profitability at Home Meridian are unlikely to recur. These includes the large quality-related chargeback, which was confined to a single customer and limited product, demurrage costs, excess freight costs at year-end, delayed implementation of tariff-prompted price increases, and postponed shipments to a few large retailers.
谢谢你，保罗，大家下午好。我们在第一季度令人失望的盈利表现主要是由我们的Home Meridian HMI Segment中的几个与成本相关的问题所致。家居用品行业的需求减少和零售环境疲软推动了5％的综合销售下滑，这也打压了我们本季度的盈利。鉴于销售下滑以及对从中国进口的家具和家具零部件征收10％关税的影响，我们的胡克品牌部门和所有其他部门在本季度表现相当不错。因此，我们在所有业务方面都有改进策略。
Home Meridian的成本相关问题包括大量优质退款，更高的运费和滞期费以及与我们的库存相关的成本。此外，由于HMI客户群的性质，Home Meridian的利润受到来自中国和我们其他业务部门的进口10％关税的影响更大，因为许多客户已经在较低的关税前价格中出现大量订单。但是，增加了定价和资源配置策略。我们计划将生产从中国转移到非关税国家，这主要是按计划进行的。事实上，这一转变在本季度加速，预计到第三季度末大部分将完成。
正如我们在4月中旬发布的第四季度财报中所报告的那样，订单和积压在2月和3月份都在下降，并且在4月份继续下降。根据大多数公共家具公司的报告以及我们与零售客户的谈话所听到的消息，需求减少对我们所有业务部门的销售产生了负面影响，并且在整个行业中始终如一。然而，在我们的Hooker品牌细分市场中，5月财政期间订单的中位数单位数增长令我们感到鼓舞。我们认为Home Meridian的订单率仍然低于去年，原因是他们的许多大客户仍然推迟收到货物和放置重新订单以应对今年早些时候面临的疲软的零售环境。我们预计，在2020财年第二季度，Home Meridian的订单开始有所改善，而且下半年的业绩对于这一细分市场要好得多。
由于HMI部门的利润率下降，本季度毛利润和营业收入均下降约650万美元。 Hooker品牌分部的营业利润下降主要是由于净销售额下降所致。我们正在通过提高每项业务盈利能力的策略来应对所有这些挑战。虽然我们确实预计整个夏季都会遇到挑战，但我们对秋季销售季节更为乐观。我们认为，这些对Home Meridian盈利能力产生负面影响的问题不太可能再次发生。这些包括与质量相关的大量退款，仅限于单个客户和有限的产品，滞期费，年底超额运费，延迟实施关税促销价格上涨，以及推迟向少数大型零售商发货。
While the lion share of our operating units are in the residential furniture industry, it's noteworthy that both of our non-residential business units, Samuel Lawrence Hospitality and H Contract reported significant sales increases during the quarter. SLH sales more than doubled, and ended the quarter with a backlog nearly 70% higher than during the same period last year, H Contract had an approximate 40% sales increase along with improved gross margins and operating profits. Other business units that performed well in the quarter included Hooker Upholstery, which had a 3% sales increase and incoming orders 5% higher than a year ago. In the Home Meridian Segment, Accentrics Home, which is dedicated to emerging channels such as e-commerce grew sales by nearly 20%.
Turning now to the economy as a whole, the most significant macroeconomic development so far this year has been the increased tariff imposed on furniture and furniture components imported from China. Finished furniture and component parts shipped from China after May 10, 2019 became subject to an additional 15% tariff. The additional amount brings the total tariff on furniture imports from China to 25%. As of February 2019, Hooker Furniture Corporation imported over 40% of our product line from China. By segment, our strategies to address the increased tariffs include at Home Meridian the company's PRI value priced upholstery division is resourcing production away from China projecting that 90% of production will be in non-tariff countries by the fall. Other divisions are moving production in non-tariff countries to a lesser degree. Home Meridian is also receiving vendor price concessions from many Chinese producers and raising prices to customers where possible.
Hooker Casegoods and Hooker Upholstery are passing on most of the increased tariff costs beyond the amount offset by vendor concessions in the form of a surcharge that can be reversed if and when tariffs are dropped or reduced. Hooker Upholstery is moving a significant portion of their production outside of China during the coming six months. And Hooker Casegoods, our long-term relationship and the specialized craftsmanship of the company's main Chinese vendor makes moving entirely away from China a less desirable action. However, tariffs will be priced into all new items, and the vendor is opening a factory in Vietnam, where some production can be shifted. The company is continuing to develop production in alternative countries, and is receiving vendor price concessions from Chinese producers. Domestically-produced upholstery divisions are included in all other are enacting selected price increases and receiving vendor concessions to help mitigate the impact of tariffs on component parts imported from China.
Taking a closer look at each of our segments, I'll begin with the Hooker Branded Segment. As mentioned, given the sales decline and the business disruptions from the initial 10% tariff, this segment performed well. Our net sales in this segment were down $3.2 million or 7.4%. This segment was still highly profitable with 13% operating margin during the quarter, and upper single-digit sales increase in Hooker Casegoods was partially offset by Hooker Upholstery's 3% sales increase.
虽然我们经营单位的大部分份额来自住宅家具行业，但值得注意的是，我们的非住宅业务部门Samuel Lawrence Hospitality和H Contract均报告了本季度的销售额大幅增长。 SLH的销售额增长了一倍以上，并且在本季度结束时积压了比去年同期高出近70％的水平，H Contract的销售增长率约为40％，毛利率和营业利润也有所改善。其他在本季度表现良好的业务部门包括Hooker Upholstery，其销售额增长3％，新订单比一年前增加5％。在Home Meridian Segment，致力于电子商务等新兴渠道的Accentrics Home的销售额增长了近20％。
现在谈谈整个经济，今年迄今为止最重要的宏观经济发展是对从中国进口的家具和家具部件征收的关税增加。 2019年5月10日之后从中国发运的成品家具和零部件将额外征收15％的关税。增加的金额使从中国进口的家具的总关税达到25％。截至2019年2月，胡克家具公司从中国进口了40％以上的产品线。按细分市场，我们解决增加关税的策略包括Home Meridian公司的PRI价值定价室内装饰部门正在从中国资源生产，预计90％的产量将在秋季到达非关税国家。其他部门正在将非关税国家的生产转移到较小程度。 Home Meridian还接受了许多中国生产商的供应商价格优惠，并在可能的情况下向客户提高价格。
Hooker Casegoods和Hooker Upholstery将大部分增加的关税成本转嫁到超出供应商特许权的金额之上，以附加费的形式抵消，如果关税减少或减少，可以撤销。 Hooker Upholstery在未来六个月内将其大部分产品转移到中国境外。和Hooker Casegoods，我们的长期合作关系以及该公司主要中国供应商的专业工艺使得完全远离中国的行动变得不那么理想。然而，关税将被计入所有新项目，供应商正在越南开设一家工厂，在那里可以转移一些生产。该公司正在继续在替代国家开发生产，并正在接受中国生产商的供应商价格优惠。国内生产的室内装潢部门包含在所有其他部门中，其中包括选定的价格上涨和接受供应商特许权，以帮助减轻关税对从中国进口的零部件的影响。
仔细看看我们的每个细分，我将从Hooker品牌细分开始。如上所述，鉴于销售额下降以及最初的10％关税造成的业务中断，这一细分市场表现良好。我们在该分部的净销售额下降了320万美元或7.4％。该部门仍然高利润，本季度营业利润率为13％，Hooker Casegoods的单位数销售额增长部分被Hooker Upholstery 3％的销售增长所抵消。
All Other, which includes domestically-produced upholstery divisions, Bradington-Young, Shenandoah, and Sam Moore, along with H Contract, reported a net sales decrease of $1.2 million, or 4.2%, from $29.5 million in last year's first quarter to $28.3 million in the current first quarter. Lower sales were driven by reduced shipments in our domestic upholstery manufacturing divisions, partially offset by continued growth at H Contract, which specializes in furnishings for senior living and retirement communities. Profitability performance in the segment was solid with the segment reporting and operating income margin of approximately 10%. A new Sam Moore Division President joined the company shortly after the end of the quarter, and will focus on growing the top line through helping Sam Moore transition into a more robust full line upholstery resource with a broader selection and better selling programs.
At this point, I'd like to turn the call over to Lee Boone to give more detail on the HMI segment this quarter.
All Other，包括国内生产的室内装潢部门，Bradington-Young，Shenandoah和Sam Moore，以及H Contract，报告净销售额减少120万美元，或4.2％，从去年第一季度的2950万美元降至2830万美元在当前的第一季度。我们国内室内装潢制造部门的出货量下降推动销售额下降，部分被H Contract的持续增长所抵消，H Contract专门为高级生活和退休社区提供家具。该分部的盈利表现稳健，分部报告及营业收入利润率约为10％。新的Sam Moore分部总裁在本季度结束后不久加入公司，并将通过帮助Sam Moore过渡到更强大的全线室内装潢资源以及更广泛的选择和更好的销售计划来专注于增加顶线。
Thanks, Paul. Home Meridian sales decreased $3 million or 4.2% compared to last year's first quarter, and we reported a $5 million operating loss in the quarter. Higher than expected non-recurring quality-related charges in the quarter negatively impacted sales by $2.1 million or 3%, and accounted for about 40% of the segment's quarterly operating loss. Home Meridian's profitability was also negatively impacted by import tariffs that were not fully recovered and selling prices; excessive freight costs and business disruptions from the resourcing of production away from China. Diverged and per diem cost due to a port congestion and delays by us and some customers on receipt of inventory also contributed to high cost of goods sold for the quarter.
Management is implementing numerous countermeasures to improve top line and bottom line results. Top line initiatives include new product and licensing initiatives with mega accounts, as well as a new container mixing warehouse in Vietnam, operational this month, which will enable retailers to mix product from multiple factories on the individual shipping containers.
Countermeasures to improve profitability include sourcing moves away from China and underperforming factories, pricing improvements with select retail customers, elimination of certain low margin products, and focused spending reductions. Unfortunately, the recently increased tariff rate of 25% on China-sourced goods will continue to impact results into Q2, hopefully to a lesser degree, as we continue to move production to other countries. Our countermeasures to mitigate tariffs are well underway. We have adjusted pricing on all goods remaining in China to make up margin losses, and we're making good progress resourcing production to Vietnam and Malaysia. Approximately 50% of our PRI upholstery production will be produced in Vietnam by the end of Q2, and roughly 90% is scheduled to move by this fall. Not only will these move solidify our new upholstery base outside China, they will deliver higher margins on the transferred products.
In addition to motion upholstery, we are shifting production of other merchandise categories away from China, including hospitality furnishings, kitchen cabinets, accident case goods, and upholstered headboards. Last year, 35% of Home Meridian production came from China. By year-end, we expect that number to be less than 15%. Sluggish furniture retail conditions industry-wide in Q1 resulted in reduced orders, customers requested shipping delays, and corresponding lower sales. The biggest shortfall were in our clubs business where we did not receive a reorder of a major upholstery purchase from last year.
In addition, a few of our largest retailers experienced significantly lower sales in Q1 was combined with long supply chain lead times, and the recent tariff increase caused them to delay and cancel orders in Q1 as well as Q2. Q1 results were also negatively impacted across all business units by unusually high freight and container expenses resulting from logistical backups, retailer warehouses, and Home Meridian stateside warehouses. These issues are costly, but temporary problems and we're working with each individual customer and warehouse location for quick resolution. We expect significant improvements in Q2 and beyond. The combination of all these issues occurring on top of lower sales volume in Q1 lead the operating result for the quarter -- the operating loss for the quarter.
谢谢，保罗。与去年第一季度相比，Home Meridian的销售额减少了300万美元或4.2％，我们报告该季度的运营亏损为500万美元。本季度高于预期的非经常性质量相关费用对销售额产生了210万美元或3％的负面影响，占该部门季度经营亏损的约40％。 Home Meridian的盈利能力也受到未完全收回的进口关税和销售价格的负面影响
In addition to the remedial actions outlined above, Home Meridian is conducting a thorough profitability review to improve feature results. Additional margin improvements will come from re-pricing merchandise of certain mega accounts, the elimination of low margin products, and targeted spending reductions across the company. On a more positive note, Home Meridian launched a new mass channel division in Q1 that is dedicated to developing business with mass retailers. The core product line of the new mass merchant's division is ready to assemble our RTA furniture, a new category for HMI, representing significant incremental sales and profit growth opportunity. Two experienced leaders have been hired from the industry, who will develop the business this year, for shipments that are targeted for Q4.
Fortunately, we are beginning to see some strengthening in our incoming orders as strong Memorial Day sales delivered better results. We are well-positioned to benefit from improving retail conditions as they develop. We've not lost for space at retail, and in fact stand to gain placements with many of our largest customers with a wave of over 30 new product programs that are scheduled for shipment in Q2 and Q3. Despite the poor performance in Q1 and the remedial actions underway, Home Meridian management is convinced our overall strategy is sound, and will deliver long-term results as well as enhance shareholder value.
At this time, I'd like to turn the call over to Paul Huckfeldt to elaborate further on our quarterly results.
除了上述补救措施外，Home Meridian还进行了彻底的盈利性审查，以改进功能结果。额外的保证金改善将来自某些大型账户的商品重新定价，低利润产品的淘汰以及整个公司的目标支出减少。从积极的角度来看，Home Meridian在第一季度推出了一个新的大众渠道部门，致力于与大众零售商开展业务。新大众商业部门的核心产品线已准备好组装我们的RTA家具，这是一个新的HMI类别，代表着显着的增量销售和利润增长机会。该行业聘请了两位经验丰富的领导者，他们将在今年开展业务，针对第四季度的出货量。
Thank you, Lee. Consolidated average selling prices increased 4.9%, mostly due to favorable product from customer base, but that was not sufficient to offset the unit volume decrease of 8.7%, which resulted from decreased order volumes in both our reporting segments and in all other.
Unit volumes are down high single-digit -- high single to low double digits across all of our segments. Consolidated gross profit decreased $6.4 million to $25.5 million for the fiscal 2020 first quarter, and decreased from 22.4% to 18.8% as a percent of net sales. Hooker branded gross profit decreased both in absolute terms and as a percent of net sales due to lower Hooker case good sales, and to a lesser extent increased product costs, partially offset by the increased sales and higher gross margin in our Hooker upholstery division, which is benefiting from well-placed product introductions last year.
Gross profit significantly declined in absolute terms and as a percentage of net sales in the Home Meridian segment. As we've already discussed, margin was negatively impacted by quality chargebacks, un-recovered tariffs and freight charges, and some lower margin sales programs that we've been working to improve, as well as increased warehousing and distribution costs. Gross margin decreased slightly in absolute terms, but increased as a percent of net sales in all other, primarily due to increased sales and profitability in each contract and moderately lower material costs in our domestic upholstery units, partially offset by higher direct labor and overhead as a percent of sales, which is attributable to the lower volumes.
Consolidated selling general and administrative expenses stayed essentially flat, but increased as a percentage of sales due to the lower sales in the quarter. Higher employee compensation and benefits costs were offset by lower selling expenses on the lower sales volume. Recognition of a deferred gain of about 275,000 related to the sale of a former distribution facility partially offset the absence of $1 million gain on company-owned life insurance, which was recorded in this quarter last year. For these reasons, operating income from fiscal 2020 first quarter decreased $6.5 million to $2.9 million. Operating margin decreased from 6.6% to 2.1%.
On the balance sheet, our cash balance increased $16.8 million from the fiscal year 2019 year-end to $28.3 million. We generated $20.3 million in cash from operating activities, much of it from the collection of accounts receivable that was outstanding at the end of the fiscal fourth quarter, and $1.4 million in proceeds from the sale of that former distribution facility, which we had owner-financed.
I should also note that we adopted ASC 842, the new leased accounting standard this quarter, which put about $44 million of new assets and a similar liability on our balance sheets. At the end of the fiscal 2020 first quarter, we had access to $27.7 million on our revolving line of credit and $24.5 million of cash surrender value of our company-owned life insurance, which gives us considerable financial flexibility.
我们所有细分市场的单位数量都是高位单位数 - 高单位数到低位数。 2020财年第一季度综合毛利减少640万美元至2550万美元，占净销售额的百分比从22.4％下降至18.8％。 Hooker品牌的毛利润在绝对值和净销售额的百分比均有所下降，原因是Hooker案例销售额下降，以及产品成本增加的程度较小，部分被Hooker室内装潢部门的销售增加和毛利率提高所抵消。去年受益于良好的产品推出。
Now I'll turn the call back to Paul Toms for some closing comments and his outlook.
Thanks, Paul. While we were glad to see mid-single digit improvement in orders in the Hooker branded segments so far in the second quarter, the order activity is inconsistent across divisions. Overall, the residential furniture industry is experiencing deflated demand and somewhat sluggish to retail conditions. We expect the newly-enacted 25% tariff on Chinese imports to cause some additional business disruptions in the industry throughout the next several months. We're more optimistic about the second-half of the year and expect demand to increase to normal or above-average levels beginning around Labor Day, and continuing into the fall, which is traditionally the strongest season of the year for furniture sales.
We also expect that some of our large retail customers will have completed their rebalancing of inventories and be in a better position to receive new products. Both short-term and long-term, we're addressing all of our challenges, and almost every division, we have active strategies to expand our business beyond the current product line and customer base. We remain confident in our business model and strategies, and in our strategic execution, and are making the necessary investments both capital and human to perform at a very high level.
This ends the formal part of our discussion, and at this time, I'll turn the call back over to our operator Ashley for questions. Thank you.
Thank you [Operator Instructions]. And our first question comes from the line of Anthony Lebiedzinski with Sidoti & Company. Your line is open.
谢谢[操作员说明]。 我们的第一个问题来自Anthony Lebiedzinski与Sidoti＆Company的合作。 你的线是开放的。
Yes, good afternoon, and thank you for taking the questions. So I wanted to get just a better understanding as far as HMI, the larger loss, just in terms of what was kind of non-recurring versus recurring, I know you guys gave some details as far as the quality-related chargeback of 2.1 million, just wanted to get a better sense of the magnitude of cost related to the higher freight and demurrage cost as well as the higher costs related to inventories?
是的，下午好，谢谢你提出问题。 所以我希望能够更好地理解人机界面，更大的损失，只是在非经常性和反复出现的情况下，我知道你们提供了一些细节，就质量相关的210万的退款而言 ，只是想更好地了解与较高的运费和滞期费相关的成本幅度以及与库存相关的较高成本？
Freight costs -- Anthony, this is Doug Townsend, the freight cost related to the return from the fourth quarter filled up the warehouses, and we had to get temporary warehouses and then we have these extra per diem [ph] and demurrage charges that went through Q1 as well, and we'll have a little bit in Q2 as well, but then those will go away, and the short-term warehouses will get out of in Q3 and Q4. So, that will be with us for a little while. The return charge was a one-time event, and the quality charge was a one-time event that we don't expect to happen again.
运费 - 安东尼，这是道格汤森，与第四季度的回报相关的运费与仓库相关，而我们不得不获得临时仓库，然后我们有额外的每日津贴和滞期费 通过第一季度，我们在第二季度也会有一点点，但随后这些将会消失，短期仓库将在第三季度和第四季度退出。 所以，这将与我们在一段时间内。 退货费用是一次性事件，质量费用是我们预计不会再发生的一次性事件。
Got it. Okay, all right. And then, so back in the fourth quarter, there was also a product quality issue from a agent vendor, so is this related to that, or is this just a spillover from the fourth quarter, or this is a separate issue?
正如我们所说，我们有点 - 在前7个星期我们上升了1％，进入了真正的大周。 第9周是复活节，前一年，很多春假，它推迟了整整3周到第11,12周。当我们看一下 - 你必须看看春假复活节时间和相关的天气 在那段时间内。 显然，我们想要一个多雨的春假。 两周的结合，我们跟踪了大约150 bps的逆风。 所以，它在本季度的两者之间。...
The freight charges and the extra warehouses are related to that return. We actually didn't get the returns until Q1, and so that's when the freight charges came, but we had a crew for it [ph] and talked about it in Q4.
Got it. Okay. All right, thank you for that. That's helpful. Okay. And then, so obviously, you continue to move product sourcing away from China. You gave us some numbers for some of the segments. So, in totality, by the end of the fiscal year, where would you expect your percentage -- as far as your penetration from China, whether it's percentage of sales or percentage of import, so where do you think they will be by the end of the fiscal year?
得到它了。 好的。 好的，谢谢你。 这很有帮助。 好的。 然后，很明显，您继续将产品采购从中国转移出去。 你给了我们一些段的数字。 那么，总的来说，到本财政年度结束时，你会期望你的百分比 - 就你从中国的渗透率来说，无论是销售额的百分比还是进口的百分比，你认为它们到底会在哪里？ 财政年度？
This is Lee, Anthony. By year-end, we anticipate having a 90% to 95% of the China production moved out of China that we intend to move, not 100% will be moved out, because there're not appropriate places to move a small part of it, but 90% to 95% will be moved by the end of this year…
这是李，安东尼。 截至年底，我们预计将有90％至95％的中国产品迁出我们打算迁出的中国，而不是100％将迁出，因为没有合适的地方可以搬迁一小部分 ，但到今年年底将移动90％至95％......
Right, but is that specifically for Home Meridian, or is that for the company as a whole?
That's for Home Meridian.
Home Meridian, but my question was to just in terms of Hooker Furniture Corporation as a whole?
If our reliance on China was 40% at the end of last year, I would think by the end of this year it would be closer to 20%.
Got it. Okay, that's very helpful. Okay…
得到它了。 好的，这非常有帮助。 好的…
I do think we have strategies in place between concessions by vendors and price increases to mitigate most of the impact of the product at 25% tariff on the products that remain in China.
Got it, okay. Thank you for that. And also, as far as your inventories, where would you expect those to be at the end of the fiscal year?
知道了，好的。 谢谢你。 而且，就您的库存而言，您认为那些会在财政年度结束时会在哪里？
Yes, I don't know that was modeled at, Anthony, but it's probably not a lot different than where they are now. Part of our business that's supported by inventories, specifically e-commerce for Home Meridian and for Hooker, and on the Hooker side interior design business and a lot of our smaller foundational accounts, that business I believe will grow in total, and so, we'll need more inventory to continue to support into the high level. At the same time, we probably got $10 million or $12 million of more inventory than we need right now, half related to the return from the fourth quarter, and the other half just inventory build as business slowed, but we had orders placed based on expectation of higher demand. So, I think you kind of -- probably not a lot different inventory level than where we are now, but it will be composed differently and hopefully appropriate for the demand at that time.
是的，我不知道这是模仿安东尼，但它可能与他们现在的情况没有多大差别。 我们的部分业务得到了库存的支持，特别是Home Meridian和Hooker的电子商务，以及Hooker方面的室内设计业务和许多较小的基础账户，我认为这项业务总体上会增长，因此，我们 需要更多库存才能继续支持高水平。 与此同时，我们可能获得了超过现在需要的1000万美元或1200万美元的库存，一半与第四季度的回报相关，而另一半只是随着业务放缓而进行的库存增加，但我们的订单基于 期望更高的需求。 所以，我认为你有点 - 可能与我们现在的库存水平没有太大不同，但它的组成方式会有所不同，并且有希望适合当时的需求。
Okay, thank you for that color. And getting back to HMI, so you mentioned there are some top line initiatives with mega accounts, is that -- was that the reference to the RTA, or is there anything else that's part of the top line initiatives?
好的，谢谢你的那种颜色。 回到人机界面，所以你提到有一些关于大型账户的顶线计划，是 - 是RTA的参考，还是还有其他任何顶级计划的一部分？
So, the RTA initiative is primarily a fiscal year 2021 start. We might get shipments in Q4 this year, but it won't help this year a lot. The top line initiatives are more sales programs of existing product categories with our mega accounts and our newer licensing initiatives that will be launching at the October market.
因此，RTA计划主要是2021财政年度开始。 今年第四季度我们可能会出货，但今年不会有太大帮助。 顶线计划是现有产品类别的更多销售计划，包括我们的大型账户以及将在10月份推出的更新的许可计划。
Got it. Okay, so thank you for that. And you also talked about your non-residential sales doing well. So what percentage of your total sales is that now?
得到它了。 好的，谢谢你。 而且你还谈到你的非住宅销售情况良好。 那么现在你的总销售额的百分比是多少？
70% of HMI sales [indiscernible], and that's probably $40 million combined between SLH, so 7%, something like that.
Got it. Okay. Okay, got it. And then, lastly, do you have any updated thoughts on your capital allocation plans, just overall how are you thinking about cash flow priorities now?
得到它了。 好的。 好，知道了。 然后，最后，您对资本分配计划有任何更新的想法，总体而言，您现在如何考虑现金流优先级？
I think right now we're going to just -- short-term we're going to just manage the business. I think with the uncertainty about tariffs I think we need some cushion and cash. I think that always served us well in the past, so that we don't have to make a decision based on generating cash. So I think in the short-term, our capital allocation is steady as she goes. We still believe over the long-term that strategic acquisition is the best use of cash going forward to continue to diversify the company and build on the niches where we're underrepresented. We're continuing to pay the dividend. Couple weeks ago we declared the same $0.15 dividend that we declared previously, and expect to continue that. And I think the goal right now is to conserve capital and see how the rest of this year develops, and then also preferably look to strategic acquisitions once we get things stabilized.
我认为现在我们只是 - 短期我们将只管理业务。 我认为，由于关税的不确定性，我认为我们需要一些缓冲和现金。 我认为这在过去总能很好地为我们服务，因此我们不必在产生现金的基础上做出决定。 所以我认为从短期来看，我们的资本配置是稳定的。 从长远来看，我们仍然认为，战略性收购是对现金的最佳利用，以继续使公司多元化，并建立在我们代表性不足的领域。 我们继续支付股息。 几周前，我们宣布了我们之前宣布的相同的0.15美元股息，并期望继续这样做。 而且我认为现在的目标是保护资本，看看今年剩下的时间如何发展，然后一旦我们把事情稳定下来，最好还是寻求战略性收购。
Got it, okay. So, would you need the tariff issues to go away before you would consider making any acquisitions?
I don't think "Go away," but I think just get them under control. Paul?
Got it. Okay. All right, well, thank you so much.
得到它了。 好的。 好的，好的，非常感谢你。
Thank you. [Operator Instructions] And our next question comes from the line of Todd Lichtenberger [ph] with [indiscernible] Fund. Your line is now open.
谢谢。 [操作员说明]我们的下一个问题来自Todd Lichtenberger [ph]和[音频不清晰]基金会。 你的生产线现已开放。
Yes, thank you, gentlemen. Just real quick, just from a broader context, you put it in the press release and you kind of mentioned it in your comments, but you made the point that you expect demand to increase to normal or above average levels beginning around Labor Day. Can you give a little bit more color on that, like what's -- why that expectation, given the recent softness, what -- kind of what leads you to believe that?
是的，谢谢你们，先生们。 只是真实快速，只是从更广泛的背景，你把它放在新闻稿中，你在评论中提到它，但你指出你期望需求从劳动节开始增加到正常或高于平均水平。 你可以给它一点颜色，就像那个 - 为什么期望，考虑到最近的柔软，是什么 - 让你相信的东西？
Okay. This is Paul Toms, and I think there're several things. One is we have seen business improve in May and especially late-May around Memorial Day over what we were experienced in most of the first quarter. Hasn't been across all of our divisions, but it has been across multiple divisions. I think there has been a lot of uncertainty in the first-half of the year between just the tariffs, government shutdown, a very volatile stock market at the end of last year in December. We feel like those are behind us. Yes, we got the additional tariffs, but I think we have strategies to mitigate those as to hopefully other people, and I think as we get through the summer, that housing looks better right now with interest rates declining, home prices moderating, inventories increasing, it seems like we got improvement in the housing sector, and I just -- I can't pinpoint one specific thing that caused the downturn in business earlier this year, but I believe that generally things are better and we have seen as I said recently.
I think the large customers -- we're seeing more of an impact on our business than what our large customers are seeing, but they entered this with more inventory than they needed. So the first thing they've done is put the brakes on and say, "I don't need the product that I ordered from you, and maybe ready to shift or already on the order." So, we're kind of having to hold off on delivering those and that's also delayed their placing of reorders on merchandise they currently run as well as some of the new orders of products -- new products that they would order, but I feel like that as their business improves and I think it has modestly over Memorial Day I think we'll start to see them take inventory again -- since they've got their inventories more correctly sized. And then I guess lastly, the fall is always the strongest selling season, kicked off by Labor Day. So I expect that to be the case again this year.
好的。这是Paul Toms，我认为有几件事。一个是我们看到5月份的业务有所改善，特别是在阵亡将士纪念日的5月下旬，我们在第一季度的大部分时间里都有所改善。没有涉及我们所有的部门，但它已跨越多个部门。我认为，今年上半年关税，政府关闭，去年12月底股市波动剧烈，之间存在很大的不确定性。我们觉得那些人已经过去了。是的，我们得到了额外的关税，但我认为我们有策略来缓解那些希望其他人的问题，而且我认为在我们度过夏天的时候，住房看起来更好，利率下降，房价放缓，库存增加，看起来我们的住房部门有所改善，我只是 - 我无法确定导致今年早些时候业务下滑的具体因素，但我相信一般事情都会好转，我们已经看到了我所说的最近。
我认为大客户 - 我们看到的对我们的业务的影响比我们的大客户看到的更多，但是他们进入这个市场的库存超出了他们的需求。因此，他们所做的第一件事就是踩刹车并说：“我不需要我从你那里订购的产品，也许还准备好转移或已经订购。”因此，我们不得不推迟交付这些，这也推迟了他们对目前运行的商品的重新订购以及一些新订单的产品 - 他们会订购的新产品，但我觉得随着他们的业务改善，我认为它在阵亡将士纪念日之前适度，我认为我们会开始看到他们再次获得库存 - 因为他们的库存尺寸更合适。然后我猜最后，秋季始终是最强劲的销售季节，在劳动节开始。所以我希望今年再次成为现实。
Okay, thank you very much.
Thank you, ladies and gentlemen this concludes today's Q&A session. I would now like to turn the call back over to Paul Toms for any closing remarks.
谢谢女士们，先生们今天的问答环节。 我现在想把这个电话转回Paul Toms的任何结束语。
Well, don't have any additional remarks, but we appreciate you joining us for the call. We hope to have better results to report in September, and thank you for joining us today. Good day.
好吧，没有任何其他评论，但我们感谢您加入我们的电话会议。 我们希望在9月份能够有更好的结果报告，并感谢您今天加入我们。 美好的一天。
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude today's program, and you may all disconnect. Everyone have a wonderful day.
女士们，先生们，感谢您参加今天的会议。 这确实结束了今天的计划，你可能都会断开连接。 每个人都有美好的一天。如果您对美股 或者 港股也感兴趣, 或者想要了解如何开户, 可以加我wechat: xiaobei006006, 同时也可以拉您进美股交流群哦。