Travel back in time with me, dear Fool. Back all of five weeks, to the days just before furniture importer (and sometimes maker) Hooker Furniture (NASDAQ:HOFT) reported its Q4 2006 earnings release.

Back then, I observed an interesting quirk in the company's SEC filings, to the effect that around the turn of the year, Hooker would be entering a two-month "transition period," an earnings twilight zone if you will, between the end of Q4 2006 under its old fiscal calendar year and the beginning of Q1 2007 under its new fiscal order. I pointed out that the company was planning to take a number of one-time charges to earnings, each of which would conveniently fall within this twilight fiscal period, and promised to pay special attention to it when it arrived. Well, it arrived (finally) last week, so let's take a look.

Bad news first
Remember the $1.18 per share that Hooker earned last year? Yeah, well, forget about that. Between a $3 million charge for severance benefits paid when it closed its last U.S.-based wood furniture manufacturing plant, a massive $18.4 million charge for terminating its Employee Stock Ownership Plan (ESOP), and the write-off of $855,000 in "related deferred tax assets," Hooker managed to rack up $1.52 per share in losses during its two-month-long "transition period," wiping out the entire past year's profits (or eating into next year's profits) (or neither of the above, seeing as these charges apparently don't belong to either fiscal year).

Now for the good
It wasn't all bad news, of course. Continuing the trend we've grown to expect as Hooker moves from making lower-margin wood furniture onshore to importing higher-margin wares from off, Hooker posted 90 basis points' worth of higher gross margins on its sales during the transition period (comparing the two months' numbers to their equivalents from Q1 2005). Even better -- and contrary to my prediction in our Foolish Forecast -- selling, general, and administrative expenses (SG&A) declined 60 more basis points thanks to "lower port storage and temporary warehousing costs for imported wood furniture purchases."

Although I take some issue with CEO Paul Toms' calling the transition period's net loss an "anomaly" -- because methinks Hooker doth protest too much, calling it an anomaly and creating a special anomalous reporting period to house it -- I'm very pleased to see that he does not see the decline in SG&A as similarly anomalous. To the contrary, Toms cited the "declining warehousing and distribution costs," in conjunction with lower expenses from ESOP, lower operating costs from no longer running its last domestic wood furniture factory, and higher gross margins on imported goods, as all promising "improved profitability in our 2008 fiscal year."

Indeed, things appear to be working out much better than I had initially expected from Hooker's new business model. Let's hope the company can indeed prove that it's outgrown its "red" fad and can stick to basic black in the future.

In other Hooker news:

And for related news and views on peer furniture makers such as La-Z-Boy (NYSE:LZB), Furniture Brands (NYSE:FBN), and Stanley (NASDAQ:STLY), don't miss:

Stanley Furniture and Hooker Furniture are both Hidden Gems recommendations. La-Z-Boy is a Motley Fool Income Investor recommendation.

Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.