It sure looks bad. Analysts had been expecting Motley Fool Hidden Gems selection Hooker Furniture (NASDAQ:HOFT) to report first-quarter earnings of $0.42 a share, but the leading furniture maker posted numbers substantially lower at only $0.25 a stub, well off even last year's $0.35. As expected, investors hammered the stock, nailing it more than 17% lower.

Yet are things as bad as they seem? Certainly domestic sales are a problem for the company. Down over 20% for the past two quarters, Hooker has been struggling to beef up its imported furniture segment, and it had a glut of inventory last quarter that spoke of potential sales weakness. As a result, margins were cut to rid itself of the excess, while it also recorded a number of one-time charges in depreciation, restructuring costs, and the sale of a manufacturing facility. Without these expenses, Hooker actually recorded earnings of $0.37 a share, beating last year's numbers by $0.02 though still 13% below analyst expectations.

The problem with analyst coverage of Hooker is that the company does not provide guidance, so it flies by the seat of its pants in making guesses about its performance. Usually, it isn't too accurate, though in the past that's generally been because it has been too conservative. Over the past two years, analysts have missed Hooker's results by an average of 53%, nailing it only once. So it's not by itself all that surprising that Hooker did not meet analyst expectations.

What does raise eyebrows, though, is the suggestion that sales for the second quarter will be flat from last year. The recently acquired Bradington-Young line has been performing admirably for Hooker, as has its metal furniture division, but the rest of the product mix has been having its legs cut out from under it. What we're witnessing is a steadily declining sales effort. Fourth-quarter sales were 15%, followed by a 3% increase this quarter and an expectation of flat sales in the second quarter. Considering that Hooker missed its own hope of 4% to 7% growth in sales this time out, it's quite possible that revenues might even decline next quarter.

It's been a difficult period for a number of furniture retailers. Bombay Company (NYSE:BBA) reported a drop in income even as it beat estimates by a penny, Pier 1 (NYSE:PIR) has been in a funk, and another Hidden Gems pick, Stanley Furniture (NASDAQ:STLY), has shown some threadbare warning signs.

As earnings follow sales, investors may want to use caution when deciding to pick up shares of the 80-year-old furniture maker. While the stock's fall yesterday may be akin to taking a chainsaw to a sapling, poor results rarely stand alone, and additional trimmings may wait in the future. Fool contributor Rich Smith pointed out recently that furniture makers have been stockpiling their wares, indicating a coming sector decline. There may yet be opportunities to get Hooker at even better prices.

Sit back in your easy chair and read up on what's happening in the furniture business:

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Fool contributor Rich Duprey doesn't own an easy chair or any of the stocks mentioned in the article.