Wow. Talk about deja vu. It seems just a month ago, I was writing a column much like this one, previewing the Q4 earnings release for Motley Fool Hidden Gems recommendation Hooker Furniture (NASDAQ:HOFT). And now here the company comes again, promising even more earnings news come Thursday.

What's that? It was just a month ago?

What analysts say:

  • Buy, sell, or waffle? Even after a whole month, still only two analysts follow Hooker. Nor have their ratings changed one whit since last quarter's barn-burner earnings release. One still says buy. The other still says hold.
  • Revenue. Neither one has published a revenue prediction yet.
  • Earnings. On average, they're predicting $0.29 per share in profits.

What management says:
So why is it that Hooker's gracing us with its second earnings release in as many months? As explained in its press release announcing the earnings date, it's to bring us all up to date on its performance during the two-month "transition period" it underwent while transitioning from a fiscal year ending in late November to one ending in late January. (Or thereabouts. In fact, the first exemplar of Hooker's new fiscal year began Jan. 29, 2007, and will end Feb. 3, 2008.)

What management does:
Over the past four quarters, Hooker has kept its rolling gross margins rising strongly, as they improved by 200 basis points (in marked contrast to fellow Hidden Gems recommendation Stanley Furniture (NASDAQ:STLY)). Hooker's operating and net margins have been a bit more erratic, however.

Margins

8/05

11/05

2/06

5/06

8/06

11/06

Gross

27.0%

26.9%

27.1%

27.7%

28.3%

28.9%

Operating

9.2%

7.7%

7.8%

8.0%

7.6%

8.5%

Net

4.1%

3.7%

3.8%

4.0%

4.2%

4.0%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
What more can we tell you about margins? CEO Paul Toms told us all in last quarter's earnings conference call that the firm isn't just transitioning to a new fiscal year, but to a new business model as well. Henceforth, Hooker will operate as two businesses in one: (1) a domestic producer of upholstered furniture (a commitment proved by the firm's recent move to acquire Sam Moore from La-Z-Boy (NYSE:LZB)); and (2) "a marketing, logistics, and global sourcing business model for wood and metal furniture."

Regarding the import business, Toms said that each "imported wood, metal and upholstered furniture" product brings it higher gross margins than a domestically produced counterpart. Therefore, we should expect Hooker's gross margins to rise year over year in the quarters following its definitive exit from the domestic wood furniture business.

Meanwhile, "imports generally carry higher warehousing and distribution costs, which is captured in selling and administrative expense." For that reason, we should expect somewhat higher selling, general, and administrative costs (SG&A). The big question for investors, I suppose, is how much of the higher gross profits will be sapped away by higher SG&A before they can fall to the bottom line as net earnings. Going forward, I'll try to keep an eye on this trend for you.

In other Hooker news:

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Fool contributor Rich Smith does not own shares of any company named above.