Its conversion to a new fiscal calendar complete, Motley Fool Hidden Gems recommendation Hooker Furniture (NASDAQ:HOFT) is ready to give the new system a whirl, starting tomorrow. Fiscal Q1 2008 earnings news is due out in the morning.

What analysts say:

  • Buy, sell, or waffle? Two analysts follow Hooker. One says "buy." The other says "hold."
  • Revenues. The shift in Hooker's financial calendar makes year-over-year comparisons a bit difficult. That said, the analysts predict $79.7 million in sales in this year's Q1.
  • Earnings. On average, they're predicting $0.35 per share in profits.

What management says:
Last quarter's earnings announcement (really not a "quarter's" at all, but a report on the firm's two-month transition period between the end of its old fiscal calendar and the start of the new) contained both bad news and good for Hooker investors. Bad news first, courtesy of CEO Paul Toms: "Our business outlook has not changed, and we still expect retail conditions to remain challenging at least through the first half of 2007."

Fortunately, however, Hooker "still expect[s] improved financial performance because of ... cost-cutting measures ... and the continued progress in [Hooker's] supply chain management and warehousing and distribution operations."

What management does:
The following table's results attempt to reflect Hooker's performance over the last 12 months -- which may be difficult to measure precisely because of the time-shift. But precise or not, the general trend is clearly upward at the gross margin level. Rolling operating margin appears stable in the mid-eighth percentile. For comparison, that's worse than Ethan Allen's (NYSE:ETH) 12.7% operating margin, but much better than the low single digits that La-Z-Boy (NYSE:LZB) and Furniture Brands (NYSE:FBN) rake in.

As for Hooker's net -- well, there was little chance of that one looking good, considering that the transition period Hooker reported on in March contained $1.52 per share in losses from a combination of restructuring costs, a charge for terminating Hooker's Employee Stock Ownership Plan, and a write-off of deferred tax assets. These charges wiped out the entire previous year's GAAP profits.

Margins

11/05

2/06

5/06

8/06

11/06

1/07

Gross

26.9%

27.1%

27.7%

28.3%

28.9%

29.1%

Operating

7.8%

8.6%

8.9%

8.6%

8.5%

8.6%

Net

3.7%

3.8%

4%

4.2%

4%

(1.9%)
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:
Real profits are another matter entirely. Far from losing money, over the last year Hooker generated an impressive $26.5 million in free cash flow, belying the $6.7 million loss the firm had to report under GAAP. The company has liquidated significant amounts of old inventory since the end of the last fiscal year, but -- and take this as good news or bad, according to your perspective -- there's still room for improvement at Hooker.

The last half of last fiscal year saw Hooker grow its sales just 1%, while accounts receivable rose 7% and inventories 6%. On the minus side, Hooker still has work to do on getting its bills paid on time, and bringing inventories more in line with sales trends. On the plus side, if Hooker manages to accomplish these feats, free cash flow could continue to improve even more than net earnings.

Check out how Hooker it in its pre-time-shift, transitional quarter back in March:

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