Written business drops by double digits, and the company warns inflation and other factors could make the second half challenging
ATLANTA — Havertys posted second quarter gains in earnings per share, profit margin and delivered sales as supply chain disruptions eased and the retailer reduced its backlog of customer orders.
But a written sales decline of 13.3% may be more indicative of the demand slowdown the industry is facing.
Net income for the period ended June 30, decreased to $21.7 million from $22.9 million in the second quarter a year ago. On a per-share basis, however, earnings rose 5.0% to $1.27 from the previous $1.21. Gross profit as a percentage of sales increased to 57.9% from 56.6%.
Consolidated sales for the period rose 1.3% to $253.2 million, while comp-stores sales increased 1.1%.
In a release, Chairman and CEO Clarence Smith said the strong earnings performance was driven by the retailer’s gross margin improvement and attention to operating costs.
“These results are particularly gratifying as we are comparing to last year’s record setting growth,” he said. “Supply chain issues are subsiding, and we are restoring our operating inventory levels and reducing our backlog of orders.”
Consumers, he added, are returning to “historical shopping patterns,” concentrating their buying around traditional holiday events vs. spreading it out.
“We have had declines in in-store traffic and outside these peak periods,” Smith said, noting Havertys’ decline in written business over last year’s second quarter. “We believe consumers are still investing in their home as our written business for the second quarter was up 23.2% over the ‘normal’ pre-pandemic second quarter of 2019.
“The second half of this year could be challenging as consumer discretionary spending is impacted by rising inflation, market volatility, and geopolitical concerns.” He said the company’s “competitive and financial strengths have provided the means to grow from adversity.”
For the first six months of the year, Havertys sales increased 1.2% from the first half of 2021 to $492.2 million. Net income decreased to $41.1 million from $42.3 million while earnings per share increased to $2.37 from $2.25.
Gross profit margin increased by 1.3 percentage points to 57.9% “due to pricing discipline and merchandise mix,” it said.
An HNN 125 retailer, Havertys operates 121 stores in 16 Southern and Midwestern states.