Havertys reports 5.9% decrease in consolidated Q1 sales

Written sales were down 11.7% and written comp-store sales were down 12.7% for the quarter

ATLANTA, Ga. — Havertys reported consolidated sales for its first quarter ended March 31 fell 5.9% while comparable store sales decreased 6.7%.

Consolidated sales totaled $224.8 million, compared to $238.9 million for the same period last year.

Net income totaled $12.4 million, or 74 cents a share, compared to $19.4 million, or $1.11 per share in 2022, a 36% decline.

Gross profit margin meanwhile rose to 59.1% from 59%.

Other highlights from the report are as follows:

+ Total written sales were down 11.7% and comp-store sales were down 12.7% for the quarter.

+ SG&A expenses rose $3.2 million and were 52.7% of sales compared to 48.2% in the first quarter of 2022.  The company said this was due to a $1.4 million increase in selling expenses resulting from the impact of rising interest rates on third-party credit cost, partially offset by lower commissioned-based compensation expenses. The company also had a $2 million increase in occupancy costs driven by higher maintenance and tax expenses and a $1.3 million increase in administrative expenses due to higher health insurance costs and professional services. Meanwhile it saw a $1.4 million decrease in delivery costs primarily from $900,000 in lower demurrage fees and a reduction in the use of temporary labor.

+ It reported cash, cash equivalents and restricted cash equivalents of $127 million as of March 31.

+ It also generated $11.1 million in cash from operating activities, which it said was primarily from solid earnings performance and changes in working capital, which included $15 million in vendor repayments and accrued liabilities. Inventories also decreased by $4 million. It also reported a $5.7 million increase in other assets and liabilities.

+ It had no debt outstanding and had $80 million of credit availability as of March 31.

+ It paid $4.5 million in cash dividends during the three-month period.

+ It anticipates gross profit margins for 2023 to be between 58.5% and 59%. This is based on changes in product and freight costs and its impact on the company’s LIFO (last in, first out) reserve.

Clarence H. Smith, chairman and chief executive officer, said that the Havertys team “delivered a strong quarter against difficult headwinds of shifts in consumer spending and persistent inflationary pressures.”

“Sales reflect the reduction in traffic and written business that we have reported in recent quarters as our business transitioned from the pandemic’s explosive pace to a more measured one,” he said. “Our written business for the first quarter of 2023 compared to the “normal” pre-pandemic first quarter of 2019 was up 10.9% and written comp-store sales were up 6.9%.”

He added that the first quarter’s average sales ticket also was up over last year’s and that sales generated from the company’s free in-home design service was more than 25% of total sales. In addition, product flows are returning to more normal levels.

“We are receiving new products, which were delayed during the pandemic, addressing a key part of our merchandise plan,” he said, adding, “We remain disciplined in our pricing and protective of the gross profit margin gains we have steadily achieved. Operationally, our experienced leaders are focused on ensuring we are efficiently meeting our objectives. Our financial strength allows us to capitalize during weak cycles, making investments and executing on our growth strategy with the addition of new stores and improving the shopping experience in-store and online. We are adapting and evolving to stay ahead and grow in a changing retail and economic landscape.”

Thomas Russell

Home News Now Editor-in-Chief Thomas Russell has covered the furniture industry for 25 years at various daily and weekly consumer and trade publications. He can be reached at tom@homenewsnow.com and at 336-508-4616.

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