Designer-driven custom orders fuel Havertys’ business in tough times

Special-order business during Q3 was up 47% from last year, driving higher average tickets

ATLANTA — Like many in the industry, HNN 125 retailer Havertys is in the midst of challenging times, a subject the company addressed during its latest earnings call.

Net sales for the quarter ended Sept. 30 totaled $220.3 million, down 19.7% over last year with same-store sales down 20.7% for the quarter. Year to date, sales were down 15% to $651.4 million, compared to $766.7 million in the first nine months of 2022.

Steve Burdette

Third-quarter business in particular was weaker than expected due in part to a 16% decrease in written sales this past Labor Day compared to last year’s record holiday event. “Store traffic continues to be our biggest obstacle,” noted Steve Burdette, president.

Of course, there were some bright spots in the report, too, namely that the company’s gross profit margin rose to 60.8% from 57.1%. Overall, it expects its gross margins for the full year to be between 60% and 60.2.%. It also reported cash and cash equivalents of $141.4 million and remains profitable overall with $17.2 million in net income for the quarter and $41.3 million year to date.

Another bright spot in the company’s balance sheet? Average tickets continue to rise as seen in the average $3,284 spent in the first nine months compared to $3,213 the same period in 2022.

This brings us to another highly important and related segment of the company’s business that came up during its conference call — its designer and special-order business.

According to Burdette, the company’s Q3 special-order business was up 47% from last year and represented about 33% of its upholstery business for the quarter. He noted that the increases have been driven by its designer business, which grew to 29% of its business for the quarter and with the average designer ticket growing just over 10%.

“Our focus is to continue to make sure that we are exposing all of our customers to our complimentary design services and increasing the number of customers that are engaging with our designers, which will continue to drive our average ticket higher,” Burdette said.     

The custom-order and designer business obviously represents an area of opportunity — in addition to typical holiday weekend sales events that fuel sales activity for most furniture stores — for a retail giant that is looking to add five new stores a year in 2024 and 2025.

In response to a question from Michael Frederick Legg, managing director of Emerging Growth Equity Research at The Benchmark Co., Burdette noted that the company has about one designer per showroom, which he predicted will rise to 1.5 per showroom on average heading into 2024.

“From a designer opportunity, we have an opportunity to grow that,” Burdette said. “And our opportunity is to look at how we can increase that to get seven-day coverage and what does that look like. We’re doing some experimentation of adding either a designer to additional stores where it makes sense to make sure we have that coverage in our bigger showrooms and then we’ll continue to see how we can expand that out.”

He added that the company’s access to special-order products creates an opportunity for designers not only to work with clients, but also tap into the better side of the product line that it sells, thus helping elevate the average ticket. With these types of sales involving a ticket price that is about 50% higher from where it is on average, Burdette said there is an opportunity to grow this side of the business.

“I think we can continue to increase that,” Burdette said of higher tickets, adding, “I think the opportunity lies with our designer and us continuing to increase and drive that.”

Clarence Smith

Chairman and CEO Clarence Smith added that the company also is adding better lines to the store’s entire assortment, which also is helping to fuel increases in the average ticket.

Describing this as upper-end product that allows for more customization, he said, “We’re emphasizing the better end of the market across our lineup. And we’re getting great results from it. And I think we’re getting more workability with vendors to offer customization across the line.”

He cited the company’s efforts to bring in better-end leather from China on some of its bestselling upholstery that is custom, “and we’re getting it quick ship from China. But I think the overall trend is towards the upper end with us and where we’re having the most success.”

“Our growing design service with special-order and custom upholstery separates us from the more promotional players in the industry,” he added. “Our relationships and partnerships throughout the industry, both domestic and international, have helped us develop terrific merchandise values, which we believe is gaining share in building our reputation as a top-quality home furnisher. … We continue to focus on helping our customers’ vision of their homes come to life. We’re in an excellent position throughout our regions to make that happen and grow our business.”

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 and at 336-508-4616.

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