Havertys Q4, full-year sales impacted by industrywide slowdown

Retailer reports 24.9% decrease in consolidated quarterly sales and 17.7% decline in sales for the full year ended Dec. 31

ATLANTA — Havertys reported double-digit declines in consolidated and same-store sales for its fiscal fourth quarter and full year ended Dec. 31, reflecting an overall industry slowdown that impacted retailers and suppliers alike over the past year.

The HNN 125 retailer said that Q4 sales totaled $210.7 million, down 24.9% from $280.6 million the same period in 2022, with comparable store sales falling 25.5%. Total written sales for the quarter were down 13.1% and written comp-store sales were down 14%.

Q4 net income was $15 million, or 90 cents per share, compared to $23.7 million, or $1.42 per share, the same period in 2022. Net income as a percentage of sales during the quarter was 7.1% compared to 8.5% the same period in 2022.

For the full year, the company reported $862.1 million consolidated sales, down 17.7% from $1.05 billion in fiscal 2022. Comparable store sales decreased 18.4%. Net income for the full year totaled $56.3 million, or $3.36 per share, compared to $89.4 million, or $5.24 per share, in fiscal 2022. Net income as a percentage of sales was 6.5% compared to 8.5% in fiscal 2022.

The company reported gross profit of $131.4 million, or 62.4% of sales in the fourth quarter compared to $159.9 million, or 57% of sales in the same period last year. For the full fiscal year, gross profit totaled $523.1 million, or 60.7% of sales, compared to $604.2 million, or 57.7% of sales, in fiscal year 2022.

“We delivered solid fourth-quarter results of strong gross profit margins and expense control within a difficult environment for retail home furnishing sales,” said Clarence H. Smith, chairman and chief executive officer. “Higher interest rates and record-low housing sales and inflation combined with prior years’ outsized sales results have generated challenging headwinds. Our strong balance sheet is enabling us to execute our strategic store growth plans and invest in our business.”

Smith also noted that in 2023, the company returned $42.1 million of capital to shareholders, purchased $6.9 million in common shares, paid quarterly dividends of $19.1 million, and in December paid a special cash dividend of $16.1 million. He added that the company has paid an annual cash dividend since 1935 and increased its quarterly cash dividend payouts each year since 2008.

Other highlights of the report were as follows:

+ Q4 SG&A expenses were 54.4% of sales, versus 45.8% the same period last year. A decrease of $13.8 million in SG&A expenses, the company noted, was largely due to a $7.7 million decrease in selling expenses due to decreased compensation and third-party credit costs. It also had a $3.7 million decrease in warehouse, transportation and delivery costs primarily from reduced headcount through attrition and less usage of temporary labor as well as lower costs for fuel and demurrage fees. In addition, it had a $3.2 million decrease in advertising expenses that came through reduced spending on television and interactive marketing.

+ The company reported cash and cash equivalents of $127.8 million with no funded debt.

+ It also said that it generated $97.2 million in cash from operating activities related to solid earnings performance and from changes in working capital, including a $24.4 million decrease in inventories and a $12.1 million reduction in customer deposits.

+ It anticipates gross profit margins in 2024 to be between 59.5% and 60%. This is based on anticipated product and freight costs and “the marginal impact on our LIFO reserve as compared to prior years.”

+ It plans $32 million in capital expenditures in 2024, with a goal of increasing its retail square footage 2.8% with the opening of five stores and closing of another location.

+ Fixed and discretionary SG&A expenses for the full year are expected to range from $295 million to $297 million. The company said the increases are related to costs associated with its store growth and inflation. Variable SG&A expenses for the full year are projected in the 19.9% to 20% range. Increases over 2023, it said, are primarily inflation driven.

“Our team members remain focused on our business objectives and dedicated to delivering excellent service to our customers,” Smith said. “The Havertys legacy of quality furniture and service is foundational for our ‘Regret-Free Guarantee’ now featured in our marketing.”

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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