Company remains profitable with net income of $4.9 million for the quarter
ATLANTA — Retailer Havertys reported double-digit decreases in consolidated and comparable-store sales amid an ongoing housing-related slowdown that has impacted retailers around the country.
Total consolidated sales for the fiscal third quarter ended Sept. 30 fell 20.2% to $175.9 million, from $220.3 million the same period last year. Comparable-store sales fell 20.5% during the same period.
The company remains profitable with net income of $4.9 million, or 29 cents per share. This is down from $17.2 million, or $1.02 per share the same period last year.
The company said that total written business was down 15.3% and comp-store written business declined 16.3% for the quarter. Meanwhile, its gross profit margins decreased to 60.2% from 60.8% last year, driven by a change in its LIFO reserve which it said “generated an immaterial impact on gross profit in 2024 compared to a positive impact of $2.3 million in 2023.”
It also noted that its SG&A expenses were 57.4% of sales versus 51.1% the same period last year. The company attributed the $11.8 million decrease to a $6.2 million decrease in selling expenses, which it said are predominantly variable costs tied to commissioned-based compensation expense and third-party creditor costs.
There was also a $3.6 million decrease in warehouse and delivery costs primarily from reduced labor costs and lower expenditures for supplies and fuel and a $2.9 million decrease in administrative expenses related to lower incentive and stock compensation costs. The company said it also had a $1.8 million increase in occupancy costs related to a reduction in rent expense in 2023 for a $1.3 million lease incentive payment.
“Our earnings for the quarter reflect the impact of below plan sales including the Labor Day holiday written results which mirrored the quarterly sales declines,” said Chairman and CEO Clarence Smith. “We did begin to see improvement in traffic during the quarter and average ticket rose slightly.”
He said that the company opened a new store in the third quarter and that three additional locations are expected to open in the fourth quarter, “meeting our expansion goal of five new net stores and ending 2024 with 129 locations.”
“Our merchandising team’s new experienced members will keep our product offerings on-trend and employ data analytics to further strengthen our brand and earnings,” he added. “We continue to refine our marketing and sharpen our focus on customer engagement.
The consumer remains cautious on making big-ticket postponeable purchases, and the lack of housing turnover has additionally dampened demand.
“We believe our strategies on store growth, merchandising, and marketing geared towards our target customer are key to Havertys’ long-term success. Our strong balance sheet and financial strength enable us to execute on these strategies in the current economic environment.”
Other highlights of the report were as follows:
+ Design consultants accounted for 34.5% of written business in 2024 compared with 29.0% in 2023
+ It reported cash, cash equivalents, and restricted cash equivalents of $127.4 million as of Sept. 30
+ It also said it generated $42 million in cash from operating activities primarily from earnings and changes in working capital including a $5.3 million reduction in inventories, an $8.1 million increase in customer deposits, and a $7.1 million decrease in accrued liabilities and vendor repayments.
+ The company invested $24.3 million in capital expenditures and paid $15.3 million in quarterly cash dividends.
+ It also reported no debt outstanding at September 30, 2024 and credit availability of $80.0 million.