Over 154 Years of Service to the Furniture Industry
Furniture World Logo

Havertys Reports Earnings for First Quarter 2017

Furniture World News Desk on 5/14/2017


HAVERTYS (NYSE:HVT) (NYSE:HVT.A) reports earnings per share for the first quarter ended March 31, 2017 was $0.28 compared to $0.21 for the same period of 2016.

Clarence H. Smith, chairman, president and CEO, said, “We are pleased with the first quarter sales and earnings given the choppy retail environment. Our merchandising team has developed a great assortment of products to meet the discerning tastes of the on-trend consumer. The upholstery category continues to drive our business with strong sales and favorable margins, and we had good results from the mattress and accessory groups.

“We are glad to have exited a temporary space in Lubbock, Texas and now serve customers in a newly constructed showroom on the site of the store destroyed a year ago. We expanded into the Greensboro, N.C. market opening a new store this week, and with our long-term presence in Winston-Salem, the Havertys brand is already favorably recognized in the Piedmont Triad area.

“As gratifying as new store openings are, our primary focus is on improving the profitability of our current store base. Adjustments to our media mix, localized marketing, enhancements to our website, and associate training have yielded higher in-store closing rates. Our product mix, in-home design service, and suggested complimentary merchandise has resulted in ten straight quarters of increases in average ticket over comparable periods. We believe our customer centered focus and strategies will further separate us from our competition and create better returns for our stockholders.”

Financial Highlights

First Quarter 2017 Compared to First Quarter 2016

  • As previously announced, net sales increased 3.0% to $200.4 million. Comparable store sales were up 1.6%.

  • Total written sales for the first quarter of 2017 were up 2.5% and written comparable store sales increased 1.0% over last year’s first quarter. Since 2016 was a leap year, this year’s quarter contained one less day, a Saturday. This calendar change reduced the reported written sales increase by approximately 1.9%. Havertys stores are closed for Easter and the positive first quarter impact on written sales from the holiday occurring in April this year versus March last year is estimated to be approximately 1.2%.

  • Average written ticket was up 2.9% and custom upholstery written business rose 10.3%.

  • Gross profit margins increased 100 basis points to 54.7%. Lower inbound freight costs on imported products and merchandise pricing and mix contributed approximately 80 basis points of this improvement and the remainder was primarily from reduced product markdowns.

  • SG&A costs as a percent of sales were 50.1% in 2017 and 49.5% in 2016. Total SG&A dollars increased $4.0 million due to increases in administrative costs of $1.1 million (largely due to compensation costs), selling expenses of $0.8 million, occupancy costs of $0.8 million, advertising and marketing expenses of $0.8 million, warehouse and delivery expenses of $0.5 million.

  • Other income includes a $1.2 million gain from the insurance recovery related to the destruction of our Lubbock, Texas location at the end of 2015.

  • The new store in Lubbock opened in early March.

Expectations and Other

Total delivered sales for the second quarter to date of 2017 are up 2.2% and comparable store sales increased 1.3%. Total written sales for the last week of March plus April are up approximately 2.0% over the same day of week period last year and written comparable store sales increased approximately 0.9%. We are using this period for comparison as it negates the impact of Easter occurring in late March last year and April this year.

We expect that gross profit margins for the full year 2017 will be approximately 53.9%, increased from the 53.6% prior guidance due to better pricing and product mix in the first half. Second half 2017 gross margins are expected to be approximately 40 to 50 basis points lower than the full year average due to anticipated inbound ocean freight increases and a related negative LIFO impact.

Our estimate for fixed and discretionary type SG&A expenses for 2017 are now $259.0 million, a $1.0 million reduction of our previous estimate, compared to $250.0 million for these same costs in 2016. The variable type costs within SG&A for the full year of 2017 are expected to be 18.1% percent of sales compared to the 18.2% rate in 2016.

We will open a store in Greensboro, N.C. in early May and a replacement store in Columbia, S.C. in September.

We expect to increase standard selling square footage approximately 0.3% in 2017. Total capital expenditures are estimated to be approximately $27.0 million in 2017.

More about Havertys: Havertys (NYSE:HVT) (NYSE:HVT.A), established in 1885, is a full-service home furnishings retailer with 124 showrooms in 16 states in the Southern and Midwestern regions providing its customers with a wide selection of quality merchandise in middle to upper-middle price ranges. Additional information is available on the company’s website havertys.com.

News releases include forward-looking statements, which are subject to risks and uncertainties. Factors that might cause actual results to differ materially from future results expressed or implied by such forward-looking statements include, but are not limited to, general economic conditions, the consumer spending environment for large ticket items, competition in the retail furniture industry and other uncertainties detailed from time to time in the company’s reports filed with the SEC.