Haverty Furniture Reports 6.5% Increase for Second Quarter 2004

Furniture World Magazine

Haverty Furniture Companies, Inc., reported earnings for the second quarter ended June 30, 2004. Net income for the second quarter was $3.7 million or $0.16 per diluted share of Common Stock, as compared to the second quarter 2003 net income of $2.1 million or $0.10 per diluted share of Common Stock. For the six months ended June 30, 2004, net income was $9.9 million or $0.43 per diluted share of Common Stock versus net income of $7.0 million or $0.32 per diluted share of Common Stock for the same period in 2003. Net sales for the second quarter of 2004 were $179.6 million, an increase of 6.5% over sales of $168.6 million for the corresponding quarter in 2003. As previously reported, comparable-store sales increased 2.6% for the quarter. Clarence H. Smith, president and chief executive officer, said, "The strength of our brand continued to drive our sales and earnings growth during the second quarter. Our expanded Havertys Collections Premium merchandise and newly introduced private-label bedding line give us a branded assortment in all categories and price points. Sales of our Havertys branded products were approximately 36% of our total second quarter sales, more than double that of last year's second quarter. "On a comparable basis, gross profit margin increased 80 basis points over the second quarter last year. Increased sales of Havertys branded products and reduced levels of markdowns helped generate our improved margins. "The total amounts financed by our customers, either through our programs or the third party provider, decreased during the second quarter to 40% of sales from 45% last year. We did have an increase in usage of our internal credit programs during the second quarter as compared to the first quarter of 2004. This generated additional accounts receivable but since these are mostly no-interest accounts, our credit service charge revenue for the second quarter lagged the prior year's quarter by $0.5 million. The financial strength of our customer base and corresponding receivable portfolio is demonstrated by the reduction in the provision for bad debts. "We had modest improvements in our SG&A expenses as a percent of sales on a comparable basis as we leveraged certain fixed costs and had reductions in our warehouse costs. "Our use of cash during the quarter was primarily directed towards inventory and capital expenditures. Inventories grew during the second quarter as we strengthened our premium merchandise lines and reacted to the higher forecasted sales of imported products. "We opened our new Columbia, Maryland store in the second quarter, and our second store in San Antonio, Texas will open in September. We will move into new markets as we expand into Cincinnati, Ohio and Baton Rouge, Louisiana later this year. The strength of our merchandising and ability to service the customer give us a distinct advantage. We are excited about our current and future growth opportunities as we extend our reach and strengthen our market share," Smith concluded.