Havertys Reports Comparable Store Sales Decline For April

Furniture World Magazine

HAVERTY FURNITURE COMPANIES, INC reported sales for the month ended April 30, 2008. Havertys' April sales increased 0.6% to $54.0 million, compared with $53.6 million in April 2007. On a comparable-store basis, April sales decreased 2.7%. Comparable-store sales do not include stores or locations opened, closed or otherwise non-comparable during the last 12 months. Sales for the first four months of 2008 decreased 2.2% to $239.2 million compared with $244.7 million in 2007. On a comparable-store basis, sales decreased 5.5% for the first four months. As noted in the Company's first quarter earnings release on April 30th, total delivered sales for April were estimated to be flat and total written business was estimated to be down approximately 7% to 8%. Actual delivered results detailed above show an increase of 0.6% and total written business for April was down approximately 7%. Net income for the first quarter of 2008 increased to $1.0 million or $0.05 per diluted common share, compared to the first quarter 2007 net income of $0.8 million or $0.04 per diluted common share. As previously reported, net sales for the first quarter of 2008 were $185.2 million, or 3.0% less than the sales in the corresponding quarter in 2007. On a comparable-store basis, sales decreased 6.3% for the quarter. Clarence H. Smith, president and chief executive officer, said, "Our earnings for the first quarter were up 24.2% on a 3.0% sales decline. Gross margins were strong at 52.1% compared to the prior year's quarter of 49.9% and reflect the impact of several of our strategies. We chose to use credit as a stimulant for sales rather than emphasizing price discounting during the first quarter. Slightly more than one third of the gross profit improvement was due to our product mix and better pricing discipline. Heightened diligence over our inventories reduced the levels of damaged and close out merchandise and accounted for a third of the gross margin improvement. Our gross profit is also impacted by the level of sales financed using our in-house long-term no interest credit promotions. During 2008, we shifted more of these promotions to the third-party and the impact of this shift generated approximately another third of the gross margin improvement. "We are pleased with the progress of the initiatives we undertook last year to lower our SG&A expenses and have seen improvement in most areas. The savings were largely offset by the shift to longer term free interest credit offers provided through the third-party which increased our selling costs approximately $2.8 million for the first quarter of 2008 compared to 2007 when credit promotions had not been emphasized. Higher fuel costs were another offset that led to flat overall SG&A expenses. "Our inventories are higher than at year-end, due in part to our building stock because of the impact of factory closures around the Chinese New Year. However, they are in line with our budget and well balanced. Accounts receivable continues to decrease as we shift away from in-house financing of long-term promotions. We have experienced some increases in write offs and delinquencies, but due to the reduction in total receivables our allowance account has declined slightly. "Our industry is still struggling to find the bottom of this cycle. We are encouraged by our performance in certain of our markets but we still see significant weakness in Florida. We began selling on the web last month and have recently begun promoting havertys.com more heavily using banner advertising and enhanced search engine practices. Our approach remains to connect with the customer in ways she chooses to shop and drive customers to our stores pre-disposed to purchase. We believe that we can leverage our existing organization and fixed cost structure with any positive sales momentum. Havertys is a full-service home furnishings retailer with 124 showrooms in 17 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 at www.havertys.com .