Havertys Reports Second Quarter Loss

Furniture World Magazine

Haverty Furniture Companies, Inc. reported a loss for the second quarter ended June 30, 2008. The net loss for the second quarter of 2008 was $2.3 million or $0.11 per diluted share of Common Stock, as compared to the second quarter 2007 net loss of $1.4 million or $0.06 per diluted share of Common Stock. For the six months ended June 30, 2008, the net loss was $1.3 million or $0.06 per diluted share of Common Stock versus a net loss of $0.5 million or $0.02 per diluted share of Common Stock for the same period in 2007. As previously reported, net sales for the second quarter of 2008 were $168.4 million, a decrease of 10.0% compared to sales of $187.1 million for the corresponding quarter in 2007. Comparable-store sales decreased 12.7% for the quarter. Clarence H. Smith, president and chief executive officer, said, "The current economic conditions, which have had a brutal impact on the residential furniture industry, show few signs of abating in the near term. Our focus is on cost containment and maintaining our strong balance sheet while enhancing our competitive positions in the markets we serve. Gross margins for the second quarter reflect our continuing commitment to closely managing our inventories and the decision to shift more of the greater than one-year customers' financing to our third party provider. These strategies were the primary contributors to the gross margin improvement from 48.6% in the prior year's second quarter to 51.2% this year. "Our SG&A expenses are lower in most areas as we have adjusted much of our store and delivery operations to the current business levels. These reductions were partly offset by increases in delivery fuel costs and third-party credit expense in the second quarter as compared to last year's quarter. We are currently analyzing additional reductions in our SG&A fixed costs given the severity and protracted nature of this business cycle. "Inventories are at a level appropriate for the current sales environment and are well balanced. Accounts receivable balances have continued to decline as we reduced our offering in 2008 of in-house financing greater than one year. We will be making the final scheduled debt payments on two unsecured notes and obligations associated with four retail stores and a distribution center over the next ten months, so these amounts are now included in our current liabilities. "As we look for the best deployment of our capital, we have significantly curtailed our store growth. Our current capital expenditure plans related to stores of $7.0 million are for projects that were initiated in prior periods and normal store maintenance. Planned capital expenditures during 2008 for distribution and information technology are $5.7 million. "After today's July sales release, we will no longer be reporting monthly sales results. We will continue to release total sales and comparable store sales for each quarter as soon as practical. "The economic conditions in which we operate are very difficult. We believe that our financial strength will allow us to adapt to this challenging environment and opportunities that are ahead of us," Smith concluded. 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 web site at http://www.havertys.com/ .