Havertys to upgrade distribution
By Clint Engel -- Furniture Today, December 9, 2001
ATLANTA — Havertys plans to roll out a new distribution system that is expected to cut inventory and other costs, buttressing the retailer's aggressive expansion plans for next year.
The move is expected to enable easier and more efficient growth in outlying markets by the 104-store, Atlanta-based Top 100 company.
A key step will be the opening of a 511,000-square-foot distribution center in Braselton, Ga., about 40 miles north of Atlanta, in the third quarter of next year.
The high-ceiling, racked facility, expandable to more than 900,000 square feet, will replace two smaller distribution centers in Atlanta and Charlotte, N.C., that the company has outgrown and is unable to expand.
Havertys also will open two satellite home-delivery centers in late 2002 and early 2003 as it phases in a new remote home-delivery method in markets in Georgia, Virginia, Tennessee, Kentucky and the Carolinas.
Under that program, Havertys will assemble and prep goods in Braselton or the satellite centers, then load them onto containers or trailers for overnight delivery to some 20 market areas. There, they would be hitched up to trucks for direct delivery to customers without additional handling.
"Operating in this fashion will reduce inventory and warehousing costs and maintain the quick delivery service that Havertys customers expect," said Clarence Smith, chief operating officer. He said the new Braselton facility and delivery system will enable the retailer to eliminate numerous local warehouse facilities in markets served by the new center, although he wouldn't disclose the locations.
"What this really gives us is a platform to grow in adjacent and outlying markets without adding distribution centers or warehouses or additional inventory," Smith said.
An example is the retailer's recent move to acquire seven former HomeLife Furniture stores, including two in the northern Virginia suburbs of Washington. Havertys had considered the Washington market economically out of reach because it would have required an expensive, dedicated warehouse. But the Braselton center and new system gives Havertys an efficient way to enter new markets like D.C. — one with an upscale consumer profile that Havertys hopes is a perfect match for its brand of retailing.
"It gave us the opportunity to take on these two stores, which we will later supplement with other stores," Smith said. "We'll be testing this program here in the East and see how it applies to the rest of our regions later."
Havertys expects warehouse and delivery costs for the affected markets to drop by about 1% of net sales, saving roughly $4 million a year by 2004 in the areas served by Braselton. The company also expects the sale of local warehouse facilities will generate proceeds of about $14 million to $15 million, which should offset the costs of starting up the new centers as well as losses from inventory closeouts at the old warehouses.
With the expansion through the HomeLife stores, some additional growth and a few closings, Havertys expects to add a net six units next year for a total store count of 110.
The seven former HomeLife stores are expected to boost sales by $12 million next year and $42 million in 2003. Havertys is on track to generate sales of more than $665 million this year.
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