Havertys sales flat, earnings off 27.2%
By Furniture Today Staff -- Furniture Today, April 27, 2003
Atlanta — Flat sales and higher costs resulted in a 27.2% earnings decline for furniture retailer Havertys in the first quarter.
The company reported a profit of $4.9 million on sales of $175.4 million, which were up just 0.2% from the same quarter of 2002 as same-store sales declined 6.6%.
"For the first quarter of 2003, we experienced a continuation of the softer sales trends we had seen in the fourth quarter last year," said Clarence Smith, president and chief executive officer of the 111-store, Atlanta-based chain. "We believe this has resulted from macroeconomic issues, especially white-collar job losses and lower consumer confidence."
Gross profit margins were up about 0.8 percentage points from last year's first quarter, despite the increased use of imports and lower prices on some items, he said. Havertys store-branded merchandise, mostly imports, is accounting for roughly 35% of sales, a mix that Smith said "is about right."
Higher costs — selling, general and administrative expenses were up 9.8% from a year earlier to $78.6 million — stem mainly from the 11 new stores opened last year and distribution infrastructure improvements. Some costs will fall off, at the rate of about $2 million a year, with the shutdown of five warehouse locations later this year as distribution is consolidated, he said.
"Further spreading of fixed distribution costs will be evident when more normal sales growth is achieved," Smith said.
This year, Havertys has opened one new store, a relocation in Jackson, Miss., and has three more on tap: its first store in San Antonio in May, its first in West Palm Beach, Fla., in June, and its first in Maryland, in the Washington suburb of Bowie, in November.
Smith said strong sellers in the first quarter included bedding and upholstery, with some weakness in bedroom because of lower price points and difficulty bringing in some back-ordered groups from overseas. Popular styles included painted finishes and light woods in dining; leather in stationary and motion upholstery and recliners, including some imports; and tropical themes, especially in coastal markets.
| Haverty Furniture | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 3/31 | 2003 | 2002 | Change |
| (a) Excludes credit service income of $1.9 million in the 2003 quarter and $2.4 million in the 2002 quarter. |
|||
| Sales (a) | $175,380,000 | $174,953,000 | 0.2% |
| Operating income | 7,296,000 | 12,662,000 | (42.4%) |
| Net income | 4,898,000 | 6,730,000 | (27.2%) |
| Earnings per share | 0.22 | 0.30 | (26.7%) |
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