Havertys’ profits decline $7.3 million in first quarter
By Clint Engel -- Furniture Today, May 11, 2009
ATLANTA — Havertys reported a first-quarter loss of $7.3 million or 34 cents per share as it continued to squeeze costs out of its operations and promote heavily in the face of weak demand.
In the same period last year, the Atlanta-based Top 100 company had net earnings of $1 million or 5 cents per share.
Sales for the quarter fell off 22.1% to $144.2 million. Same-store sales declined 22.9%, and the company indicated second- quarter business isn’t looking any better. Total written business for the second quarter to date is down about 27% vs. a year ago, the company said.
Havertys remains focused on “adjusting costs to market conditions, managing for cash, and taking meaningful and measured steps to drive sales,” said Clarence Smith, president and CEO of the midpriced to upscale home furnishings chain.
“Stimulating store traffic and sales are vital during this downturn as we compete for a scarcer and hyper cost-conscious consumer,” he said.
Havertys’ margins for the quarter were down 92 basis points due to more promotional pricing, but Smith added that weak demand also is creating “attractive purchasing opportunities” with some suppliers.
“We expect to highlight a number of great values at good margins to our customers in the coming months,” he said.
In March, Havertys closed one underperforming store, and in May it opened a new showroom in Little Rock, Ark., replacing two older stores. The company now operates 121 stores in 17 Southern and Midwestern states.
No more closings are planned this year, but Smith said Havertys is scrutinizing all locations, especially those nearing the end of their leases, and could close more if “satisfactory renewal terms cannot be reached.”
During the quarter, Havertys cut its selling, general and administrative expenses by 5.9% from the fourth quarter and by 14.9% from the same period a year ago. The bulk of the savings came from lower compensation costs due to “staff changes” and changes in its advertising mix.
The company also completed a $6.8 million sale-leaseback transaction on one store in the first quarter, reduced accounts receivables by $6.2 million and slowed merchandise buys because of reduced demand. Inventories at the close of the quarter were $10.2 million lower than in the same period a year ago.
Haverty Furniture
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
| Quarter ended 3/31 | 2009 | 2008 | Change |
| (a) Includes credit service charge revenues of $393,000 in the 2009 quarter and $565,000 in the 2008 quarter. |
|||
| Sales (a) | $144,238,000 | $185,253,000 | (22.1%) |
| Operating income | (7,116,000) | 1,398,000 | — |
| Net income | (7,263,000) | 1,032,000 | — |
| Earnings per share | (0.34) | 0.05 | — |
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