Havertys profits up 5.3% on 3% sales gain
By Furniture Today Staff -- Furniture Today, October 28, 2002
Atlanta — Havertys posted a $5.9 million third-quarter profit, up 5.3% from the same period last year, as the Top 100 furniture store made the most of a soft business climate by improving gross margins.
Net sales for the quarter were up 3% to $175.7 million from $170.6 million in the same period a year ago. Same-store sales crept up 0.3%.
For the nine months, Havertys net income was $16.4 million, up 31.2% over net income of $12.5 million for last year's corresponding period.
"A softer than anticipated sales environment was to some degree offset by outstanding gross margins," said Jay Slater, chief executive officer of the midpriced to upscale retailer with 111 stores in 14 Southern and Central states.
Gross profit as a percent of sales for the quarter rose to 48.2% from 47.8% a year ago.
Gross margin also improved for the year to date as the company continued to use sales promotions carefully and gradually increased its assortment of goods offered under the proprietary Havertys brand, now the No. 2 brand in the store behind Broyhill. With imported goods under the store brand, Havertys has been able to offer better values at the same or even higher prices, the company said.
During the High Point furniture market, Havertys' buyers saw interesting trends, Slater said, particularly in the bedroom and dining room categories, including less ornate carving on case goods and lighter and painted wood finishes.
The values showing up in leather upholstery imported from Asia "can only be described as incredible," he added.
Havertys' operating costs during the quarter were higher than normal but as expected, given the startup costs for seven new stores, the transition to its new Eastern distribution center and the opening of a home delivery center in Virginia.
Those costs were largely offset by gains from the sale of two vacated warehouses, Slater said.
Next year, the company plans to open four new stores, including one replacement unit, as well as expand two showrooms by converting warehouse space, for a net increase in selling space of 163,000 square feet.
Meanwhile, Havertys has continued to experience soft sales this month, with same-store sales in the negative low single digits, up against "fairly strong same-store sales gains in the previous year of 4.4%" said President Clarence Smith.
The company hasn't changed its earlier earnings guidance for the fourth quarter of 35 cents to 37 cents per share.
"Although the tone of our business remains a little softer than last year at this time, we are pleased with all we have accomplished during an incredibly active third quarter," Slater said. "We look forward to the resulting growth and operational improvements we should enjoy in 2003."
| Haverty Furniture | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/30 | 2002 | 2001 | Change |
| (a) Excludes credit service charge revenues of $2.1 million in the 2002 quarter, $2.7 million in the 2001 quarter, $6.7 million in the 2002 nine months and $8.6 million in the 2001 nine months. | |||
| Sales (a) | $175,680,000 | $170,645,000 | 3.0% |
| Operating income | 5,257,000 | 9,355,000 | (43.8%) |
| Net income | 5,909,000 | 5,611,000 | 5.3% |
| Earnings per share | 0.27 | 0.26 | 3.8% |
| 9 months ended 9/30 | 2002 | 2001 | Change |
| Sales (a) | $515,525,000 | $490,359,000 | 5.1% |
| Operating income | 24,704,000 | 22,239,000 | 11.1% |
| Net income | 16,381,000 | 12,481,000 | 31.2% |
| Earnings per share | 0.74 | 0.58 | 27.6% |
