Havertys sales rise, profits fall
By Larry Thomas -- Furniture Today, March 6, 2005
Atlanta — Top 100 retailer Havertys said sales rose 5.3% last year, but earnings fell 10.2%, largely due to costs stemming from the closing of several small warehouses.
Sales for 2004 totaled $784.2 million and net income was $22.8 million. Fourth-quarter sales reached $216.8 million, up 5.6% from the comparable 2003 period, while net income plummeted 21.3% to $8.6 million.
The retailer, with 118 stores in 16 states, said it is replacing the smaller facilities with larger distribution centers in Lakeland, Fla., and Dallas. The moves should lower Havertys' costs over the long term as the company becomes more reliant on direct importing and other offshore suppliers.
"These activities did impact our earnings more than planned," said Clarence Smith, president and CEO. "(But) they will improve our distribution capabilities, enhance our competitive service position and expand our presence into new markets."
During a conference call with securities analysts, Smith said that Havertys is continuing to move away from branded merchandise and rely more heavily on private-label goods, which have better margins. Such merchandise accounted for more than 50% of Havertys' sales last year, and Smith said he expects the percentage to continue to grow.
"Our suppliers know that we are focused on the Havertys brand," he told analysts.
He said, however, that the company will continue to carry branded furniture from Lane, Broyhill, Bernhardt and La-Z-Boy, as well as bedding from Sealy, Serta, Stearns & Foster and Tempur-Pedic.
Smith said 2005 has started strong, and he believes the remainder of the year — especially the second half — will see brisk business.
| Haverty Furniture | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/31 | 2004 | 2003 | Change |
| a) Excludes $1 million in the 2004 quarter; $1.4 million in the 2003 quarter; $4.5 million in the 2004 year and $6.4 million in the 2003 year from credit service and other income. b) Includes non-operating income of $3.6 million in the 2004 quarter; $688,000 in the 2003 quarter; $5.4 million in the 2004 year and $2.2 million in the 2003 year. The 2003 quarter and year also include a $1 million gain, the cumulative effect of a change in accounting principle. | |||
| Sales (a) | $216,803,000 | $205,269,000 | 5.6% |
| Operating income | 9,725,000 | 14,503,000 | (32.9%) |
| Net income (b) | 8,575,000 | 10,899,000 | (21.3%) |
| Earnings per share | 0.37 | 0.48 | (22.9%) |
| Year ended 12/31 | 2004 | 2003 | Change |
| Sales (a) | $784,162,000 | $744,635,000 | 5.3% |
| Operating income | 30,315,000 | 36,029,000 | (15.9%) |
| Net income (b) | 22,754,000 | 25,331,000 | (10.2%) |
| Earnings per share | 0.99 | 1.13 | (12.4%) |
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