Havertys profit plunges 84%
By Clint Engel -- Furniture Today, May 6, 2007
Atlanta — First-quarter net earnings for retailer Havertys plunged nearly 84% from a year ago as a tough business climate bit into the bottom line.
The Top 100 chain based here posted net income of $831,000, or 4 cents per share, compared with a profit of $5.1 million, or 23 cents per share, in the first quarter of 2006.
"Clearly, the residential furniture industry is now in a significant down cycle, and we're feeling the impact," said President and CEO Clarence Smith in a conference call with the investment community.
The 121-store retailer already had reported an 8.6% drop in net sales for the period to $191.1 million, and a 10.4% same-store sales decline. Things got worse in the first month of the second quarter as the retailer reported a 17.1% decline in April sales to $53.6 million from $64.7 million a year ago, and a same-store sales decrease of 18.1%.
Business in April, typically the retailer's weakest month, was "exacerbated by a continued sluggish housing market" and turned into the worst month for the company in several years, Smith said.
He said earnings for the first quarter were hurt by the lower sales volume, and noted that business continued to be weak in most regions, with Florida suffering the most. But, Smith added, "We have chosen not to be overly aggressive with pricing promotions and our gross profit percentage declined very modestly."
Selling, general and administrative costs for the quarter were down $3.4 million from a year ago and down $8.5 million from 2006's fourth quarter. In response to slower business, the company also decreased inventories by $5 million from the year-end level.
Smith said Havertys has reduced its distribution workforce by more than 110 people, largely through attrition, and trimmed about 100 positions on the delivery side. Regional managers are evaluating all stores for proper staffing levels, he added.
With the furniture industry tied to a severely slumping housing sector, Smith said it's difficult to predict when business will show sustained turnaround, although the company expects to see sales improvement late this year.
Havertys, with stores in 17 Southern and Midwestern states, expects to open seven stores this year, including one this month in Huntsville, Ala., and close three.
| Quarter ended 3/31 | 2007 | 2006 | Change |
|---|---|---|---|
| Sales | $191,073,000 | $209,088,000 | (8.6%) |
| Operating income | 304,000 | 6,224,000 | (95.1%) |
| Net income | 831,000 | 5,103,000 | (83.7%) |
| Earnings per share | 0.04 | 0.23 | (82.6%) |
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Havertys first-quarter earnings tumble 84%
May 3, 2007
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