Havertys earns $9.2M in 4Q
By Clint Engel -- Furniture Today, March 8, 2010
ATLANTA —
Havertys posted a fourth-quarter profit of $9.2 million, rebounding from a loss for the same period a year ago, thanks to a combination of cost-cutting initiatives and a slight pickup in business.
The 119-store Top 100 company indicated that business has continued to improve this year, but said it remains cautious and committed to lean operations.
Sales for the fourth quarter were up less than 1% from a year earlier to $162.4 million, with same-store sales rising 2%.
In last year's fourth quarter, the retailer posted a loss of $9.3 million, largely because of an $8.2 million non-cash charge to increase the valuation allowance for deferred tax assets. In the latest period, that charge was just $600,000.
Excluding the charges, net income was $9.8 million for the fourth quarter of 2009, compared with a $1.1 million loss a year earlier.
For the full year, sales decreased 14.9% in 2009 to $588.3 million and same-store sales fell 14.2%. The net loss for the year was $4.2 million, an improvement from the net loss of $12.1 million in 2008. Excluding the tax expense charges, the net losses were $3.5 million and $3.9 million in 2009 and 2008, respectively.
Havertys is “pleased with the earnings leverage that we achieved on a small increase in sales,” said President and CEO Clarence Smith.
“The return to positive comparable-store sales in the fourth quarter was a good sign since it historically is the strongest period for furniture retailers. We believe by carefully highlighting great merchandise values in our advertising we are stimulating sales and protecting our brand,” Smith said.
In a conference call and follow-up interview, he noted that the company has signed a lease on a former Circuit City location in Columbus, Ga., for a roughly 30,000-square-foot showroom. Havertys expects to open in the new market in the fourth quarter.
Smith said Columbus is “a great fit for our distribution footprint and it is one of the markets in the region which is expected to grow in the coming year.”
He also said the company has closed two stores this year — in Fredericksburg, Va., and Albany Ga. — and made it clear the chain's focus will be on improving profitability and same-store sales rather than simply expanding its square footage.
He said Havertys' average sales per square foot was about $139 vs. about $206 a few years ago, and said the retailer can't justify much new store expansion until sales per square foot are back over $200, or the property is a “real steal.”
He said gross profit margins for the quarter improved and that there was modest deflation in product costs and lower ocean freight rates in 2009.
Selling, general and administrative costs in the quarter were down 8.7% or $7.5 million, reflecting efficiency and cost-cutting steps.
“We reduced spending in each major category, with more than half of the savings coming in advertising and marketing expenditures, occupancy and administrative expenses,” Smith said.
Total written business in the first quarter to date is up about 8% in spite of interruptions in some key markets due to winter storms, he said.
Haverty Furniture
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
| Quarter ended 12/31 | 2009 | 2008 | Change |
| (a) Includes income tax benefit of $1.6 million in the 2009 quarter and $1.2 million in the 2009 year, and income tax expense of $7.1 million in the 2008 quarter and $5.6 million in the 2008 year. |
|||
| Sales | $162,399,000 | $161,836,000 | 0.3% |
| Operating income | 7,538,000 | (2,017,000) | — |
| Net income (a) | 9,165,000 | (9,309,000) | — |
| Earnings per share | 0.42 | (0.44) | — |
| Year ended 12/31 | 2009 | 2008 | Change |
| Sales | $588,264,000 | $691,079,000 | (14.9%) |
| Operating income | (5,025,000) | (6,991,000) | — |
| Net income (a) | (4,179,000) | (12,101,000) | — |
| Earnings per share | (0.20) | (0.57) | — |
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Havertys swings to $9.2 million quarterly profit
Mar 2, 2010
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