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Havertys posts small profit as sales dip 1.1%

ATLANTA - Havertys posted a third-quarter profit of $118,000 on a slight decrease in sales as the Top 100 company continued to refine efforts to target its core consumer in a weak home furnishings environment.
     The company also indicated it was expecting a decent fourth quarter and outlined expansion plans for next year, which will give it three net new locations including one in a new market.
     Havertys earned 1 cent per share for the period ended Sept. 30, compared with 5 cents per share, or $1.2 million, a year ago. As previously reported, thirdquarter sales were down 1.1% to $155.4 million and same-store sales decreased 0.6%.
     "The retail home furniture business remains challenging but we are committed to connecting with our customers by having great showrooms, excellent service and exciting new products," Havertys President and CEO Clarence Smith said in a release.
     For the quarter, the retailer reported a slight increase in gross profit margin to 51.8% and said bedding sales continue to shine, with year-over-year growth and strength at higher price points.
     For the first nine months, Havertys reported a net loss of $1.5 million compared with a gain of $2.9 million for the same period last year. Sales were down $1.2% to $452.6 million and same-store sales were off 0.9%.
     In a conference call, Smith said Havertys opened a Boca Raton, Fla., store last month and will relocate its Asheville, N.C., store later this month to a former Circuit City location. The moves are helping the retailer grow store square footage for the first time in three years. In the Boca Raton store, Havertys is experimenting with several new initiatives including more special order fabrics and more Florida-specific products, and the initial response has been positive, he said.
     Next year, Smith said, Havertys plans to open a second Baltimore store and a replacement store in Atlanta, as well as two stores in other markets he didn't identify, though he did say one will be a new market.
     With the new stores, Havertys' retail space will grow by about 100,000 square feet next year and give the retailer a net 122 stores, up from 119 today.
     By the end of this year, Smith said Havertys will have completed its Bright Inspirations store enhancement program in 46 stores, remodeling them for a warmer, more contemporary feel, among other things. Forty-seven more stores will be remodeled next year and the remainder will be completed in 2013, he said.
     "The housing market, to which home furnishings sales are naturally linked, continues to be a persistent and significant drag on the economy," Smith said, adding that it's important for the company to "maintain our strong balance sheet and cash position and we are careful in the deployment of capital.
     "Our middle to upper-middle income target customer is also likely to remain cautious in spending until overall economic growth shows signs of sustainability accompanied by improvements in the housing market."
     For the fourth quarter to date, Havertys said delivered sales are up 4.9% and written sales are down 1.4% from 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 9/30

2011

2010

Change

Sales

$155,379,000

$157,137,000

(1.1%)

Operating income

(7,000)

1,307,000

-

Net income

118,000

1,187,000

(90.1%)

Earnings per share

0.01

0.05

(80.0%)

9 months ended 9/30

2011

2010

Change

Sales

$452,644,000

$458,248,000

(1.2%)

Operating income

(1,487,000)

3,093,000

-

Net income

(1,494,000)

2,935,000

-

Earnings per share

(0.07)

0.13

-

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