Havertys more than doubles profit on 3.4% sales gain

But retailer warns that demand has been weakening

Clint Engel -- Furniture Today, November 5, 2010

ATLANTA — Havertys more than doubled its profit in the third quarter and sales were up 3.4% from the same period a year ago, but the company warned that demand has been weakening and the retailer is up against tough comparative numbers for the fourth quarter.

The 118-store Top 100 company said sales for the period rose to $157.1 million from $151.9 million for the third quarter last year, with same-store sales up 4.3%. Net earnings grew to nearly $1.2 million or five cents per share from $501,000 or two cents per share a year ago.

For the first nine months, Havertys' sales increased 7.6% to $458.2 million and same-stores were up 9%. Net income was $2.9 million, compared with a $13.3 million loss for the first nine months a year ago.

"Although our performance in 2010 has improved over last year, we have previously reported a softening of demand trends in the most recent months," said Clarence Smith, president and CEO of the Atlanta-based retailer, whose midpriced to upscale stores are in 17 Southern and Midwestern states.

"The fourth quarter is historically our strongest of the year and our results will be against more difficult comparisons," he said, but added that the company is confident its shopping experience will allow it to continue gaining market share.

Smith said Havertys continues to evaluate locations for store closings and openings. The retail entered Columbus, Ga., in October and closed its Bowling Green, Ky., store at the end of the third quarter. It will close its Abilene, Texas, store during the fourth quarter as its lease expires.

During the third quarter, Havertys' gross profit margins declined to 51.3% of sales from 52.1% a year earlier, mostly due to the negative impact of on an increase in LIFO inventory reserved due to inflation, compared with a reduction in the reserve for the same period a year ago. Selling, general and administrative costs during the quarter decreased 1.1%.