Share this on

Havertys' earnings decline 40% in 4Q on flat sales

More promotional pricing reduces gross margin

Clint Engel -- Furniture Today, March 1, 2011

ATLANTA — Havertys posted a nearly 40% decline in fourth-quarter income but finished 2010 with a profit, compared with a loss in 2009, despite inflating product costs.

Earnings of $5.5 million or 25 cents per share in the fourth quarter was down from $9.2 million or 42 cents per share in the same period a year earlier. Net sales were relatively flat at $162.1 million, while same-store sales increased 1.9%.

For the year, the 118-store retailer reported net income of $8.4 million or 38 cents per share, a turnaround from a loss of $4.2 million or 20 cents per share in 2009. Sales increased 5.5% to $620.3 million and same-store sales jumped 7%.

"Although our industry faces the challenges of still-depressed housing values and sales activity, 2010 was a successful year for Havertys," said President and CEO Clarence Smith, noting the sales and same-store sales growth. He said the retailer's "ability to maintain expense discipline and leverage our SG&A costs was essential to our profitability."

"Our merchandising methods also proved especially beneficial as product costs rose in the second half of the year," he added.

Smith said the retailer made "judicious decisions" on stores last year, closing four weakening units and moving some to better locations, taking advantage of real estate opportunities brought about by the difficult retail environment. It entered Columbus, Ga., in the fourth quarter by renovating a former Circuit City store and this year plans to enter the Boca Raton, Fla., market, taking a location being vacated by a furniture retailer and strengthening its position in southeast Florida.

"Havertys is a great brand and we have a solid position in our markets," Smith said. "We expect that as general economic conditions continue to recover and housing stabilizes, the demand for furniture will also improve."

Havertys' gross profit margins in the fourth quarter declined to 51% of sales from 53% in the same period a year ago, a decrease the company said was expected and was due in part to more promotional pricing and changes in its LIFO inventory reserve because of moderate inflation.

Selling, general and administrative costs increased slightly, and the retailer boosted its television advertising by about $1.4 million. The added costs were largely offset by lower occupancy expenses.

The midpriced to lower-high-end Havertys operates 118 stores in 17 Southern and Midwestern states.

Share this on

Havertys Turns 2010 Profit Despite 4Q Earnings Dip

Mar 16, 2011

Havertys plans to remodel 40 stores this year

Mar 2, 2011

Havertys earns $2.4 million as sales rise 8.2%

May 6, 2010

Also by this author

Also by Clint Engel

Featured Company

Wright Labels

Bill and Tom Wright founded Wright of Thomasville in 1961 on the idea that printing was a creative medium and the belief that "a promise made is a promise kept." The Wright brothers focused their attention on providing exceptional printing for the... more