Havertys Turns 2010 Profit Despite 4Q Earnings Dip
Clint Engel -- Furniture Today, March 16, 2011
ATLANTA - Havertys posted a decline in fourth-quarter net income but finished 2010 with a profit, a turnaround from a loss in 2009 despite higher costs, the Atlantabased retailer reported.
Earnings of $5.5 million in the fourth quarter were down 40.5% the same period a year earlier. Excluding a tax benefit in 2009, earnings were down 25.7%. Net sales were relatively flat at $162.1 million, while samestore sales grew 1.9%.
For the year, the 118-store retailer reported net income of $8.4 million, reversing a $4.2 million loss in 2009. Sales increased 5.5% to $620.3 million and samestore 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. He said the retailer's "ability to maintain expense discipline and leverage our SG&A costs was essential to our profitability."
In a conference call with analysts, Smith also said Havertys plans to remodel about 40 store interiors this year and will open its first store in Boca Raton, Fla., in a 48,000-square-foot showroom that Carls Furniture is vacating. Havertys expects to take possession of the store this summer and open by Labor Day.
Havertys closed four weakening stores last year and moved 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.
The remodeling effort will upgrade the interiors of about 40 stores this year - focusing on major markets - in a program it calls Bright Inspirations, which includes lighting, paint, new signage and some layout changes.
Havertys' gross profit margin in the fourth quarter declined to 51% of sales from 53% a year earlier, 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.
Havertys operates 118 stores in 17 Southern and Midwestern states.
Haverty Furniture | |||
Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
Quarter ended 12/31 | 2010 | 2009 | Change |
Sales | $162,083,000 | $162,399,000 | (0.2%) |
Operating income | 3,776,000 | 7,538,000 | (49.9%) |
Net income (a) | 5,509,000 | 9,165,000 | (39.9%) |
Earnings per share | 0.25 | 0.42 | (40.5%) |
Year ended 12/31 | 2010 | 2009 | Change |
Sales | $620,331,000 | $588,264,000 | 5.5% |
Operating income | 6,870,000 | (5,025,000) | - |
Net income (b) | 8,444,000 | (4,179,000) | - |
Earnings per share | 0.38 | (0.20) | - |
(a) Includes income tax benefit of $1.56 million in 2009. (b) Includes income tax benefit of $1.23 million in 2009. | |||
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Havertys plans to remodel 40 stores this year
Mar 2, 2011
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