Havertys Posts Loss as 1Q Sales Dip 1.2%
Clint Engel -- Furniture Today, May 27, 2011
ATLANTA - Havertys posted a first-quarter loss of $671,000 as a continuing weak housing market and rising fuel, health care and other costs weighed on results.
However, the retailer has since seen a pick-up in business at the higher end of its price spectrum and says it's making merchandise and store layout improvements, including a new accessories program, which it expects will play well to its customer base.
Haverty Furniture | |||
Quarter ended 3/31 | 2011 | 2010 | Change |
Sales | $154,171,000 | $156,036,000 | (1.2%) |
Operating income | (518,000) | 2,386,000 | - |
Net income | (671,000) | 2,354,000 | - |
Earnings per share | (0.03) | 0.11 | - |
The loss compared with a gain of $2.4 million in the same period a year ago. Net sales decreased 1.2% to $154.2 million and same-store sale were down 0.6% after five consecutive quarterly gains.
"Housing trends improved modestly last year until the new buyer tax credits expired. Since then, further declines in home values and increased foreclosures have not helped the environment for furniture sales," said Clarence Smith, president and CEO of the Atlanta-based Top 100 company.
Smith added that while the retailer has lowered its operating costs over the past few years, it was affected in the latest quarter by rising fuel prices, wage increases and higher group insurance premiums. Selling, general and administrative costs increased $600,000 from a year earlier.
In a conference call with the investment community, Smith said the housing market declines "may be beginning to level off." He said that in the second quarter so far the average ticket and price per SKU is up in the mid-single digits.
Smith also said Havertys is in the process of reworking its accessories lineup to be more consistent with its improved store displays under a "Bright Inspirations" program, designed in part to bring the stores up to speed with its Web presence. Over the past year, the retailer had trimmed its accessories inventory through closeouts in preparation for an ongoing store remodeling program.
In March, Havertys hired experienced accessories merchandiser Susan Black to lead the effort. She had managed accents and case goods for the former Norwood, Mass.-based Domain and later directed the accessories program for Bassett stores.
"We brought Susan on to help us centralize the buying and distribution of accessories," said Richard Gallagher, Havertys senior vice president of merchandising. "Up to this point, the vast majority were purchased by Havertys' individual markets, which inherently made it a little difficult to make sure we had the same presentation from store to store" - one of the goals of Bright Inspirations.
He said Black has completed rugs and is now on to lamps, artwork and top of bed. Tabletop will be the last segment.
Smith said Havertys' home accents typically account for about 3% of sales and said, "We think we can do a much better job."
Despite the tough environment, Smith said Havertys continued to manage its supply chain well in the first quarter as the retailer flowed imported goods in advance of plant closings in Asia for the Chinese New Year, and still ended the quarter with an inventory level nearly $4 million lower than at year's end, and $5.6 million lower than a year ago.
Havertys, with 118 stores in 17 Southern and Midwestern states, remains free of funded debts and increased its cash position to $66.1 million at the end of the quarter, up $13.7 million from a year ago.
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