Havertys earns $118,000 in third quarter as sales slip 1.1%

Clint Engel -- Furniture Today, November 3, 2011

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.

Havertys earned 1 cent per share for the period ended Sept. 30, compared with 5 cents per share, or $1.2 million, for the same quarter a year ago. As previously reported, third-quarter 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 margins 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. Net sale were down $1.2% to $452.6 million and same-store sales were off 0.9%.

Havertys has completed its Bright Inspirations store enhancement program in 33 of its stores and will continue the remodel program through early 2013. Smith also said the company is working with a new marketing agency "to develop a consumer segmentation model which will aid in more efficiently reaching our target customers with a resonating message."

He also indicated Havertys' steady but controlled growth plans will continue into next year. "There are numerous opportunities for store expansion that we evaluate," he said.

The company opened a Boca Raton, Fla., store in a former Carls location late last month and will relocated its Asheville, N.C., store later this month.

Next year, Smith said Havertys plans to open a new Baltimore store and a replacement store in its home market of Atlanta, as well as two stores in other markets he didn't identify.

"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 with this fragility, 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. It also said it expects fourth quarter gross margins to increase by about 1 percentage point from 51% for the fourth quarter of 2010.

The retailer operates 119 stores in 17 Southern and Midwestern states.