by Ongoing softness in the housing market presents challenges as consumers continue to pull back spending on home furnishings
ATLANTA — Retailer Havertys reported a 18.1% drop in sales for its first quarter ended March 31 related to an ongoing slowdown at retail that is resulting from continued softness in the housing market.
The HNN 125 retailer said that consolidated sales totaled $184 million, compared to $224.8 million the same period last year. Meanwhile, net income fell to $2.4 million, or 14 cents per share, compared to $12.4 million, or 74 cents per share, last year.
The company said that total sales were down 18.1% while same-store sales were down 18.5% for the quarter. Total written sales were down 12.6% and written comp-store sales were down 13%.
Meanwhile, the retailer’s gross profit margin rose to 60.3% up from 59.1% the same period last year, with SG&A expenses at 59.4% of sales, compared to 52.7%. The company said that overall, these expenses fell by $9 million, including a $4.8 million drop in selling expenses tied to commission-based compensation expenses and third-party creditor costs, and a $3.2 million drop in warehouse and delivery costs related to reduced headcount via attrition and lower expenditures for supplies and fuel.
It also reported a $600,000 decrease in advertising expenses it said was driven by reduced spending on television and interactive marketing and partly offset by increased technology costs.
The company said that it has some $32 million in planned capital expenses for the year, and plans to increase its overall retail square footage by 3.4% this year compared to 2023.
It plans to open a total of five new stores this year, which includes plans to enter the Houston market with one store expected to open in the fourth quarter. Other locations are planned in early 2025.
“This is a sizable new market within our distribution footprint that we believe aligns well with the Havertys brand,” said Clarence H. Smith, chairman and chief executive officer.
He said the four other stores this year include one in Southaven, Mississippi, in the Memphis, Tennessee, market that opened in March and three previously announced stores in Florida that are expected to open in the second and third quarter.
Of the most recent quarterly performance, Smith said, “Our sales reflect the challenges from the ongoing weak housing market. The decline in demand requires exceptional customer engagement and operational flexibility. We began highlighting our regret-free guarantee early in 2024 and continued promoting our free-in home design service which grew 10.4% in the first quarter compared to last year and was 32.3% of our total written business. Our teams generated another quarter of excellent gross margins of 60.3% and the prudent reductions in operating costs generated positive results for the quarter.”
Other highlights of the quarterly report are as follows:
+ The company reported cash, cash equivalents and restricted cash equivalents of $117.9 million.
+ It reported generating $3.1 million in cash from operating activities, primarily from earnings and charges in working capital including a $5.1 million increase in customer deposits, a $1.9 million reduction in inventories and a $12.8 million decrease in vendor repayments and accrued liabilities.
+ It invested $6.4 million in capital expenditures.
+ It paid $4.8 million in quarterly cash dividends and reported no outstanding debt as of March 31 and credit availability of $80 million.
“We are making important investments in our stores and online presence to be well positioned to gain additional market share at the reversal of this near-term demand cycle,” Smith added. “The board’s decision to increase the quarterly dividend reflects our strong financial position and long-term outlook as we invest in our business and return capital to our stockholders.”
