by Written sales fall 8.8% due to slowdown in activity later in the quarter
ATLANTA — Havertys reported first quarter sales of $238.9 million, a 1% increase over the $236.5 million reported the same period last year, and cited inflation and geopolitical uncertainties, among other things, for a drop off in traffic and written business later in the period,
Comparable store sales for the period ended March 31 rose just 0.2%, another of the many indications of a consumer slowdown the industry has been seeing. Meanwhile, total written sales for the first quarter were down 8.8% compared to the same period last year while written comp store sales were down 9.6%.
The company posted net income of $19.36 million, or $1.11 per share compared to $19.4 million, or $1.04 per diluted share for the same period in 2021. Both sales and earning beat analysts’ estimates.
Gross profit totaled $141 million, up from $135 million last year, which resulted in gross margins rising 1.9 percentage points to 59.0% in 2022 from 57.1% for the same period of 2021. The Atlanta-based retailer attributed this to “pricing merchandise mix and discipline.”
In a release, Havertys Chairman and CEO Clarence Smith called it “another strong quarter.”
“Our merchandising team has responded to cost increases by judiciously adjusting retail pricing,” he said. “Sales generated by our free in-home design service are improving as COVID-19 concerns abate and were 23.5% of deliveries this quarter compared to 21% in the first quarter of last year. COVID-19 does remain a factor in our supply chain, and ongoing delays in case goods have impacted sales in this category.”
Smith said that delivered and written business was good early in the quarter compared to historic results in 2021. This was partly based on increased consumer activity around traditional holiday shopping events including a record Presidents’ Day. However that changed later in the quarter.
“We encountered significant declines in in-store traffic and written business in March,” he said. “We believe discretionary consumer spending has been adversely impacted by rising inflation, including fuel costs, market volatility and geopolitical concerns.”
Here are some more highlights from the quarter:
+ The company generated $20.6 million in cash from operating activities due to solid earnings performance and the funding of a $7.8 million in inventories and a $4.7 million increase in payables and other operating assets and liabilities.
+ It reported $169.1 million in cash and cash equivalents while also purchasing 438,499 shares of common stock for $12.5 million and paying $4.3 million in quarterly cash dividends.
+ Havertys said it expects gross profit margins for 2022 will be between 57.7% and 58%, an increase over its prior estimate.
+ Fixed and discretionary SG&A expenses for the full year are expected to be from $295 million to $298 million. Variable SG&A expenses for the full year are expected to range from 18% to 18.2%, which is an increase from its previous estimate based on increases in selling and delivery costs.
