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Financial, Retail

Havertys Announces First Quarter 2024 Results

 Havertys announces first quarter results, raises gross margin expectations, and reports it is on track to open five new stores this year and five in 2025.

5/1/2024
ATLANTA-- HAVERTYS (NYSE:HVT and HVT.A), today announced an increase to its quarterly dividend (the 12th consecutive annual increase) and reported operating results for the first quarter ended March 31, 2024.

First quarter 2024 versus first quarter 2023:

-- Diluted earnings per common share ("EPS") of $0.14 versus $0.74.
-- Consolidated sales decreased 18.1% to $184.0 million. Comparable-store sales decreased 18.5%.
-- Gross profit margin increased to 60.3% from 59.1%.

Clarence H. Smith, Chairman and CEO 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.

We are investing capital to expand our business and are on track to open five new stores this year and five in 2025. Our new store located in Southaven, Mississippi, and in the Memphis, Tennessee, market opened at the end of March. The three stores we previously announced are in-fill opportunities in growing areas of Florida and should open in the second and third quarter this year. We plan to enter the Houston, Texas, market later this year with one store slated to open in the fourth quarter and additional locations in early 2025. This is a sizeable new market within our distribution footprint that we believe aligns well with the Havertys brand.

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. 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."

Dividend

The board of directors declared a 6.7% increase in the quarterly dividend, from $0.30 per share to $0.32 per share on the company's common stock. The quarterly dividend for the company's Class A common stock is also being increased from $0.28 to $0.30 per share.

The dividend is payable on June 14, 2024, to stockholders of record at the close of business on May 24, 2024. Havertys has paid a cash dividend in each year since 1935.

First Quarter ended March 31, 2024 Compared to Same Period of 2023

-- Total sales down 18.1%, comp-store sales down 18.5% for the quarter. Total written sales were down 12.6% and written comp-store sales declined 13.0% for the quarter.

-- Gross profit margins increased to 60.3% in 2024 from 59.1% in 2023.

-- SG&A expenses were 59.4% of sales versus 52.7% and decreased $9.0 million. The primary drivers of this change are:

--decrease of $4.8 million in selling expenses, primarily variable costs tied to commissioned-based compensation expense and third-party  creditor costs.
--decrease in warehouse and delivery costs of $3.2 million primarily from reduced headcount via attrition and lower expenditures for  supplies and fuel.
--decrease of $0.6 million in advertising expenses driven by reduced spending on television and interactive marketing partly offset by  increased technology costs.

Balance Sheet and Cash Flow for the Three Months ended March 31, 2024

-- Cash, cash equivalents, and restricted cash equivalents at March 31, 2024 are $117.9 million.

-- Generated $3.1 million in cash from operating activities primarily from earnings and changes 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.

-- Invested $6.4 million in capital expenditures.
-- Paid $4.8 million in quarterly cash dividends.
-- No debt outstanding at March 31, 2024 and credit availability of $80.0 million.

Expectations and Other

We are increasing our expectations for gross profit margins for 2024 to be between 60.0% to 60.5%. The adjustment is based on our merchandising mix and anticipated changes in product and freight costs. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence.

Fixed and discretionary expenses within SG&A for the full year of 2024 are expected to be in the $290.0 to $292.0 million range, a reduction in our previous guidance related to advertising and other costs. Variable SG&A expenses for the full year of 2024 are anticipated to be in the 19.9% to 20.2% range.

Our effective tax rate for 2024 is expected to be 26.5% excluding the impact from discrete items and any new tax legislation.

Planned capital expenditures for the full year of 2024 are approximately $32.0 million. We expect retail square footage will increase approximately 3.4% in 2024 over 2023.

Read the full release here.
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