Yahoo Finance Haverty Furniture Companies Inc (HVT) Q1 2024 Earnings Call Transcript Highlights: Navigating ...
Revenue: $184 million, down 18.1% from the previous year.
Comparable Store Sales: Decreased by 18.5%.
Gross Margin: Increased to 60.3% from 59.1% last year.
Net Income: $2.4 million, down from $12.4 million in the previous year.
Earnings Per Share (EPS): $0.14 per diluted share, compared to $0.74 in the same quarter last year.
Dividend: Quarterly dividend increased by 6.7%.
Store Locations: Plans to open five new stores in 2024 and five in 2025, including new entries in Texas and Florida.
Capital Expenditure (CapEx): $6.4 million spent in Q1; $32 million planned for 2024.
Cash and Cash Equivalents: Ended the quarter with $111.8 million.
Debt: No funded debt reported.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Haverty Furniture Companies Inc reported strong gross margins of 60.3%, indicating efficient cost management and product mix.
The company has a robust balance sheet with over $100 million in cash and no funded debt, providing financial stability and flexibility.
Haverty Furniture Companies Inc announced a 6.7% increase in its quarterly dividend, marking the 12th consecutive year of dividend increases.
The company is expanding its store presence, with plans to open five new stores in 2024 and another five in 2025, enhancing market reach.
Haverty Furniture Companies Inc is leveraging its strong locations and brand awareness to establish new stores in strategic markets at below-market rates.
Negative Points
Q1 sales decreased by 18.1% to $184 million, and comparable store sales were down 18.5%, reflecting significant market challenges.
Total written sales declined by 12.6%, indicating a decrease in customer orders and potential future revenue challenges.
The broader furniture industry is experiencing significant disruptions, with many major manufacturers and retailers failing, which could pose risks to stability and supply chains.
Store traffic continues to struggle across all markets, although there was a slight improvement in February and March.
Despite strong gross margins, net income significantly decreased to $2.4 million in Q1 2024 from $12.4 million in the same period last year, largely due to lower sales volumes.
Q & A Highlights
Q: Can you elaborate on why you chose Houston and the opportunity you see there? A: Clarence Smith, CEO of Haverty Furniture, explained that Houston is the largest market within their distribution footprint and they have been planning to re-enter this market. The company has secured leases for stores in prime locations like The Woodlands and Baybrook Village, which are expected to drive growth. They plan to expand further in the Houston area over the next few years.
Q: How promotional are your competitors in the current market environment, and have you implemented any price increases? A: Steven Burdette, President of Haverty Furniture, noted that there hasn't been a significant change in the promotional activities or pricing strategies among competitors. He highlighted that credit promotions have tightened due to cost increases, but overall, the competitive landscape remains consistent.
Q: Could you discuss the trends in your written business and the impact of the Easter timing this year? A: Richard Hare, CFO of Haverty Furniture, mentioned that January saw a nearly 20% decline in written business, which improved in February and March. The Easter timing, offset by the leap year, resulted in a combined decrease of less than 7% for February and March.
Q: Given the strong balance sheet, is there potential to accelerate the pace of new store openings? A: Clarence Smith indicated that the company is prepared to seize more opportunities for growth as they arise, especially in converting existing spaces to Haverty stores. They have the capability and resources to expand more rapidly if suitable opportunities present themselves.
Q: What are your plans regarding share repurchases given the current share price? A: Clarence Smith stated that the Board evaluates the share repurchase program quarterly. With approximately $13 million authorized for buybacks, they will continue to assess the situation and buy back shares as deemed appropriate.
Q: Can you provide insights into the changes in your marketing strategy? A: Steven Burdette explained that the new media partner will help optimize media spending and targeting, with a focus on market-specific strategies. This includes potentially varying the mix of digital, print, and broadcast media by market to enhance customer engagement and drive traffic to stores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
