Havertys Operating Results for the Second Quarter 2023

August 2, 2023  by HFBusiness Staff in Business Strategy, Industry   

Second quarter 2023 versus second quarter 2022:

~ Diluted earnings per common share ("EPS") of $0.70 versus $1.27.

~ Consolidated sales decreased 18.5% to $206.3 million. Comparable-store sales decreased 19.1%.

~ Gross profit margin increased to 60.5% from 57.9%.

Clarence H. Smith, chairman and CEO said, "The impact of inflation and rising interest rates have caused some consumers to pull back on discretionary home related spending. Our second quarter sales reflected this challenge, particularly early in the quarter.”

“The second quarter's average ticket was an all-time high aided by our free in-home design service involvement in 28.6% of sales. Gross profit margin also reached a historic high as freight and product costs declined. Operationally, we are identifying processes for improvement and cost reductions to further improve our efficiency and performance.”

“We were pleased to secure four excellent locations from the Bed Bath & Beyond bankruptcy. These stores will allow us to reach more consumers in the Memphis, TN and Destin, FL markets, southeast Florida near Miami, and St. Petersburg in the Tampa Bay Area which is one of the hottest markets in the country. We expect these locations will open as Havertys stores in the first half of 2024. The sites are within our current footprint enabling us to further leverage our investment in a best-in-class distribution network.”

Smith concluded, “We are carefully watching the economic green shoots in the housing market as we enter the second half of the year. Our financial strength and experienced teams position us to capitalize on the opportunities ahead."

Some items of note from the balance sheet and cash flow include:

~ Cash, cash equivalents, and restricted cash equivalents at June 30, 2023 are $116.1 million.

~ Generated $40.1 million in cash from operating activities primarily from solid earnings performance and changes in working capital including $10.1 million in vendor repayments and accrued liabilities, and an increase in other assets and liabilities of $11.6 million.

~ Invested $40.5 million in capital expenditures including $28.2 million for the purchase of our Florida distribution center from our landlord in May.

~ Paid $9.4 million in quarterly cash dividends during the six months ended June 30, 2023.

~ No debt outstanding at June 30, 2023 and credit availability of $80.0 million.

Havertys shared their expectations for 2023 including profit margins, expenses and capital expenditures:

~ We expect gross profit margins for 2023 will be between 59.5% to 60.0%. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence. Our estimated gross profit margins are based on anticipated changes in product and freight costs and its impact on our LIFO reserve.

~ Fixed and discretionary expenses within SG&A for the full year of 2023 are expected to be in the $286.0 to $289.0 million range, a reduction in our previous guidance related to advertising and warehouse and delivery costs. Variable SG&A expenses for the full year of 2023 are anticipated to be in the 19.5% to 19.7% range.

~ Our effective tax rate for 2023 is expected to be 25% excluding the impact from the vesting of stock-based awards, potential tax credits, and any new tax legislation.

~ Planned capital expenditures for the full year of 2023 are approximately $57.0 million.

~ We expect retail square footage will increase approximately 1.6% in 2023 over 2022 as we open four stores and close one during the year.