Havertys Reports Operating Results for Fourth Quarter

February 25, 2025  by Karen Parrish in Business Strategy, Industry   

Fourth quarter 2024 versus fourth quarter 2023:
— Diluted earnings per common share ("EPS") of $0.49 versus $0.90.
— Consolidated sales decreased 12.5% to $184.4 million. Comparable store sales decreased 13.7%.
— Gross profit margin of 61.9% versus 62.4%.

FY 2024 versus FY 2023:
— Diluted earnings per common share ("EPS") of $1.19 versus $3.36.
— Consolidated sales decreased 16.1% to $722.9 million. Comparable store sales decreased 16.7%.
— Gross profit margin was 60.7% for 2024 and 2023
— Pre-tax income of $26.2 million versus $72.7 million.

Steven G. Burdette, president and CEO, said, "Our team remained disciplined in managing our operations and executing our growth strategies, even amidst the housing slowdown. We achieved our goal of opening five net new stores in 2024, with a notable return to the Houston, TX market after approximately 40 years, where we now have two stores."

"In 2024, we returned $25.5 million of capital to our shareholders. We purchased $5.0 million in common shares and paid quarterly dividends of $20.5 million, marking another year of annual dividend payouts. Our prudent capital management underscores our dedication to delivering value to our shareholders."

"As we celebrate our 140th year, we remain focused on our strategies for store growth, merchandising, and marketing, which are key to Havertys' long-term success. Our strong balance sheet and financial stability provide a solid foundation for continued growth investment, positioning us to benefit when the economic cycle improves."

Fourth Quarter ended December 31, 2024 Compared to Same Period of 2023
— Total sales down 12.5%, comp-store sales down 13.7% for the quarter. Total written sales were down 6.7% and written comp-store sales declined 8.7% for the quarter.
— Design consultants accounted for 31.8% of written business in 2024 and 29.2% in 2023.
— Gross profit margins decreased 50 basis points to 61.9% in 2024 from 62.4% in 2023. In 2024, the positive impact generated by the change is LIFO reserve was $0.9 million compared to $2.8 million in 2023.
— SG&A expenses were 57.4% of sales versus 54.4% and decreased $8.9 million. The primary drivers of this change are:
— decrease of $4.3 million in selling expenses due to lower commissioned-based compensation and third-party credit costs.
— decrease in warehouse, transportation, and delivery costs of $3.3 million primarily from reduced labor and fuel costs.
— decrease of $1.7 million in administrative expenses due to lower incentive and stock based compensation costs.
— increase of $1.1 million in occupancy expenses primarily due to depreciation expense.

Balance Sheet and Cash Flow

— Cash, cash equivalents, and restricted cash equivalents at December 31, 2024 are $126.3 million.
— Generated $58.9 million in cash from operating activities primarily from earnings and changes in working capital, including a $10.5 million decrease in inventories, a $4.9 million increase in customer deposits, a $7.1 million decrease in other assets and liabilities and $11.4 million decrease in accrued liabilities and vendor repayments.
 — Invested $32.1 million in capital expenditures.
 — Purchased 214,500 shares of common stock for $5.0 million.
— Paid $20.5 million in quarterly cash dividends in 2024.
— No debt outstanding at December 31, 2024 and credit availability of $80.0 million.

Expectations and Other

— We expect gross profit margins for 2025 will be between 60.0% to 60.5%. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence. Our estimated gross profit margins for 2025 are based on anticipated product and freight costs and the marginal impact on our LIFO reserve as compared to the prior years.

— Fixed and discretionary expenses within SG&A for the full year of 2025 are expected to be in the $291.0 to $293.0 million range. The increases over 2024 are primarily from costs associated with our store growth and inflation. Variable SG&A expenses for the full year of 2025 are anticipated to be in the 19.0% to 19.3% range. Variable expense increases over 2025 are primarily inflationary driven.

— Our effective tax rate for 2025 is expected to be 26.5% excluding the impact of discrete items and any new tax legislation

—  Planned capital expenditures are approximately $27.1 million in 2025.

Comparable Store Sales 

Comparable-store or "comp-store" sales is a measure which indicates the performance of our existing stores and website by comparing the sales growth for stores and online for a particular month over the corresponding month in the prior year. Stores are considered non-comparable if they were not open during the corresponding month or if the selling square footage has been changed significantly.

Cost of Goods Sold and SG&A Expense 

We include substantially all our occupancy and home delivery costs in SG&A expense as well as a portion of our warehousing expenses.  Accordingly, our gross profit may not be comparable to those entities that include these costs in cost of goods sold.

We classify our SG&A expenses as either variable or fixed and discretionary.  Our variable expenses are comprised of selling and delivery costs.  Selling expenses are primarily compensation and related benefits for our commission-based sales associates, the discount we pay for third party financing of customer sales and transaction fees for credit card usage.  We do not outsource delivery, so these costs include personnel, fuel, and other expenses related to this function.  Fixed and discretionary expenses are comprised of rent, depreciation and amortization and other occupancy costs for stores, warehouses and offices, and all advertising and administrative costs. 

Conference Call Information
The company invites interested parties to listen to the live webcast of the conference call on Feb 25, 2025 at 10:00 a.m. ET at its website, ir.havertys.com. If you cannot listen live, a replay will be available on the day of the conference call at the website at approximately 12:00 p.m. ET.