Havertys Reports Operating Results for First Quarter 2025

May 1, 2025  by Karen Parrish in Business Strategy, Industry   

First quarter 2025 versus first quarter 2024:

Diluted earnings per common share ("EPS") of $0.23 versus $0.14.
Consolidated sales decreased 1.3% to $181.6 million. Comparable store sales decreased 4.8%.
Gross profit margin was 61.2% compared to 60.3%.

Steven G. Burdette, President and CEO said, "We are pleased to report solid first quarter results with improved gross margins, earnings, and expense control, despite facing several headwinds, including a weak housing market, atypical winter weather in the South, low consumer confidence, and significant shifts in trade policy.

Throughout our 140-year history, we have consistently demonstrated resilience in navigating changes in U.S. economic policy. This experience, along with our solid balance sheet, has equipped us to effectively manage the dynamic U.S. trade policy environment while continuing to serve our customers and deliver value to our shareholders."

First Quarter ended March 31, 2025 Compared to Same Period of 2024

— Total sales down 1.3%, comp-store sales down 4.8% for the quarter. Total written business was down 2.6% and comp-store written business declined 6.3% for the quarter.

— Design consultants accounted for 33.2% of written business in 2025 and 32.4% in 2024.

— Gross profit margins increased to 61.2% in 2025 from 60.3% in 2024.

— SG&A expenses were 59.0% of sales versus 59.4% and decreased $2.2 million. The primary drivers of this change are:

decrease of $2.0 million in selling expenses as these are predominantly variable costs tied to commissioned-based compensation expense and third-party creditor costs.

decrease in warehouse and delivery costs of $1.7 million driven by lower salaries and related benefit costs.

decrease in advertising costs of $1.1 million aligning with the reduction of sales.

increase in occupancy costs of $1.6 million largely due to costs related to new locations.

increase in administrative expenses of $1.0 million primarily from increased salaries and stock compensation costs.

Balance Sheet and Cash Flow for the Three Months Ended March 31, 2025

— Cash, cash equivalents, and restricted cash equivalents at March 31, 2025 are $118.3 million.

— Generated $6.2 million in cash from operating activities primarily from earnings and changes in working capital including a $5.3 million increase in inventories, $2.0 million increase in customer deposits, and a $4.5 million decrease in accrued liabilities and vendor repayments.

— Invested $6.1 million in capital expenditures.

— Purchased approximately 94,000 shares of common stock for $2.0 million.

— Paid $5.2 million in quarterly cash dividends.

— No debt outstanding at March 31, 2025, and credit availability of $80.0 million.

Expectations and Other

— Our 2025 guidance includes tariffs currently in effect as of April 30, 2025, but excludes the effects of additional proposed tariffs that have been paused by the Trump Administration. We are closely monitoring the tariff negotiations and evaluating the impact to minimize the effects on our business.

— Our expectations for gross profit margins for 2025 are unchanged from our prior guidance and are between 60.0% to 60.5%. 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 2025 are expected to be in the $291.0 to $293.0 million range, unchanged from our previous guidance. Variable SG&A expenses for the full year of 2025 are anticipated to be in the 18.6% to 19.0% range, a decrease from our previous guidance driven by lower warehouse and delivery costs and third-party credit expense.

— Our effective tax rate for 2025 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 2025 are approximately $24.0 million, a $3 million decrease from our previous guidance due to tariff uncertainty. We expect retail square footage will increase approximately 2.0% in 2025 over 2024.

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

A replay of the conference call will be available at the company website, ir.havertys.com.