Economic Factors - A significant portion of the company's sales is driven by discretionary spending, which is influenced by economic factors such as interest rates, consumer confidence, and retail trends[47]. - The company is vulnerable to fluctuations in raw material costs, which could adversely affect profits due to supply/demand trends and other economic factors[54]. - The company has exposure to floating interest rates through its Credit Agreement, but does not anticipate significant adverse impacts from a 100-basis point change in interest rates[141]. Supply Chain and Sourcing - Approximately 70% of the company's total furniture purchases in 2018 were for goods not produced domestically, with 35% sourced from China[53]. - The company imports a substantial portion of its merchandise, exposing it to risks related to tariffs and political conditions, particularly concerning goods manufactured in China[52]. - The company relies on third-party producers for product supply, and any operational difficulties with these manufacturers could negatively impact product delivery and sales[56][57]. Competition and Market Position - The company faces competition from a diverse group of retailers, including national department stores and independent specialty stores, which may impact market share and revenues[49][50]. Operational Costs - Transportation costs are critical to profitability, as the company relies on a limited number of distribution centers to deliver products across 21 states[63][64]. Compliance and Security - The company must comply with various product safety laws and regulations, and any failure by vendors to meet these standards could harm the brand's image and business results[59]. - Cybersecurity threats are a growing concern, and the company invests in security technology to protect against data breaches and cyber-attacks[68][69].
Haverty Furniture(HVT_A) - 2018 Q4 - Annual Report