Store Operations - As of December 31, 2024, Havertys operated 129 stores with approximately 4.5 million retail square feet, an increase from 124 stores and 4.387 million square feet in 2023[29]. - In 2024, Havertys opened 6 new stores and closed 1, resulting in a net increase of 5 stores for the year[33]. - Havertys plans to open an average of 5 new stores per year, primarily in former "big box" retail sites, with the first store in Houston, TX opened in 2024[32]. - The company operates 129 retail stores totaling approximately 4.5 million square feet as of December 31, 2024[112]. - The number of stores increased to 129 in 2024 from 124 in 2023, with retail square footage at year-end reaching 4,539,000[148]. Sales and Revenue - Approximately 33.6% of written sales in 2024 resulted from consultations with in-home designers, with average sales tickets for designer visits being twice that of in-store sales[28]. - Online sales accounted for approximately 3.0% of total business in 2024, indicating a focus on enhancing digital channels[36]. - Net sales for 2024 decreased by $139.2 million or 16.1% compared to 2023, attributed to the housing recession, inflationary pressures, and cautious consumer spending[148]. - Comparable store sales decreased by 16.7% in 2024 compared to 2023[148]. - The average ticket value in 2024 was $3,371, reflecting a 3.0% increase over the previous year[148]. - Net sales are recorded when merchandise is delivered to customers, reflecting revenue from merchandise sales and related fees, net of expected returns and sales tax[139]. Financial Performance - The company reported a net income of $19.956 million for 2024, down from $56.319 million in 2023, resulting in a net income margin of 2.8%[148]. - Gross profit as a percentage of net sales remained stable at 60.7% for both 2024 and 2023, with a 100 basis point increase in gross profit margins excluding LIFO impact[150]. - Selling, general and administrative (SG&A) expenses decreased by $36.6 million or 8.0% in 2024, with SG&A as a percentage of net sales rising to 58.0% from 52.9% in 2023[155]. - The effective tax rate increased to 23.7% in 2024 from 22.5% in 2023[157]. - The company had $120.0 million in cash and cash equivalents as of December 31, 2024, with no outstanding borrowings under its $80.0 million revolving credit facility[158][160]. Supply Chain and Sourcing - The company’s largest ten suppliers accounted for approximately 41.3% of product purchases in 2024, with a significant portion of wood products imported from Asia[43]. - Approximately 20.8% of case goods sales and 5.9% of upholstery sales in 2024 were generated by direct imports[44]. - The company relies on third-party producers for product supply, which may lead to operational difficulties and affect timely delivery of quality merchandise[73]. - Significant fluctuations in raw material prices could adversely affect profits, with potential impacts from supply chain disruptions and increased costs[77]. - The company’s ability to forecast supply chain needs is crucial, as significant deviations from projected demand could adversely affect financial results[78]. Workforce and Employee Engagement - Havertys' total workforce as of December 31, 2024, was 2,334, with 1,480 in retail operations and 645 in warehouse and delivery[49]. - The company emphasizes a strong safety program and employee engagement, with approximately 117,000 hours of learning consumed by team members in 2024[54]. - The company faces high employee turnover in the retail industry, which could lead to increased hiring and training costs[90]. - Labor shortages and competition may increase labor expenses and impair the ability to provide high levels of customer service[91]. Risk Factors - Approximately 58% of total furniture purchases in 2024 were for goods not produced domestically, exposing the company to political and economic risks associated with global sourcing[72]. - The company faces significant competition from various retailers, including internet-only retailers and national department stores, which may impact market share and profitability[64]. - Cyber threats and the need for robust cybersecurity measures are critical, as successful attacks could materially harm business operations[87]. - The company has implemented a cybersecurity framework to manage risks, although threats continue to evolve[103]. - The board of directors oversees cybersecurity risks, with regular updates from the Senior Vice President of Information Technology[108]. - Rising oil and gasoline prices could adversely affect profitability due to increased transportation costs[97]. Capital and Investments - Capital expenditures are expected to be approximately $27.1 million in 2025 to support operations and strategic expansion[159]. - Cash used in investing activities in 2024 consisted primarily of $32.1 million of capital expenditures, compared to $53.1 million in 2023[170][171]. - Total capital expenditures for stores in 2024 were $27.3 million, with planned expenditures of $22.7 million for 2025[173]. - The company repurchased 214,500 shares of Common Stock for $5.0 million in 2024, with approximately $8.1 million remaining under the existing authorization[163]. Financial Reporting and Audit - The consolidated financial statements of Haverty Furniture Companies, Inc. for the years ended December 31, 2024, 2023, and 2022 have been audited and present fairly the financial position of the Company as of December 31, 2024 and 2023[218]. - The audit report expressed an unqualified opinion on the Company's internal control over financial reporting as of December 31, 2024[219]. - There were no critical audit matters identified during the audit process, indicating a straightforward audit without significant issues[222]. - The financial statements are prepared in accordance with generally accepted accounting principles in the United States[218]. - The Company’s management is responsible for the financial statements, while the independent auditor's role is to express an opinion based on the audit[220]. - The audit was conducted in accordance with PCAOB standards, ensuring a thorough examination of the financial statements[221]. - The company has been audited by Grant Thornton LLP since 2016[223].
Haverty Furniture(HVT_A) - 2024 Q4 - Annual Report