Store Operations and Expansion - As of December 31, 2023, Havertys operated 124 stores across 16 states, with approximately 4.4 million retail square feet[32]. - The company aims to open five new stores per year and increase retail square footage by approximately 2.8% in 2024[33]. - The company operated 124 showrooms across 16 states as of December 31, 2023, maintaining its retail presence without franchising[216]. Sales and Financial Performance - Net sales for 2023 were $862.1 million, a decrease of 17.7% compared to $1.05 billion in 2022[131]. - Gross profit for 2023 was $523.1 million, representing 60.7% of net sales, an increase from 57.7% in 2022[131]. - Net income for 2023 was $56.3 million, or 6.5% of net sales, down from 8.5% in 2022[131]. - Comparable store sales decreased by 18.4% in 2023, compared to an increase of 3.4% in 2022[131]. - The average ticket size for sales was $3,278 in 2023, up from $3,171 in 2022[131]. - The company reported a basic earnings per share of $3.48 for 2023, down from $5.43 in 2022, a decline of 35.9%[211]. Supply Chain and Distribution - The largest ten suppliers accounted for approximately 40.2% of product purchases in 2023, with 19.4% of case goods and 9.2% of upholstery sales generated by direct imports[38][39]. - The average time between purchase and delivery for in-stock items is 3 to 5 days, while special order items take 5 to 7 weeks[42]. - Havertys' distribution system includes three distribution centers and four home delivery centers, providing next-day delivery for prepped merchandise within a 250-mile radius[41]. - The company utilizes three large distribution centers, making it vulnerable to operational interruptions that could affect timely product delivery[74]. Workforce and Employee Development - The total workforce as of December 31, 2023, was 2,574, with 1,561 in retail operations and 779 in warehouse and delivery[43]. - The company has a strong focus on employee development, with team members consuming approximately 93,000 hours of learning in 2023[48]. - High employee turnover in the retail industry may lead to increased costs associated with hiring and training, impacting service levels and brand image[80]. Risks and Challenges - Approximately 61% of the total furniture purchases in 2023 were for goods not produced domestically, exposing the company to risks related to exchange rates and tariffs[63]. - The company relies on third-party producers for substantially all products, which may lead to operational difficulties and impact the timely delivery of quality merchandise[65]. - Significant fluctuations in the price and availability of raw materials could adversely affect profits, with potential supply chain disruptions impacting order fulfillment[68]. - Cyber threats are evolving, and a successful cyber-attack could result in significant data breaches, harming customer relationships and incurring potential liabilities[78]. - The company faces risks related to compliance with international trade rules, which could lead to penalties or enforcement actions affecting business operations[71]. - Increased shipping costs and delays could negatively impact margins and customer satisfaction, potentially leading to order cancellations[73]. Financial Management and Governance - The company has a cybersecurity framework in place to manage risks, although increasing threats may pose challenges[94]. - The board of directors oversees strategic and operational risks, including cybersecurity, with regular updates from management[96]. - The company has maintained effective internal control over financial reporting as of December 31, 2023, with no critical audit matters identified[206]. - The independent auditor's report confirmed the effectiveness of the company's internal control over financial reporting based on COSO criteria[175]. - The company has adopted a Code of Conduct for its directors and officers, which is available on its website[183]. Capital Expenditures and Investments - Capital expenditures for 2023 amounted to $53.1 million, with planned expenditures of approximately $32.0 million for 2024 to support operations and strategic expansion[155][145]. - The company expects to continue prioritizing investments in the business and may return excess cash to shareholders through share repurchases or special dividends[145]. - The company has a stock repurchase program with approximately $13.9 million remaining for future purchases as of December 2023[116]. Cash and Liquidity - As of December 31, 2023, the company had $120.6 million in cash and cash equivalents, with no funded debt[144][146]. - Cash dividends paid in 2023 totaled $35,240, compared to $33,948 in 2022, reflecting an increase of 3.8%[215]. - The company had no outstanding borrowings under its Credit Agreement during 2023 and 2022, which bears interest based on variable rates[166]. Audit and Compliance - An independent registered public accounting firm issued an unqualified opinion on the company's consolidated financial statements for the year ended December 31, 2023[176]. - The financial statements are in conformity with accounting principles generally accepted in the United States[203]. - The audit was conducted in accordance with PCAOB standards, ensuring rigorous evaluation of financial reporting[206].
Haverty Furniture(HVT_A) - 2023 Q4 - Annual Report