Haverty Furniture-Bear of the Day: HAVERTYS (HVT)

Company Overview - HAVERTYS is a home furnishings retailer with 127 showrooms in 17 states, focusing on the Southern and Midwestern regions, and specializes in middle to upper-middle price ranges [1] Leadership Transition - On Nov 12, 2024, HAVERTYS announced that CEO Clarence H. Smith will retire and transition to executive chairman effective Jan 1, 2025, after 50 years with the company [2] Q3 2024 Earnings Report - HAVERTYS reported Q3 2024 earnings of $0.29, missing consensus estimates by$ 0.19 or 39.6%, with sales falling 20.2% to $175.9 million and comparable-store sales decreasing 20.5% [3][4] - Design consultants accounted for 34.5% of written business compared to 29% last year [3] Market Conditions - The company noted that consumers remain cautious about making big-ticket purchases, influenced by lower home sales and stagnant homeowner movement [4] - Despite the challenges, HAVERTYS opened a new store in the quarter and plans to open three more locations, expecting to end 2024 with 129 locations [4] Financial Performance - Gross margin held steady at 60.2%, slightly down from 60.8% the previous year [4] - Analysts have cut earnings estimates for 2024 and 2025, with the 2024 Zacks Consensus Estimate dropping to$ 0.93 from $1.45, a 71% decrease from 2023 earnings of$ 3.25 [6] Balance Sheet Strength - HAVERTYS maintains a strong balance sheet with no outstanding debt as of Sep 30, 2024, and credit availability of $80 million [7][8] - Cash and cash equivalents totaled$ 127.4 million, and the company has consistently paid cash dividends since 1935, currently yielding 5.5% [8] Stock Performance - HAVERTYS shares are at multi-year lows due to pessimism in the furniture market, trading with a forward P/E of 24.9 [9] - The stock has moved in tandem with other housing-related stocks, and investors interested in a housing rebound should consider keeping HAVERTYS on their watch list [9]