Financial Performance - Diluted earnings per share ("EPS") for Q3 2025 was $0.28, a slight decrease from $0.29 in Q3 2024[4] - Consolidated sales increased by 10.6% to $194.5 million compared to $175.9 million in the same quarter last year[4] - Comparable store sales rose by 7.1% for the quarter, indicating positive momentum in customer traffic and sales performance[4] - Gross profit margin improved to 60.3% in Q3 2025 from 60.2% in Q3 2024[4] - Net income for the nine months ended September 30, 2025, was $11,196,000, a decrease of 4.8% compared to $11,759,000 in 2024[14] - EBITDA for the nine months ended September 30, 2025, increased to $29,981,000, up 8.4% from $27,666,000 in 2024[16] - Net cash provided by operating activities was $45,285,000, an increase of 7.8% compared to $41,989,000 in the same period of 2024[14] Business Operations - Total written business increased by 10.0%, while comparable store written business grew by 8.0% for the quarter[8] - SG&A expenses were 57.8% of sales, up from 57.4%, with a total increase of $11.4 million primarily due to higher advertising and administrative costs[8] - The company plans to open five net new stores in 2026, resuming store count growth[3] - Comparable-store sales growth is a key performance indicator for the company, reflecting the performance of existing stores and online sales[17] Cash and Investments - Cash, cash equivalents, and restricted cash equivalents at September 30, 2025, totaled $137.0 million[8] - Cash, cash equivalents, and restricted cash equivalents at the end of the period increased to $136,977,000 from $127,365,000 in 2024, reflecting a growth of 7.3%[14] - Capital expenditures for the nine months ended September 30, 2025, were $15,277,000, a decrease of 37.1% from $24,285,000 in 2024[14] - The company paid dividends totaling $15,534,000 during the nine months ended September 30, 2025, compared to $15,295,000 in 2024, marking a slight increase[14] - The company repurchased $2,000,000 in common stock during the nine months ended September 30, 2025[14] Future Outlook - Expected gross profit margins for 2025 are projected to be between 60.4% to 60.7%, an increase from prior guidance[8] - The effective tax rate for 2025 is anticipated to be 26.5%, excluding the impact from discrete items and new tax legislation[8] - The company anticipates continued focus on retail and operating margins, with plans for capital expenditures in 2025[23] - Forward-looking statements indicate potential risks including competition, changes in consumer preferences, and supply chain vulnerabilities[24]

Financial Performance - Diluted earnings per share ("EPS") for Q3 2025 was $0.28, a decrease from $0.29 in Q3 2024[4] - Consolidated sales increased by 10.6% to $194.5 million compared to $175.9 million in the same quarter last year[4] - Comparable store sales rose by 7.1% for the quarter, with total written business increasing by 10.0%[8] - Gross profit margin improved to 60.3% in Q3 2025 from 60.2% in Q3 2024[8] - Net income for the nine months ended September 30, 2025, was $11,196,000, a decrease of 4.8% compared to $11,759,000 in 2024[14] - EBITDA for the nine months ended September 30, 2025, increased to $29,981,000, up 8.4% from $27,666,000 in 2024[16] Expenses and Cash Flow - Selling, general and administrative (SG&A) expenses were 57.8% of sales, up from 57.4%, with a total increase of $11.4 million[8] - The company generated $45.3 million in cash from operating activities, with a free cash flow of $30.0 million[11] - Net cash provided by operating activities was $45,285,000 for the nine months ended September 30, 2025, compared to $41,989,000 in 2024, reflecting a 7.9% increase[14] - Capital expenditures for the nine months ended September 30, 2025, were $15,277,000, a decrease of 37.1% from $24,285,000 in 2024[14] - Cash, cash equivalents, and restricted cash equivalents at the end of the period increased to $136,977,000 from $127,365,000, representing a growth of 7.3%[14] - Dividends paid increased slightly to $15,534,000 in 2025 from $15,295,000 in 2024, marking a 1.6% increase[14] Inventory and Customer Deposits - The company reported a significant change in inventories, with a decrease of $8,987,000 in 2025 compared to an increase of $5,268,000 in 2024[14] - Customer deposits decreased to $3,122,000 in 2025 from $8,103,000 in 2024, indicating a decline of 61.5%[14] Future Plans and Guidance - The company plans to open five net new stores in 2026, following the recent opening of a third location in Houston[3] - The guidance for gross profit margins in 2025 is between 60.4% to 60.7%, an increase from previous estimates[8] - Forward-looking statements indicate expectations for retail and operating margins, capital expenditures, and growth plans for 2025[23] Financial Position - Cash, cash equivalents, and restricted cash equivalents at September 30, 2025, totaled $137.0 million[8] - No debt was outstanding as of September 30, 2025, with credit availability of $80.0 million[8] - The company has 129 showrooms across 17 states, focusing on middle to upper-middle price ranges[21]

Core Insights - Haverty Furniture Companies, Inc. reported diluted earnings per common share (EPS) of $0.28 for the third quarter of 2025, a slight decrease from $0.29 in the same quarter of 2024 [1] Financial Performance - The third quarter of 2025 showed a decline in EPS compared to the previous year, indicating potential challenges in maintaining profitability [1]

Group 1 - Haverty Furniture Companies, Inc. will release its third quarter 2025 financial results on October 29, 2025, after the market closes [1]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Summary of Haverty Furniture Companies Conference Call Company Overview - **Company Name**: Haverty Furniture Companies, Inc. (NYSE: HVT) - **Established**: 140 years ago - **Store Count**: 129 stores across 17 states, primarily in Florida, Texas, and Georgia [4][5] - **Target Customer**: Female, aged 35-55, married, college-educated, with household income above $150,000 [4] Business Strategy and Operations - **Distribution Centers**: Operates seven distribution centers located in Dallas, Texas; Braselton, Georgia; and Lakeland, Florida, with four cross-docks in various states [4] - **Store Growth**: Aims to open five stores annually but will only open three this year, resulting in a net of 129 stores by year-end [5] - **Product Mix**: Positioned in the upper middle segment, competing with brands like Crate & Barrel and Pottery Barn [6] - **Design Services**: Design services account for about one-third of business volume, with an average ticket of $3,400, and $7,600 for design services specifically, growing at 5% [6] Marketing and Customer Engagement - **Media Strategy**: Utilizes broadcast, OTT, and digital platforms, including Instagram and Pinterest, to reach customers [10][11] - **Website Revamp**: Launched a new website in late 2022, which took time to stabilize, but has since seen double-digit organic growth [12][13] - **Regret-Free Guarantee**: Implemented to enhance customer confidence, with no increase in exchange rates or markdowns reported [15][16] Financial Performance - **Credit Program**: Approximately one-third of sales are made through credit, primarily via Synchrony, with high approval ratings [22] - **Capital Allocation**: Planned capital allocation for the year is around $24 million, focusing on new stores and infrastructure [55] - **Dividends**: The company has paid dividends since 1935, with ongoing discussions about special dividends and buybacks [55] Market Conditions and Challenges - **Housing Market**: Currently at a 30-40 year low, impacting store performance; however, the company remains optimistic about future growth [30][31] - **E-commerce Goals**: Aims for e-commerce to reach 10% of total business, currently in low single digits [32][34] - **Tariffs Impact**: Tariffs primarily affect bedroom and dining room categories, with ongoing adjustments to sourcing strategies [36][37] Operational Efficiency - **Staffing Changes**: Reduced headcount from 3,500 pre-pandemic to below 2,400, while maintaining operational efficiency [50][51] - **AI Utilization**: Exploring AI for marketing and operational efficiencies, aiming to grow without increasing headcount [53] Future Outlook - **Growth Strategy**: Focus on expanding in Florida and Texas, with plans for new stores in metropolitan areas and contiguous states [26][29] - **Long-term Goals**: Aiming to return to $1 billion in sales, emphasizing commitment to customer service and operational excellence [57] Key Takeaways - Haverty Furniture Companies is strategically positioned in the furniture market with a focus on design and customer service - The company is navigating current market challenges while planning for future growth and operational efficiency - Strong financial management and a commitment to shareholder returns through dividends and potential buybacks are evident This summary encapsulates the key points discussed during the conference call, highlighting the company's strategic direction, market positioning, and operational insights.

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements, along with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time **Condensed Consolidated Balance Sheets (In thousands):** | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | **Assets** | | | | | | Cash and cash equivalents | $107,357 | $120,034 | $(12,677) | -10.6% | | Inventories | $93,270 | $83,419 | $9,851 | 11.8% | | Total current assets | $236,148 | $238,896 | $(2,748) | -1.1% | | Total assets | $642,672 | $648,747 | $(6,075) | -0.9% | | **Liabilities** | | | | | | Total current liabilities | $130,514 | $131,565 | $(1,051) | -0.8% | | Total liabilities | $337,801 | $341,186 | $(3,385) | -1.0% | | **Stockholders' Equity** | | | | | | Total stockholders' equity | $304,871 | $307,561 | $(2,690) | -0.9% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's revenues, expenses, and net income over specific periods **Condensed Consolidated Statements of Comprehensive Income (In thousands, except per share data):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $181,025 | $178,636 | $362,592 | $362,633 | | Gross profit | $110,102 | $107,984 | $221,185 | $219,003 | | Income before interest and income taxes | $2,834 | $4,986 | $6,873 | $6,626 | | Net income | $2,689 | $4,438 | $6,467 | $6,831 | | Basic earnings per share (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted earnings per share (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Cash dividends per share (Common Stock) | $0.32 | $0.32 | $0.64 | $0.62 | - Net sales for the three months ended June 30, 2025, increased by **$2.4 million (1.3%)** compared to the same period in 2024, reaching **$181.0 million**. However, net sales for the six months ended June 30, 2025, were comparable to the prior year period[7](index=7&type=chunk) - Net income decreased for both the three-month period (from **$4.4 million to $2.7 million**) and the six-month period (from **$6.8 million to $6.5 million**) year-over-year[7](index=7&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (In thousands):** | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by operating activities | $13,377 | $17,542 | $(4,165) | | Net cash used in investing activities | $(11,683) | $(15,900) | $4,217 | | Net cash used in financing activities | $(14,237) | $(13,352) | $(885) | | Decrease in cash, cash equivalents, and restricted cash equivalents | $(12,543) | $(11,710) | $(833) | | Cash, cash equivalents, and restricted cash equivalents at end of period | $113,771 | $116,067 | $(2,296) | - Net cash provided by operating activities decreased by **$4.2 million** in the first six months of 2025, primarily due to changes in working capital, including increased inventories and reduced customer deposits[65](index=65&type=chunk) - Cash used in investing activities decreased by **$4.2 million**, driven by lower capital expenditures[66](index=66&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note A - Business and Basis of Presentation](index=7&type=section&id=Note%20A%20-%20Business%20and%20Basis%20of%20Presentation) This note describes the company's business operations and the accounting principles used in preparing the financial statements - Haverty Furniture Companies, Inc. operates as a retailer of residential furniture in the middle to upper-middle price ranges, exclusively under the **Havertys brand**[9](index=9&type=chunk) - The financial statements are unaudited and prepared in accordance with **Form 10-Q instructions and U.S. GAAP**, requiring management estimates and assumptions[9](index=9&type=chunk)[10](index=10&type=chunk) [Note B – Stockholders' Equity](index=8&type=section&id=Note%20B%20%E2%80%93%20Stockholders%27%20Equity) This note details changes in the company's equity accounts, including net income, dividends, and stock transactions **Changes in Stockholders' Equity (Six Months Ended June 30, 2025, in thousands):** | Item | Common Stock | Class A Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total | | :-------------------------------- | :----------- | :------------------- | :------------------------- | :---------------- | :----------------------------------- | :------------- | :------ | | Balances at Dec 31, 2024 | $30,419 | $1,793 | $117,257 | $418,960 | $(869) | $(259,999) | $307,561 | | Net income | — | — | — | $6,467 | — | — | $6,467 | | Dividends declared (Common Stock) | — | — | — | $(9,606) | — | — | $(9,606) | | Dividends declared (Class A Common Stock) | — | — | — | $(747) | — | — | $(747) | | Acquisition of treasury stock | — | — | — | — | — | $(2,000) | $(2,000) | | Balances at Jun 30, 2025 | $30,633 | $1,732 | $120,074 | $415,074 | $(869) | $(261,773) | $304,871 | - Common Stock dividends declared were **$0.64 per share** for the six months ended June 30, 2025, and Class A Common Stock dividends were **$0.60 per share**[13](index=13&type=chunk) - The company repurchased **$2.0 million** of common stock during the first six months of 2025, with no repurchases in the comparable 2024 period[13](index=13&type=chunk)[67](index=67&type=chunk) [Note C – Interim LIFO Calculations](index=10&type=section&id=Note%20C%20%E2%80%93%20Interim%20LIFO%20Calculations) This note explains the interim valuation method for inventories using the LIFO method and its inherent estimates - Inventories are valued using the **last-in, first-out (LIFO) method** with an annual LIFO index[15](index=15&type=chunk) - Interim LIFO calculations rely on management's estimates of year-end inventory and inflation/deflation rates, making them subject to change based on final year-end valuation[15](index=15&type=chunk) [Note D – Fair Value of Financial Instruments](index=11&type=section&id=Note%20D%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value measurements for various financial instruments, primarily short-term assets and liabilities - Fair values of cash, restricted cash, accounts payable, and customer deposits approximate their carrying values due to their **short-term nature**[16](index=16&type=chunk) - Assets for self-directed, non-qualified deferred compensation plans are valued using **Level 1 quoted market prices**[16](index=16&type=chunk) [Note E – Credit Agreement](index=11&type=section&id=Note%20E%20%E2%80%93%20Credit%20Agreement) This note outlines the terms of the company's revolving credit facility, including its availability and maturity - The company has an **$80.0 million revolving credit facility**, secured primarily by inventory, maturing on **October 24, 2027**[17](index=17&type=chunk)[61](index=61&type=chunk) - As of June 30, 2025, there were **no outstanding borrowings**, and the net availability under the credit agreement was **$80.0 million**[18](index=18&type=chunk)[61](index=61&type=chunk) [Note F – Revenues and Segment Reporting](index=11&type=section&id=Note%20F%20%E2%80%93%20Revenues%20and%20Segment%20Reporting) This note details revenue recognition policies, customer deposits, and the company's single reportable segment structure - Revenue from merchandise sales and related service fees is recognized upon **delivery to the customer**, net of expected returns and sales tax[19](index=19&type=chunk) - Customer deposits were **$39.4 million** at June 30, 2025, a decrease from **$40.7 million** at December 31, 2024[19](index=19&type=chunk) **Net Sales Disaggregated by Product Category (In thousands):** | Product Category | Three Months Ended June 30, 2025 (Net Sales) | Three Months Ended June 30, 2024 (Net Sales) | Six Months Ended June 30, 2025 (Net Sales) | Six Months Ended June 30, 2024 (Net Sales) | | :----------------------- | :------------------------------------------- | :------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Case Goods | $57,561 | $58,408 | $115,613 | $117,493 | | Upholstery | $80,884 | $78,273 | $162,300 | $161,208 | | Mattresses | $16,525 | $16,640 | $32,329 | $33,240 | | Accessories and Other | $26,055 | $25,315 | $52,350 | $50,692 | | **Total Net Sales** | **$181,025** | **$178,636** | **$362,592** | **$362,633** | - The company operates within a **single reportable segment**, with an executive committee serving as the chief operating decision maker (CODM) and assessing performance based on income before income taxes[21](index=21&type=chunk)[22](index=22&type=chunk) [Note G – Leases](index=12&type=section&id=Note%20G%20%E2%80%93%20Leases) This note describes the company's operating lease arrangements, including terms, payments, and related expenses - The company holds operating leases for various real estate and equipment, with remaining terms of **1 to 15 years** and options to extend up to **20 years**[25](index=25&type=chunk) - Variable lease payments, typically based on sales volume or asset usage, are not included in the initial measurement of right-of-use assets or lease liabilities and are expensed when incurred[26](index=26&type=chunk)[27](index=27&type=chunk) **Lease Expense (In thousands):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $12,550 | $12,092 | $24,884 | $24,338 | | Variable lease cost | $1,311 | $1,388 | $2,613 | $2,762 | | **Total lease expense** | **$13,861** | **$13,480** | **$27,497** | **$27,100** | [Note H – Income Taxes](index=13&type=section&id=Note%20H%20%E2%80%93%20Income%20Taxes) This note explains the effective tax rate, its drivers, and the expected impact of recent tax legislation - The effective tax rate for the six months ended June 30, 2025, was **32.8%**, an increase from **29.2%** in the prior year, mainly due to nondeductible items and tax expense from vested stock awards[29](index=29&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)**, enacted on July 4, 2025, is not expected to have a material impact on the consolidated financial statements[30](index=30&type=chunk) [Note I – Stock-Based Compensation Plans](index=14&type=section&id=Note%20I%20%E2%80%93%20Stock-Based%20Compensation%20Plans) This note summarizes activity for service-based and performance-based restricted stock awards and related compensation costs **Stock Award Activity (Six Months Ended June 30, 2025):** | Item | Service-Based Restricted Stock Awards (Shares or Units) | Performance-Based Restricted Stock Awards (Shares or Units) | | :-------------------------------- | :---------------------------------------------------- | :------------------------------------------------------ | | Outstanding at December 31, 2024 | 250,575 | 276,098 | | Granted/Issued | 213,750 | 153,948 | | Awards vested or rights exercised | (151,938) | (91,804) | | Forfeited | (10,102) | (4,577) | | Adjustment of units based on performance | — | (65,364) | | Outstanding at June 30, 2025 | 302,285 | 268,301 | - The total fair value of service-based restricted stock awards that vested was approximately **$2.9 million**, and performance-based awards was approximately **$2.1 million**, for the six months ended June 30, 2025[32](index=32&type=chunk)[33](index=33&type=chunk) - Total compensation cost related to unvested equity awards was approximately **$9.8 million** as of June 30, 2025, to be recognized over a weighted-average period of **two years**[34](index=34&type=chunk) [Note J – Earnings Per Share](index=15&type=section&id=Note%20J%20%E2%80%93%20Earnings%20Per%20Share) This note details the calculation of earnings per share using the two-class method, considering different stock classes - Earnings per share are reported using the **two-class method**, assuming 100% of earnings are distributed as dividends based on contractual rights[36](index=36&type=chunk) - Common Stock has a preferential dividend rate of at least **105%** of the dividend paid on Class A Common Stock. Class A Common Stock holders have greater voting rights and can convert to Common Stock on a one-for-one basis[37](index=37&type=chunk) **Earnings Per Share (Common Stock):** | EPS Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted EPS (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Basic EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | | Diluted EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | [Note K – Contingencies](index=16&type=section&id=Note%20K%20%E2%80%93%20Contingencies) This note addresses the company's involvement in legal proceedings and their potential financial impact - The company is involved in various claims and legal proceedings arising in the **ordinary course of business**[39](index=39&type=chunk) - No pending claims or legal proceedings are currently believed to be reasonably likely to have a **material adverse effect** on the company's financial condition, results of operations, or cash flows[39](index=39&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, liquidity, and capital resources [Forward-Looking Statements and Risk Factors](index=17&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This subsection outlines the nature of forward-looking statements and lists various risks that could affect future results - Statements about future estimates, expectations, beliefs, intentions, projections, or strategies are considered **forward-looking statements**, subject to inherent uncertainties and risks[41](index=41&type=chunk)[42](index=42&type=chunk) - - Competition from national, regional, and local retailers[44](index=44&type=chunk) - Ability to anticipate changes in consumer preferences and implement growth strategies[44](index=44&type=chunk) - Risks in the supply chain, including cost volatility of raw materials, dependence on third-party producers, and transportation[44](index=44&type=chunk) - Impact of labor disruptions, shortages, and ability to attract/retain key employees[44](index=44&type=chunk) - Vulnerability of information technology infrastructure to cyber-attacks[44](index=44&type=chunk) - Changes in general domestic and international economic conditions (inflation, interest rates, recessions)[44](index=44&type=chunk) - Pending or unforeseen litigation[44](index=44&type=chunk) [Impact of tariffs imposed by the U.S government](index=18&type=section&id=Impact%20of%20tariffs%20imposed%20by%20the%20U.S%20government) This subsection discusses the new U.S. tariffs on imported goods and the company's assessment of their impact - New U.S. tariff rates, ranging from **10% to 41%**, will be imposed on imports from over **67 countries**, effective **August 7, 2025**[47](index=47&type=chunk) - Tariffs for Chinese goods remain at **55%** and are part of ongoing discussions. Canada faces increased tariffs on certain non-compliant goods[47](index=47&type=chunk) - The company is actively monitoring developments and evaluating mitigation strategies to assess the impact on its supply chain and cost structure[47](index=47&type=chunk) [Net Sales](index=18&type=section&id=Net%20Sales) This subsection analyzes the company's net sales performance, including total and comparable-store sales, for recent periods **Net Sales and Comp-Store Sales Performance (In millions):** | Period | Net Sales (Total) 2025 | Net Sales (Total) 2024 | Comp-Store Sales 2025 | Comp-Store Sales 2024 | | :----- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Q1 | $181.6 | $184.0 | (4.8)% | (18.5)% | | Q2 | $181.0 | $178.6 | (2.3)% | (13.6)% | | YTD Q2 | $362.6 | $362.6 | (3.5)% | (16.2)% | - Net sales for Q2 2025 increased by **$2.4 million (1.3%)** compared to Q2 2024, while comp-store sales decreased by **$4.0 million (2.3%)**[49](index=49&type=chunk) - For the first six months of 2025, net sales were comparable to 2024, but comp-store sales decreased by **$12.8 million (3.5%)**[50](index=50&type=chunk) - Design consultants contributed **33.4%** of total written sales in Q2 2025 (down from 36.0% in Q2 2024), with a higher average written ticket of **$7,631** (up from $7,260)[51](index=51&type=chunk) [Gross Profit](index=19&type=section&id=Gross%20Profit) This subsection examines the company's gross profit and margin, highlighting factors influencing changes - Gross profit margin for Q2 2025 was **60.8%**, up **40 basis points** from 60.4% in Q2 2024[53](index=53&type=chunk) - For the first six months of 2025, gross profit margin was **61.0%**, up **60 basis points** from 60.4% in the same period of 2024[53](index=53&type=chunk) - The increase in gross profit margin is primarily attributed to **product selection, merchandise pricing, and mix**[53](index=53&type=chunk) [Selling, General and Administrative Expenses](index=19&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) This subsection details the trends and components of SG&A expenses and their impact on profitability - SG&A expenses as a percentage of sales increased to **59.3%** for Q2 2025 (up from 57.7% in Q2 2024) and **59.2%** for the first six months of 2025 (up from 58.6% in 2024)[55](index=55&type=chunk)[56](index=56&type=chunk) - - Q2 2025 SG&A increased by **$4.2 million (4.1%)**, driven by administrative (**$3.4 million**), occupancy (**$1.5 million**), and advertising (**$1.1 million**) costs, partially offset by decreased warehouse and delivery costs (**$1.1 million**)[55](index=55&type=chunk) - First six months of 2025 SG&A increased by **$2.1 million (1.0%)**, driven by administrative (**$4.5 million**) and occupancy (**$3.1 million**) costs, offset by decreased warehouse and delivery (**$2.8 million**) and selling expenses (**$2.7 million**)[56](index=56&type=chunk) **SG&A Expenses by Classification (In thousands):** | Classification | Three Months Ended June 30, 2025 | % of Net Sales 2025 | Three Months Ended June 30, 2024 | % of Net Sales 2024 | Six Months Ended June 30, 2025 | % of Net Sales 2025 | Six Months Ended June 30, 2024 | % of Net Sales 2024 | | :----------------------- | :------------------------------- | :------------------ | :------------------------------- | :------------------ | :----------------------------- | :------------------ | :----------------------------- | :------------------ | | Variable | $33,353 | 18.4% | $34,746 | 19.4% | $67,000 | 18.5% | $71,732 | 19.8% | | Fixed and discretionary | $73,980 | 40.9% | $68,353 | 38.3% | $147,535 | 40.7% | $140,723 | 38.8% | | **Total SG&A** | **$107,333** | **59.3%** | **$103,099** | **57.7%** | **$214,535** | **59.2%** | **$212,455** | **58.6%** | [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) This subsection assesses the company's cash position, credit facilities, and ability to meet financial obligations - As of June 30, 2025, the company had **$107.4 million** in cash and cash equivalents and **$6.4 million** in restricted cash equivalents[60](index=60&type=chunk) - The company believes its current cash, operating cash flow, credit agreement, and access to debt markets are sufficient for operating requirements, capital expenditures, dividends, and lease obligations[60](index=60&type=chunk) - Net cash provided by operating activities decreased by **$4.2 million** to **$13.4 million** in the first six months of 2025, primarily due to increased inventories and reduced customer deposits[65](index=65&type=chunk) - Cash used in investing activities decreased by **$4.2 million** due to lower capital expenditures, and cash used in financing activities increased by **$0.9 million** due to **$2.0 million** in common stock repurchases[66](index=66&type=chunk)[67](index=67&type=chunk) [Store Plans and Capital Expenditures](index=21&type=section&id=Store%20Plans%20and%20Capital%20Expenditures) This subsection outlines the company's plans for new store openings, relocations, closures, and related capital spending **Store Plans (Actual or Planned Opening Quarter):** | Location or Market | Opening Quarter | Category | | :----------------- | :-------------- | :--------- | | Houston, TX | Q1-25 | Open | | Daytona, FL | Q2-25 | Relocation | | Atlanta, GA | Q2-25 | Closure | | Waco, TX | Q3-25 | Closure | | Houston, TX | Q4-25 | Open | | St. Louis, MO | Q1-26 | Open | | Nashville, TN | Q2-26 | Open | | Houston, TX | Q3-26 | Open | | Houston, TX | Q4-26 | Open | - The company anticipates ending 2025 with a total of **129 stores**, assuming new store openings proceed as planned[68](index=68&type=chunk) [Critical Accounting Estimates](index=21&type=section&id=Critical%20Accounting%20Estimates) This subsection discusses accounting estimates requiring significant judgment and their potential impact on financial reporting - Critical accounting estimates require significant, subjective, or complex judgments, often involving inherently uncertain matters[69](index=69&type=chunk) - Management concluded that no accounting estimates were deemed critical for the periods presented, and there have been no significant changes since the **2024 Annual Report on Form 10-K**[69](index=69&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section refers to the annual report for market risk disclosures, confirming no material changes since the last fiscal year-end - The company's exposure to market risk has not materially changed since **December 31, 2024**[70](index=70&type=chunk) - Detailed disclosures about market risk are available in **'Item 7A. Quantitative and Qualitative Disclosures About Market Risk'** of the company's Form 10-K[70](index=70&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and the absence of material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of **June 30, 2025**[71](index=71&type=chunk) - No changes in the company's internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[72](index=72&type=chunk) [PART II. OTHER INFORMATION](index=22&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal matters and equity transactions [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) This section cross-references legal proceedings information to the relevant note in the financial statements - Information regarding legal proceedings is provided in **Note K - Contingencies** of the Notes to the Condensed Consolidated Financial Statements[74](index=74&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the annual report for a discussion of material risk factors, confirming no material changes - There have been no material changes from the risk factors described in the company's **Form 10-K**[75](index=75&type=chunk) - A discussion of known material risk factors is available in **'Item 1A. Risk Factors'** of the company's Form 10-K[75](index=75&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details the company's stock repurchase program and recent repurchase activity - The Board of Directors has authorized a stock repurchase program for Common Stock and Class A Common Stock, with **no expiration date**[76](index=76&type=chunk) - No repurchases of common stock occurred during the **second quarter of 2025**[77](index=77&type=chunk) - As of June 30, 2025, approximately **$6.1 million** remained authorized for repurchase under the program[77](index=77&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) This section confirms that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated a **'Rule 10b5-1 trading arrangement'** or **'non-Rule 10b5-1 trading arrangement'** during the three months ended June 30, 2025[78](index=78&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with or incorporated by reference into the report, including certifications and agreements - - Exhibit 3.1: Articles of Amendment and Restatement of the Charter[80](index=80&type=chunk) - Exhibit 3.2: By-laws of Haverty Furniture Companies, Inc.[80](index=80&type=chunk) - Exhibit 10.1: Amendment and Waiver to the Amended and Restated Credit Agreement[80](index=80&type=chunk) - Exhibit 31.1: Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 31.2: Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 32.1: Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350[80](index=80&type=chunk) - Exhibit 101: Inline XBRL financial statements[80](index=80&type=chunk) - Exhibit 104: Cover Page Interactive Data File[80](index=80&type=chunk)

PART I. FINANCIAL INFORMATION This section details the company's unaudited financial statements and management's analysis of financial condition [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the condensed consolidated balance sheets, detailing assets, liabilities, and equity for the specified periods **Condensed Consolidated Balance Sheets (In thousands):** | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | **Assets** | | | | | | Cash and cash equivalents | $107,357 | $120,034 | $(12,677) | -10.6% | | Inventories | $93,270 | $83,419 | $9,851 | 11.8% | | Total current assets | $236,148 | $238,896 | $(2,748) | -1.1% | | Total assets | $642,672 | $648,747 | $(6,075) | -0.9% | | **Liabilities** | | | | | | Total current liabilities | $130,514 | $131,565 | $(1,051) | -0.8% | | Total liabilities | $337,801 | $341,186 | $(3,385) | -1.0% | | **Stockholders' Equity** | | | | | | Total stockholders' equity | $304,871 | $307,561 | $(2,690) | -0.9% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the condensed consolidated statements of comprehensive income, detailing net sales, gross profit, and net income **Condensed Consolidated Statements of Comprehensive Income (In thousands, except per share data):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $181,025 | $178,636 | $362,592 | $362,633 | | Gross profit | $110,102 | $107,984 | $221,185 | $219,003 | | Income before interest and income taxes | $2,834 | $4,986 | $6,873 | $6,626 | | Net income | $2,689 | $4,438 | $6,467 | $6,831 | | Basic earnings per share (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted earnings per share (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Cash dividends per share (Common Stock) | $0.32 | $0.32 | $0.64 | $0.62 | - **Net sales** for the three months ended June 30, 2025, **increased** by **$2.4 million (1.3%)** compared to the same period in 2024, reaching **$181.0 million**. However, **net sales** for the six months ended June 30, 2025, were **comparable** to the prior year period[7](index=7&type=chunk) - **Net income decreased** for both the three-month period (from **$4.4 million** to **$2.7 million**) and the six-month period (from **$6.8 million** to **$6.5 million**) year-over-year[7](index=7&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the condensed consolidated statements of cash flows, detailing operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (In thousands):** | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by operating activities | $13,377 | $17,542 | $(4,165) | | Net cash used in investing activities | $(11,683) | $(15,900) | $4,217 | | Net cash used in financing activities | $(14,237) | $(13,352) | $(885) | | Decrease in cash, cash equivalents, and restricted cash equivalents | $(12,543) | $(11,710) | $(833) | | Cash, cash equivalents, and restricted cash equivalents at end of period | $113,771 | $116,067 | $(2,296) | - **Net cash provided by operating activities decreased** by **$4.2 million** in the first six months of 2025, primarily due to changes in working capital, including **increased inventories** and reduced customer deposits[65](index=65&type=chunk) - **Cash used in investing activities decreased** by **$4.2 million**, driven by lower **capital expenditures**[66](index=66&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the company's accounting policies, equity changes, revenue recognition, and other financial instrument details [Note A - Business and Basis of Presentation](index=7&type=section&id=Note%20A%20-%20Business%20and%20Basis%20of%20Presentation) Havertys is a residential furniture retailer; financial statements are unaudited and prepared under U.S. GAAP - Haverty Furniture Companies, Inc. operates as a retailer of residential furniture in the middle to upper-middle price ranges, exclusively under the Havertys brand[9](index=9&type=chunk) - The financial statements are unaudited and prepared in accordance with Form 10-Q instructions and U.S. GAAP, requiring management estimates and assumptions[9](index=9&type=chunk)[10](index=10&type=chunk) [Note B – Stockholders' Equity](index=8&type=section&id=Note%20B%20%E2%80%93%20Stockholders%27%20Equity) This note details changes in stockholders' equity, including net income, dividends, restricted stock, and treasury stock transactions **Changes in Stockholders' Equity (Six Months Ended June 30, 2025, in thousands):** | Item | Common Stock | Class A Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total | | :-------------------------------- | :----------- | :------------------- | :------------------------- | :---------------- | :----------------------------------- | :------------- | :------ | | Balances at Dec 31, 2024 | $30,419 | $1,793 | $117,257 | $418,960 | $(869) | $(259,999) | $307,561 | | Net income | — | — | — | $6,467 | — | — | $6,467 | | Dividends declared (Common Stock) | — | — | — | $(9,606) | — | — | $(9,606) | | Dividends declared (Class A Common Stock) | — | — | — | $(747) | — | — | $(747) | | Acquisition of treasury stock | — | — | — | — | — | $(2,000) | $(2,000) | | Balances at Jun 30, 2025 | $30,633 | $1,732 | $120,074 | $415,074 | $(869) | $(261,773) | $304,871 | - **Common Stock dividends declared** were **$0.64 per share** for the six months ended June 30, 2025, and **Class A Common Stock dividends** were **$0.60 per share**[13](index=13&type=chunk) - The company **repurchased $2.0 million** of **common stock** during the first six months of 2025, with no repurchases in the comparable 2024 period[13](index=13&type=chunk)[67](index=67&type=chunk) [Note C – Interim LIFO Calculations](index=10&type=section&id=Note%20C%20%E2%80%93%20Interim%20LIFO%20Calculations) Inventories are valued using the LIFO method, with interim calculations based on management estimates subject to change - **Inventories** are valued using the last-in, first-out (LIFO) method with an annual LIFO index[15](index=15&type=chunk) - Interim LIFO calculations rely on management's estimates of year-end inventory and inflation/deflation rates, making them subject to change based on final year-end valuation[15](index=15&type=chunk) [Note D – Fair Value of Financial Instruments](index=11&type=section&id=Note%20D%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) Fair values of short-term financial instruments approximate carrying values; deferred compensation assets use Level 1 market prices - Fair values of **cash**, restricted cash, accounts payable, and customer deposits approximate their carrying values due to their short-term nature[16](index=16&type=chunk) - Assets for self-directed, non-qualified deferred compensation plans are valued using Level 1 quoted market prices[16](index=16&type=chunk) [Note E – Credit Agreement](index=11&type=section&id=Note%20E%20%E2%80%93%20Credit%20Agreement) The company maintains an **$80.0 million** revolving credit facility with no outstanding borrowings as of June 30, 2025 - The company has an **$80.0 million revolving credit facility**, secured primarily by inventory, maturing on October 24, 2027[17](index=17&type=chunk)[61](index=61&type=chunk) - As of June 30, 2025, there were no **outstanding borrowings**, and the **net availability** under the **credit agreement** was **$80.0 million**[18](index=18&type=chunk)[61](index=61&type=chunk) [Note F – Revenues and Segment Reporting](index=11&type=section&id=Note%20F%20%E2%80%93%20Revenues%20and%20Segment%20Reporting) Revenue from merchandise sales is recognized upon delivery; the company operates as a single reportable segment - **Revenue** from merchandise sales and related service fees is recognized upon delivery to the customer, net of expected returns and sales tax[19](index=19&type=chunk) - Customer deposits were **$39.4 million** at June 30, 2025, a decrease from **$40.7 million** at December 31, 2024[19](index=19&type=chunk) **Net Sales Disaggregated by Product Category (In thousands):** | Product Category | Three Months Ended June 30, 2025 (Net Sales) | Three Months Ended June 30, 2024 (Net Sales) | Six Months Ended June 30, 2025 (Net Sales) | Six Months Ended June 30, 2024 (Net Sales) | | :----------------------- | :------------------------------------------- | :------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Case Goods | $57,561 | $58,408 | $115,613 | $117,493 | | Upholstery | $80,884 | $78,273 | $162,300 | $161,208 | | Mattresses | $16,525 | $16,640 | $32,329 | $33,240 | | Accessories and Other | $26,055 | $25,315 | $52,350 | $50,692 | | **Total Net Sales** | **$181,025** | **$178,636** | **$362,592** | **$362,633** | - The company operates within a single reportable segment, with an executive committee serving as the chief operating decision maker (CODM) and assessing performance based on income before income taxes[21](index=21&type=chunk)[22](index=22&type=chunk) [Note G – Leases](index=12&type=section&id=Note%20G%20%E2%80%93%20Leases) The company has operating leases for real estate and equipment, with variable payments expensed as incurred - The company holds operating leases for various real estate and equipment, with remaining terms of **1** to **15 years** and options to extend up to **20 years**[25](index=25&type=chunk) - Variable lease payments, typically based on sales volume or asset usage, are not included in the initial measurement of right-of-use assets or lease liabilities and are expensed when incurred[26](index=26&type=chunk)[27](index=27&type=chunk) **Lease Expense (In thousands):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $12,550 | $12,092 | $24,884 | $24,338 | | Variable lease cost | $1,311 | $1,388 | $2,613 | $2,762 | | **Total lease expense** | **$13,861** | **$13,480** | **$27,497** | **$27,100** | [Note H – Income Taxes](index=13&type=section&id=Note%20H%20%E2%80%93%20Income%20Taxes) The effective tax rate increased to **32.8%** for the six months ended June 30, 2025, with no material impact from new legislation - The **effective tax rate** for the six months ended June 30, 2025, was **32.8%**, an **increase** from **29.2%** in the prior year, mainly due to nondeductible items and tax expense from vested stock awards[29](index=29&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, is not expected to have a **material** impact on the consolidated financial statements[30](index=30&type=chunk) [Note I – Stock-Based Compensation Plans](index=14&type=section&id=Note%20I%20%E2%80%93%20Stock-Based%20Compensation%20Plans) This note summarizes activity for service-based and performance-based restricted stock awards and related compensation costs **Stock Award Activity (Six Months Ended June 30, 2025):** | Item | Service-Based Restricted Stock Awards (Shares or Units) | Performance-Based Restricted Stock Awards (Shares or Units) | | :-------------------------------- | :---------------------------------------------------- | :------------------------------------------------------ | | Outstanding at December 31, 2024 | 250,575 | 276,098 | | Granted/Issued | 213,750 | 153,948 | | Awards vested or rights exercised | (151,938) | (91,804) | | Forfeited | (10,102) | (4,577) | | Adjustment of units based on performance | — | (65,364) | | Outstanding at June 30, 2025 | 302,285 | 268,301 | - The total fair value of service-based restricted stock awards that vested was approximately **$2.9 million**, and performance-based awards was approximately **$2.1 million**, for the six months ended June 30, 2025[32](index=32&type=chunk)[33](index=33&type=chunk) - Total **compensation cost** related to unvested equity awards was approximately **$9.8 million** as of June 30, 2025, to be recognized over a weighted-average period of **two years**[34](index=34&type=chunk) [Note J – Earnings Per Share](index=15&type=section&id=Note%20J%20%E2%80%93%20Earnings%20Per%20Share) Earnings per share are reported using the two-class method, reflecting preferential dividends and differing voting rights - **Earnings per share** are reported using the two-class method, assuming **100%** of earnings are distributed as dividends based on contractual rights[36](index=36&type=chunk) - **Common Stock** has a preferential dividend rate of at least **105%** of the dividend paid on **Class A Common Stock**. **Class A Common Stock** holders have greater voting rights and can convert to **Common Stock** on a one-for-one basis[37](index=37&type=chunk) **Earnings Per Share (Common Stock):** | EPS Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted EPS (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Basic EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | | Diluted EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | [Note K – Contingencies](index=16&type=section&id=Note%20K%20%E2%80%93%20Contingencies) The company is subject to various legal proceedings, none of which are expected to have a material adverse effect - The company is involved in various claims and legal proceedings arising in the ordinary course of business[39](index=39&type=chunk) - No pending claims or legal proceedings are currently believed to be reasonably likely to have a **material** adverse effect on the company's financial condition, results of operations, or cash flows[39](index=39&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, liquidity, and capital resources [Forward-Looking Statements and Risk Factors](index=17&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This subsection outlines forward-looking statements and lists risks that could cause actual results to differ materially from expectations - Statements about future estimates, expectations, beliefs, intentions, projections, or strategies are considered forward-looking statements, subject to inherent uncertainties and risks[41](index=41&type=chunk)[42](index=42&type=chunk) - Competition from national, regional, and local retailers[44](index=44&type=chunk) - Ability to anticipate changes in consumer preferences and implement growth strategies[44](index=44&type=chunk) - Risks in the supply chain, including cost volatility of raw materials, dependence on third-party producers, and transportation[44](index=44&type=chunk) - Impact of labor disruptions, shortages, and ability to attract/retain key employees[44](index=44&type=chunk) - Vulnerability of information technology infrastructure to cyber-attacks[44](index=44&type=chunk) - Changes in general domestic and international economic conditions (inflation, interest rates, recessions)[44](index=44&type=chunk) - Pending or unforeseen litigation[44](index=44&type=chunk) [Impact of tariffs imposed by the U.S government](index=18&type=section&id=Impact%20of%20tariffs%20imposed%20by%20the%20U.S%20government) New U.S. tariffs on imported goods are effective August 7, 2025; the company is assessing their impact on supply chain and costs - New U.S. **tariff rates**, ranging from **10%** to **41%**, will be imposed on imports from over **67** countries, **effective** August 7, 2025[47](index=47&type=chunk) - **Tariffs** for Chinese goods remain at **55%** and are part of ongoing discussions. Canada faces **increased tariffs** on certain non-compliant goods[47](index=47&type=chunk) - The company is actively monitoring developments and evaluating mitigation strategies to assess the impact on its supply chain and cost structure[47](index=47&type=chunk) [Net Sales](index=18&type=section&id=Net%20Sales) Net sales for Q2 2025 increased by **1.3%** year-over-year, despite a challenging demand environment, while comp-store sales decreased **Net Sales and Comp-Store Sales Performance (In millions):** | Period | Net Sales (Total) 2025 | Net Sales (Total) 2024 | Comp-Store Sales 2025 | Comp-Store Sales 2024 | | :----- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Q1 | $181.6 | $184.0 | (4.8)% | (18.5)% | | Q2 | $181.0 | $178.6 | (2.3)% | (13.6)% | | YTD Q2 | $362.6 | $362.6 | (3.5)% | (16.2)% | - **Net sales** for Q2 2025 **increased** by **$2.4 million (1.3%)** compared to Q2 2024, while **comp-store sales decreased** by **$4.0 million (2.3%)**[49](index=49&type=chunk) - For the first six months of 2025, **net sales** were **comparable** to 2024, but **comp-store sales decreased** by **$12.8 million (3.5%)**[50](index=50&type=chunk) - **Design consultants** contributed **33.4%** of total written sales in Q2 2025 (down from **36.0%** in Q2 2024), with a higher **average written ticket** of **$7,631** (up from **$7,260**)[51](index=51&type=chunk) [Gross Profit](index=19&type=section&id=Gross%20Profit) Gross profit margin improved for both the second quarter and first six months of 2025, driven by product selection and pricing - **Gross profit margin** for Q2 2025 was **60.8%**, **up 40 basis points** from **60.4%** in Q2 2024[53](index=53&type=chunk) - For the first six months of 2025, **gross profit margin** was **61.0%**, **up 60 basis points** from **60.4%** in the same period of 2024[53](index=53&type=chunk) - The **increase** in **gross profit margin** is primarily attributed to product selection, merchandise pricing, and mix[53](index=53&type=chunk) [Selling, General and Administrative Expenses](index=19&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses as a percentage of sales increased due to higher administrative, occupancy, and advertising costs - **SG&A expenses** as a percentage of sales were **59.3%** for Q2 2025 (up from **57.7%** in Q2 2024) and **59.2%** for the first six months of 2025 (up from **58.6%** in 2024)[55](index=55&type=chunk)[56](index=56&type=chunk) - Q2 2025 **SG&A increased** by **$4.2 million (4.1%)**, driven by **administrative** (**$3.4M**), **occupancy** (**$1.5M**), and **advertising** (**$1.1M**) costs, partially offset by **decreased warehouse and delivery costs** (**$1.1M**)[55](index=55&type=chunk)[56](index=56&type=chunk) - First six months of 2025 **SG&A increased** by **$2.1 million (1.0%)**, driven by **administrative** (**$4.5M**) and **occupancy** (**$3.1M**) costs, offset by **decreased warehouse and delivery** (**$2.8M**) and **selling expenses** (**$2.7M**)[55](index=55&type=chunk)[56](index=56&type=chunk) **SG&A Expenses by Classification (In thousands):** | Classification | Three Months Ended June 30, 2025 | % of Net Sales 2025 | Three Months Ended June 30, 2024 | % of Net Sales 2024 | Six Months Ended June 30, 2025 | % of Net Sales 2025 | Six Months Ended June 30, 2024 | % of Net Sales 2024 | | :----------------------- | :------------------------------- | :------------------ | :------------------------------- | :------------------ | :----------------------------- | :------------------ | :----------------------------- | :------------------ | | Variable | $33,353 | 18.4% | $34,746 | 19.4% | $67,000 | 18.5% | $71,732 | 19.8% | | Fixed and discretionary | $73,980 | 40.9% | $68,353 | 38.3% | $147,535 | 40.7% | $140,723 | 38.8% | | **Total SG&A** | **$107,333** | **59.3%** | **$103,099** | **57.7%** | **$214,535** | **59.2%** | **$212,455** | **58.6%** | [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with cash and a credit facility, despite decreased operating cash flows and increased stock repurchases - As of June 30, 2025, the company had **$107.4 million** in **cash and cash equivalents** and **$6.4 million** in restricted cash equivalents[60](index=60&type=chunk) - The company believes its current cash, operating cash flow, credit agreement, and access to debt markets are sufficient for operating requirements, **capital expenditures**, dividends, and lease obligations[60](index=60&type=chunk) - **Net cash provided by operating activities decreased** by **$4.2 million** to **$13.4 million** in the first six months of 2025, primarily due to **increased inventories** and reduced customer deposits[65](index=65&type=chunk) - **Cash used in investing activities decreased** by **$4.2 million** due to lower **capital expenditures**, and **cash used in financing activities increased** by **$0.9 million** due to **$2.0 million** in **common stock repurchases**[66](index=66&type=chunk)[67](index=67&type=chunk) [Store Plans and Capital Expenditures](index=21&type=section&id=Store%20Plans%20and%20Capital%20Expenditures) The company plans new store openings and relocations, expecting **129** stores by the end of 2025 **Store Plans (Actual or Planned Opening Quarter):** | Location or Market | Opening Quarter | Category | | :----------------- | :-------------- | :--------- | | Houston, TX | Q1-25 | Open | | Daytona, FL | Q2-25 | Relocation | | Atlanta, GA | Q2-25 | Closure | | Waco, TX | Q3-25 | Closure | | Houston, TX | Q4-25 | Open | | St. Louis, MO | Q1-26 | Open | | Nashville, TN | Q2-26 | Open | | Houston, TX | Q3-26 | Open | | Houston, TX | Q4-26 | Open | - The company anticipates ending 2025 with a total of **129** stores, assuming new store openings proceed as planned[68](index=68&type=chunk) [Critical Accounting Estimates](index=21&type=section&id=Critical%20Accounting%20Estimates) Management concluded no accounting estimates were critical for the periods presented, with no significant changes since the last annual report - **Critical accounting estimates** require significant, subjective, or complex judgments, often involving inherently uncertain matters[69](index=69&type=chunk) - Management concluded that no **accounting estimates** were deemed **critical** for the periods presented, and there have been no significant changes since the 2024 Annual Report on Form 10-K[69](index=69&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's exposure to market risk has not materially changed since December 31, 2024, as detailed in its Form 10-K - The company's exposure to market risk has not **materially changed** since December 31, 2024[70](index=70&type=chunk) - Detailed disclosures about market risk are available in 'Item 7A. Quantitative and Qualitative Disclosures About Market Risk' of the company's Form 10-K[70](index=70&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's **disclosure controls and procedures** were **effective** as of June 30, 2025[71](index=71&type=chunk) - No changes in the company's **internal control over financial reporting** occurred during the fiscal quarter ended June 30, 2025, that have **materially affected**, or are reasonably likely to **materially affect**, **internal control over financial reporting**[72](index=72&type=chunk) PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is cross-referenced to Note K - Contingencies within the financial statements - Information regarding legal proceedings is provided in Note K - Contingencies of the Notes to the Condensed Consolidated Financial Statements[74](index=74&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company refers to its Form 10-K for risk factors, confirming no material changes from those previously described - There have been no **material changes** from the risk factors described in the company's Form 10-K[75](index=75&type=chunk) - A discussion of known **material risk factors** is available in 'Item 1A. Risk Factors' of the company's Form 10-K[75](index=75&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Board authorized a stock repurchase program; no repurchases occurred in Q2 2025, with **$6.1 million** remaining authorized - The Board of Directors has authorized a **stock repurchase program** for **Common Stock** and **Class A Common Stock**, with no expiration date[76](index=76&type=chunk) - No repurchases of **common stock** occurred during the second quarter of 2025[77](index=77&type=chunk) - As of June 30, 2025, approximately **$6.1 million** remained **authorized for repurchase** under the program[77](index=77&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No directors or officers adopted, modified, or terminated a '**Rule 10b5-1 trading arrangement**' or '**non-Rule 10b5-1 trading arrangement**' during the three months ended June 30, 2025[78](index=78&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with or incorporated by reference into the report, including charter, by-laws, and certifications - Exhibit 3.1: Articles of Amendment and Restatement of the Charter[80](index=80&type=chunk) - Exhibit 3.2: By-laws of Haverty Furniture Companies, Inc[80](index=80&type=chunk) - Exhibit 10.1: Amendment and Waiver to the Amended and Restated Credit Agreement[80](index=80&type=chunk) - Exhibit 31.1: Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 31.2: Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 32.1: Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350[80](index=80&type=chunk) - Exhibit 101: Inline XBRL financial statements[80](index=80&type=chunk) - Exhibit 104: Cover Page Interactive Data File[80](index=80&type=chunk)

Financial Data and Key Metrics Changes - Company reported Q2 2025 sales of $181 million, a 1.3% increase year-over-year, with comparable store sales down 2.3% [3][18] - Gross margin improved to 60.8% from 60.4%, reflecting product selection and merchandising mix [18] - Pre-tax profits decreased to $4.3 million, with an operating margin of 2.4%, down from $6.5 million and 3.6% in Q2 2024 [3][18] - Earnings per share (EPS) for the quarter was $0.16, compared to $0.27 in the same quarter last year [3][18] Business Line Data and Key Metrics Changes - Total written sales increased by 0.4%, while design and special order business saw a mid-single-digit decline due to tariff impacts [4][9] - Average ticket size decreased slightly to just under $3,400, while designer average ticket grew approximately 5% to over $7,600 [4][9] - Upholstery and bedroom categories outperformed with low to mid-single-digit positive sales, while dining room and decor categories experienced high single-digit declines [9] Market Data and Key Metrics Changes - Traffic remained positive in the mid-single digits compared to the same period last year, with a notable increase during the Memorial Day event [4][6] - Organic traffic increased by 15.6% following the implementation of Adobe's Edge delivery service [7] - Web sales grew by 8.4% for the quarter, attributed to improved digital marketing strategies [7] Company Strategy and Development Direction - Company aims to return to positive same-store sales and is focused on enhancing customer experience through new point of purchase and tagging programs [10][12] - Plans to open five new stores annually, with two new stores in Houston and one relocation in Daytona Beach planned for 2025 [12][14] - Company is actively managing supply chain challenges and tariff uncertainties while maintaining gross margin guidance [11][15] Management's Comments on Operating Environment and Future Outlook - Management noted a struggling housing market with high interest rates and inflation concerns but highlighted consumer resilience [4][15] - Confidence in maintaining gross margin guidance despite potential tariff impacts, with proactive vendor communication [11][22] - Management expressed optimism about gradual improvement in sales trends and plans to invest more in marketing strategies [37][48] Other Important Information - Selling, general, and administrative expenses increased by 4.1% to $107.3 million, representing 59.3% of sales [19] - Company has no funded debt and ended the quarter with $107.4 million in cash and cash equivalents [20][21] - Anticipated capital expenditures for 2025 remain at $24 million, focusing on new store openings and IT investments [23] Q&A Session Summary Question: Can you speak to the cadence of your written sales throughout the quarter and any notable regional differences? - Written business was down around 2% in April, up almost 1% in May, and up around 2.5% in June, with no significant regional differences noted [26] Question: Can you quantify the impact of suspending special orders from China on same-store business? - Management acknowledged the impact on design business but could not quantify the exact effect [27][28] Question: Have you taken any pricing actions regarding tariffs, and what are your expectations? - Pricing adjustments were made in May, and management is prepared to adjust pricing based on final tariff outcomes [29][30] Question: What marketing strategies do you believe will be most impactful in driving same-store sales? - New pricing strategy and successful marketing campaigns, including extended promotions, are expected to drive traffic and conversion rates [35][36] Question: How do you view the promotional environment across the industry? - Management feels confident in their promotional strategies and plans to increase marketing investments while maintaining brand integrity [40][42] Question: What is the outlook for store openings and the real estate environment? - Store openings have been pushed to 2026, but management remains optimistic about finding suitable locations and maintaining reasonable rents [49][51]

Group 1: Earnings Performance - Haverty Furniture reported quarterly earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, but down from $0.27 per share a year ago, representing an earnings surprise of +6.67% [1] - The company posted revenues of $181.03 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.34%, compared to year-ago revenues of $178.6 million [2] - Over the last four quarters, Haverty Furniture has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Haverty Furniture shares have declined approximately 5% since the beginning of the year, while the S&P 500 has gained 8.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.29 on revenues of $185.3 million, and for the current fiscal year, it is $1.15 on revenues of $740.85 million [7] Group 3: Industry Context - The Retail - Home Furnishings industry, to which Haverty Furniture belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Haverty Furniture's stock performance [5] - Williams-Sonoma, another company in the same industry, is expected to report quarterly earnings of $1.78 per share, reflecting a year-over-year change of +2.3% [9]