Haverty Furniture(US:HVT)2024-08-03 18:49Financial Data and Key Metrics Changes - Total sales for Q2 2024 were $178.6 million, a decrease of 13.4% from the previous year, but an improvement from the 18.1% decline in Q1 2024 [3][10] - Gross margins remained strong at 60.4%, with a slight decrease of 10 basis points from 60.5% in the prior year [10] - Net income for Q2 2024 was $4.4 million, or $0.27 per diluted share, compared to $11.8 million, or $0.70 per share, in the same quarter last year [11] Business Line Data and Key Metrics Changes - The design business grew over 24% for the quarter, now representing 35% of total sales, with the average ticket for design business rising to approximately $7,000, a 7% increase [5][8] - Selling, general and administrative expenses decreased by $6.9 million, or 6.3%, to $103.1 million, but as a percentage of sales, these costs increased to 57.7% from 53.3% in the prior year [11] Market Data and Key Metrics Changes - Store traffic improved slightly during the quarter, but closing rates slipped as consumers became more deliberate in their purchasing decisions [7][8] - Customer deposits at the end of Q2 2024 were $38.7 million, up $2.9 million from the end of 2023 but down $6.9 million from Q2 2023 [12] Company Strategy and Development Direction - The company plans to open five new stores in 2024, including locations in Texas and Florida, to strengthen its market presence [4][5] - Investments in talent and IT are ongoing, with a focus on enhancing the website and improving customer engagement [25][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by higher interest rates and a sluggish housing market but expressed optimism about potential interest rate cuts and their impact on consumer demand [7][10] - The company is committed to maintaining margins and focusing on quality products, targeting a better customer segment rather than engaging in aggressive pricing [24][34] Other Important Information - The company has a solid cash position of over $100 million and no funded debt, allowing for continued investment in growth opportunities [3][12] - Capital expenditures for the first half of 2024 were $16 million, with a planned total of $33 million for the year [14] Q&A Session Summary Question: Sales trends throughout the quarter - Sales were down approximately 14% in April, 18% in May, and 8% in June, with delivery trends reflecting similar declines [15] Question: New media approach and its impact - The new media firm, Carmichael Lynch, has shown early positive indicators, with slight improvements in store traffic [16][17] Question: Plans for Labor Day promotions - The company will maintain its normal promotions without aggressive price cuts, focusing on driving store traffic through marketing efforts [22][24] Question: Impact of upcoming elections on advertising - The company may face limitations on broadcast advertising due to election-related priorities but will monitor the situation [18] Question: Management of potential tariffs on goods from China - The company has already established alternative production sources to mitigate potential tariff impacts [28] Question: Competitive landscape and promotional trends - The company does not see significant changes in promotional strategies among competitors, particularly in the upper market segment [39][41]