Haverty Furniture(US:HVT)2021-07-28 19:07Financial Data and Key Metrics Changes - The company reported record sales of $250 million for Q2 2021, representing a 127.3% increase over the prior quarter [5][20] - Written sales for Q2 2021 were up 67.5% year-over-year, while comparable store sales increased by 46.9% [21] - Gross profit margin improved by 240 basis points from 54.2% to 56.6% due to better merchandising and pricing [22] - Selling, general, and administrative expenses rose by $39.8 million or 54.7% to $112.4 million, but as a percentage of sales, these costs declined to 45% from 66.1% [23] - Net income for Q2 2021 was $22.9 million or $1.21 per diluted share, compared to $13.6 million or $0.72 per share in the same period last year [26] Business Line Data and Key Metrics Changes - The case goods business showed stronger growth compared to upholstery, which faced delays in customization and special orders [37] - The average pool age for special orders increased to approximately eight weeks, impacting the special order business [18] Market Data and Key Metrics Changes - The company is focusing on building market share in key markets, with new store openings in Myrtle Beach, Austin, and Central Florida [9][10] - The company is investing over $1 billion in distribution capacity to support growth, including a 20% increase in storage capacity at its eastern distribution center [8] Company Strategy and Development Direction - The company aims to grow market share and maintain double-digit operating margins while investing in IT and distribution networks [5][11] - The "We Furnish Happiness" marketing campaign is designed to differentiate the company from competitors and enhance customer service [10] Management's Comments on Operating Environment and Future Outlook - Management believes the increased importance of home, accelerated by COVID-19, is a sustainable trend for the near future [6] - Shipping challenges are expected to persist until spring 2022, impacting inventory levels and order fulfillment [7][15] - Staffing remains a concern, but management is optimistic about improvements in the third quarter [19] Other Important Information - The company ended Q2 2021 with $235.3 million in cash and no funded debt [28] - Planned capital expenditures for 2021 have increased from $23 million to $37 million, with significant investments in distribution and IT [32][33] Q&A Session Summary Question: Changes in consumer purchasing behavior - Management noted improvements in case goods sales, while upholstery sales were impacted by delays in customization [37] Question: Future gross margin potential - Management expressed confidence in maintaining gross margins within the guidance of 56.5% to 56.8% for the remainder of the year [39] Question: Usage of excess cash flow - The company is considering various options for excess cash, including buybacks, dividends, and investments in distribution centers [40] Question: Written sales growth comparisons - Management indicated that the back half of the year would present more challenging comparisons for written sales growth [45] Question: Impact of product and freight cost changes - Management stated that they are actively addressing changes in product and freight costs and passing those along to customers [51] Question: Changes in consumer behavior due to COVID-19 resurgence - Management reported no significant changes in consumer behavior despite the resurgence of COVID-19 [52]