Haverty Furniture(US:HVT)2020-08-11 18:48Financial Data and Key Metrics Changes - Sales for Q2 2020 were $110 million, a decrease of 42.7% compared to $191 million in Q2 2019 [7][15] - Gross profit margins increased by 20 basis points from 54.0% to 54.2% due to merchandise pricing and mix [15] - Net income for Q2 2020 was $13.6 million or $0.72 per diluted share, compared to $6 million or $0.29 per share in the same quarter last year [18] Business Line Data and Key Metrics Changes - Written sales in May and June were up 13.9%, with comparable store written sales up 7.5% [7] - Delivered sales were down 13.4% due to challenges in rebuilding delivery and distribution staff [7] - The occasional category of sales increased from 7.6% to 10.2%, while mattress sales decreased from 11.5% to 9.4% [46][47] Market Data and Key Metrics Changes - The company reported a strong backlog of orders, indicating a significant demand shift towards home-related products [8] - Traffic, written average ticket, sales per square foot, closing rates, and gross margins were at record levels [10] Company Strategy and Development Direction - The company is focusing on enhancing relationships with vendors to prioritize shipments and manage increased delivery costs [9] - Plans to increase capital expenditures to $9.6 million, focusing on repairs, maintenance, and IT upgrades [23] - The company is optimistic about long-term trends prioritizing home over other areas, despite uncertainties related to COVID-19 [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the ongoing challenges posed by COVID-19, highlighting a strong balance sheet and cash management [12] - The company anticipates that the current demand trends will continue through 2020 and into 2021 [12] - Management acknowledged potential challenges with product cancellations due to supply chain issues but remains optimistic about future performance [11] Other Important Information - The company declared a third-quarter dividend increase to $0.20 per share, a 33% increase from the previous quarter [21] - A $31.6 million gain was recorded from a sales leaseback transaction, enhancing liquidity [17] Q&A Session Summary Question: Could you provide more color around written trends in recent weeks and July? - Management indicated that trends are consistent with Q2 results and are continuing [28] Question: Will there be less promotional activity and higher gross margins due to workforce-related supply constraints? - Management stated they will not be more aggressive than historic plans and will maintain promotional activities, especially around Labor Day [30] Question: Are workforce-related challenges primarily at the supply chain level? - Management confirmed that challenges exist at both supply chain and delivery levels, with ongoing hiring efforts [32] Question: What are the average delivery times to customers? - Management noted that typical delivery times have extended to about a month, but customers are understanding of the delays [40] Question: Has government stimulus impacted demand? - Management acknowledged that stimulus has positively impacted demand as consumers focus on home improvements [42][43] Question: Which product categories have seen the most demand? - Upholstery has been the strongest category, while mattress sales have faced supply issues [46]