Haverty Furniture(US:HVT)2026-02-24 16:02Financial Data and Key Metrics Changes - Net sales for Q4 2025 were $201.9 million, an increase of 9.5% year-over-year, with comparable sales up 8.2% [3][4] - Gross margins for Q4 were 60.4%, down from 61.9% in the previous year, with LIFO charges of $3.9 million impacting results [3][4] - Pre-tax income for Q4 was $10.8 million, resulting in earnings per share of $0.51, compared to $0.49 in the same quarter last year [4][16] Business Line Data and Key Metrics Changes - The design business accounted for 33.3% of total sales, driven by a 14.8% increase in upholstery special orders [5] - Average ticket for Q4 increased by 10.9% to $3,759, with design average ticket growing 11.9% to $8,072 [5][6] - Written sales for the year were up 2.8%, with comparable sales up 0.7% [6] Market Data and Key Metrics Changes - Traffic for Q4 ended with a decrease in low single digits, following a positive trend in the previous months [5][6] - The company experienced a significant increase in web traffic and key site engagement, contributing to a 12.3% increase in written e-commerce sales for the quarter [9] Company Strategy and Development Direction - The company plans to open five new stores in 2026, including its first location in Pennsylvania, while closing one underperforming store in Alexandria, Louisiana [10][11] - Capital expenditures for 2026 are projected to be around $33.5 million, focusing on store growth and remodels [11][19] - The company aims to maintain a debt-free balance sheet and continue its focus on customer experience and operational consistency [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's performance, indicating a rebound in 2025 and a focus on testing new ideas and processes in 2026 [12] - The company is monitoring tariff developments closely, with expectations that gross margins for 2026 will be between 60.5% and 61% [18][19] - Management noted that the recent government shutdown may have impacted consumer behavior, but they remain confident in their sales momentum [39][40] Other Important Information - The company experienced a $12.7 million increase in inventories year-over-year, totaling $96.2 million at year-end [7][16] - Marketing expenses were down slightly as a percentage of net sales, with plans to keep marketing spend flat in 2026 compared to 2025 [10][44] Q&A Session Summary Question: Can you provide details about same-store sales trends throughout the quarter? - Management reported high single-digit growth in October, middle single-digit growth in November, and low single-digit decline in December [23] Question: What factors are affecting the variable component of SG&A outlook for 2026? - Management indicated that higher sales commissions and competitive pressures are expected to impact variable SG&A costs, while occupancy costs will also increase due to store growth [25][27] Question: How will the evolving tariff environment affect pricing actions? - Management stated they will be deliberate in their approach, working through existing inventories before making pricing adjustments [28] Question: What is the expected timeline for working through current inventory at the previous tariff rate? - Management anticipates it will take the first half of the year to work through current inventory before introducing new inventory at updated costs [36] Question: Can you discuss the mattress refresh program and its impact? - Management noted improvements in presentation and consumer understanding, with positive traction observed in stores that have undergone the refresh [41][43] Question: What are the expectations for marketing and advertising expenses in 2026? - Management expects marketing spend to remain flat as a percentage of sales compared to 2025 [44]