Haverty Furniture(US:HVT)2023-08-02 19:46Financial Data and Key Metrics Changes - In Q2 2023, net sales were $206.3 million, an 18.5% decrease compared to the prior year quarter [10][16] - Comparable store sales decreased by 19.1% over the prior year period [10] - Gross profit margins increased by 260 basis points to 60.5% from 57.9% due to reductions in freight and a positive LIFO inventory adjustment [10] - Net income for Q2 2023 was $11.8 million or $0.70 per diluted share, down from $21.7 million or $1.27 per share in the comparable quarter last year [13][17] - Selling, general and administrative expenses decreased by $8.1 million or 6.9% to $110 million, representing 53.3% of sales, up from 46.7% in the prior year quarter [11] Business Line Data and Key Metrics Changes - Incoming orders or written sales were down 14.7%, with written comparable store sales down 15.2% [17] - Special order business was up over 50% compared to last year, representing 30% of the upholstered business for the quarter [26] - The design business grew to over 28% of total business for the quarter, with average ticket growing close to 6% over last year [27] Market Data and Key Metrics Changes - The company experienced a significant drop in written business in April, down 20%, but saw improvements in May and June, with declines of approximately 13% and 11% respectively [7] - The overall market is facing challenges due to consumer pullback in home-related spending and the impact of higher interest rates on home sales [16] Company Strategy and Development Direction - The company is focused on strengthening its store locations from Maryland to Texas and has acquired leases on four stores from the Bed Bath & Beyond bankruptcy auction [19][21] - Plans to open three new stores by the end of the year and five stores annually within its distribution footprint are in place [40][41] - The company is investing heavily in its website and enhancing customer relationships through physical stores [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q2 but expressed optimism about recent improvements in incoming orders and customer reactions to new product introductions [23] - The company is committed to executing its strategic plan and believes it is well-positioned to grow its market share despite current economic conditions [40] Other Important Information - Capital expenditures for Q2 were $33.8 million, including the repurchase of the Florida distribution facility for $28.2 million [34] - The effective tax rate for Q2 2023 was 25.5%, with a tax expense of $4 million [32] Q&A Session Summary Question: Recent improvements in incoming orders - Management noted a significant drop in written business in April but improvements in May and June, with trends leveling back to the low teens [6][7] Question: Sustainability of average ticket growth - Management indicated that average ticket growth is driven by the design business, which has not been an issue and is expected to continue growing [46] Question: Outlook for credit promotions - The company is being more disciplined with credit promotions, offering 0% financing for 36 months but for shorter periods than in the previous year [48][62] Question: Need for further headcount reductions - Management is comfortable with current staffing levels but will continue to review and make adjustments as necessary [53][66] Question: Timeline for opening acquired Bed Bath & Beyond stores - The company anticipates completing refurbishments for the acquired stores in the first half of next year, with allocated capital for renovations [55][68]