Havertys earnings up
By Furniture Today Staff -- Furniture Today, May 5, 2008
Atlanta — Havertys credited strategies including a shift to more credit promotions and away from price discounting for helping the company post a 24.2% gain in first-quarter earnings despite a 3% sales decline.
The Atlanta-based retailer said it earned $1 million or 5 cents per share in the quarter, up from $831,000 or 4 cents per share in the same period a year earlier.
Sales came to $185.2 million, and same-store sales were down 6.3%.
Clarence Smith, president and CEO, said the company's gross margin improved to 52.1% from 49.9% a year earlier, reflecting the effects of several strategies.
"We chose to use credit as a stimulant for sales rather than emphasizing price discounting during the first quarter. Slightly more than one-third of the gross profit improvement was due to better product mix and better pricing discipline," he said.
He also said that "heightened diligence" over inventory reduced the levels of damaged and close-out goods, accounting for another third of the gross margin improvement. The remainder of the gain came from shifting more of the long-term, no-interest credit promotions from in-house financing to third-party financing, said Smith.
He added that the company was pleased with the progress it had made in reducing its selling, general and administrative expenses, but said the cost of the credit promotions and higher fuel costs balanced out the savings and kept SG&A flat with a year ago.
"Our industry is still struggling to find the bottom of this cycle," Smith said. "We are encouraged by our performance in certain of our markets but we still see significant weakness in Florida."
Last month, the company began selling on the Web and has begun promoting its havertys.com site more heavily.
"Our approach remains to connect with the customer in ways she chooses to shop and drive customers to our stores predisposed to purchase," said Smith.
He said current indications for April are that written business declined 7% to 8% with delivered sales flat. The company plans to release April sales results this week.
| Quarter ended 3/31 | 2008 | 2007 | Change |
|---|---|---|---|
| Sales | $185,253,000 | $191,073,000 | (3.0%) |
| Operating income | 1,398,000 | 304,000 | 359.9% |
| Net income | 1,032,000 | 831,000 | 24.2% |
| Earnings per share | 0.05 | 0.04 | 25.0% |
