EXHIBIT 99.1
Havertys Reports Earnings for Second Quarter 2019
ATLANTA, GEORGIA, July 30, 2019 -- HAVERTYS (NYSE: HVT and HVT.A) reports earnings per share of $0.29 for the second quarter ended June 30, 2019 compared to $0.29 for the same period of 2018. The earnings per share for the six months ended June 30, 2019 is $0.47 compared to $0.58 for the same period in 2018.
Clarence H. Smith, chairman, president and chief executive officer, said, “We began recovering in the second quarter from the supply chain disruption caused by the increased tariffs. Our inventory levels, particularly for our best-selling goods, returned to sustainable working amounts and our sales improved. Increased product costs resulting from tariffs and transportation charges have pressured our gross margins. We have been strategic in raising retail prices for those products imported from China and will continue to analyze the impact of those changes against promotional activity. My recent visit to meet with our important Asian vendors confirms the rapid movement of furniture production from China to Vietnam. We are confident in the ability of our vendors to make this transition for several of our important product lines.
“Our new store in St. Louis, MO will open in August and the south-metro Atlanta location in Newnan, GA is slated to open in September. We also expect to complete the relocation of our Baton Rouge, LA store in November.
“We are optimistic concerning the second-half of 2019 and our ability to navigate the challenges of the retail furniture industry.”
Financial Highlights
Second Quarter 2019 Compared to Second Quarter 2018
| · | Net sales decreased 3.5% to $191.9 million. Comparable store sales decreased 2.3%. |
| · | Total written sales for the second quarter of 2019 were down 4.1% and written comparable store sales decreased 3.1%. |
| · | Average written ticket increased 5.3% and custom upholstery business was up 7.6%. |
| · | Gross profit margins fell 20 basis points to 54.0% in 2019 versus 54.2% in 2018. Approximately one-half of the decline is due to merchandise pricing and mix as we used slightly more aggressive promotions. The remaining reduction was driven by higher product and freight costs. |
| · | SG&A costs declined $3.0 million and as a percent of sales increased 20 basis points to 49.9% from 49.7%. We had decreases in SG&A dollars in all categories. Fixed and discretionary expenses were down approximately $0.9 million primarily from reduced compensation costs. Variable expenses were 18.4% as a percent of sales in 2019 compared to 18.8% in 2018. This reduction is due in part to savings in our third‑party credit costs. |
NEWS RELEASE – JULY 30, 2019
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| · | We repurchased 1,005,226 shares of common stock for $17.8 million during the second quarter of 2019. |
| · | We adopted the new lease accounting standard on January 1, 2019 which significantly impacted our balance sheet. See the notes after the following financial statements. |
Six Months ended June 30, 2019 Compared to Same Period of 2018
| · | Net sales decreased 4.8% to $379.1 million. Comparable store sales decreased 3.5%. |
| · | Average ticket increased 6.1% and custom upholstery business rose 7.9%. |
| · | Gross profit margins were 54.5% compared to 54.4%. |
| · | SG&A costs as a percent of sales was 51.3% in 2019 and 50.2% in 2018. Total SG&A dollars decreased $5.1 million. Fixed and discretionary expenses were $124.4 million in 2019 versus $125.7 million in 2018. The variable type costs were 18.5% of sales in 2019 compared to 18.6% in 2018. |
Expectations and Other
| · | We expect that gross profit margins for the full year 2019 will be approximately 54.1%. Second half and fourth quarter 2019 gross margins are expected to be approximately 40 basis points lower than the full year margin. |
| · | Our estimate for fixed and discretionary type SG&A expenses for 2019 is in the $256.0 to $258.0 million range, compared to $254.9 million for these same costs in 2018. The variable type costs within SG&A for the full year of 2019 are expected to be 18.0% compared to 18.3% in 2018. |
| · | We expect selling square footage will increase approximately 1.4% in 2019. We plan to open a location in a new market in St. Louis, MO in August, an additional store in the Atlanta market in Newnan, GA in September, and complete a store relocation in Baton Rouge, LA in November. Total capital expenditures are estimated to be approximately $19.0 million in 2019. |
| · | We have $8.4 million remaining in current board authorization for common stock repurchases. |
