Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to Haverty’s Second Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Richard Hare, Chief Financial Officer. Please go ahead.

Richard Hare

Thank you, operator.

make which we'll risks subject call, uncertainties. and this forward-looking are statements, to During differ those date materially in may revise. no results Actual from update publicly which and we or only obligation made to such made speak as are the they which undertake statements, implied or Factors in economic reports the competitive that filed results and conditions with include cause differ actual SEC. company's other could the to and uncertainties detailed

our Clarence CEO, on Smith, will Steve you additional give provide update and business. and now our an commentary results Chairman President, our will Burdette Our about

Clarence Smith

you conference of in impact Thank $XXX.X home-related decreased morning. million, for Consolidated to the and higher Good joining interest our quarter XX.X% pullback spending call. rates second reflecting on consumers' the sales. sales home

sales sales down comp were written written down with store XX.X% orders Incoming XX.X%. or

per share and consumer of last delivered a at significant $X.XX solid believe we in spending the Recognizing came that versus performance. year. Our $X.XX shift inflationary I pressures, earnings

began in sales were very in quarter The driven We our -- saw special and and average sales. increased by nice customer and negatively along design-oriented custom a increase order sales the most with the in temperature. increases April to impacted improve

recognition to for products, continue free quality design. gain We and service our

primary in investing has in we store relationship are the and COVID. shop, we serve website and that in-person first is the since our that increased the the way customers we While heavily is develop physical learn our customers, way about us importance personal relationship

their we gain input store helps member importance of from our critical. in customers strengthening As team and to can Texas. where positioned drive becomes average the selections the knowledgeable locations We're focus $X,XXX, brick-and-mortar our our and design footprint Maryland our a more and are touch sale from customization stores over see

and Late awareness believe served North distribution. Concord, Richmond, we to in our by open several as served south year, brand current expanded Dayton, X on Ohio our as our allow that us are we Carolina, outlet existing store stores, by this Charlotte, Center that build and store of our can plan to an our Delivery store third Home opportunities base will Virginia. well There Cincinnati be

In the facility which to in the second future. center allow Florida Lakeland, able will our be bought expand distribution us to we in quarter, back the

We new of Bed and leases are these acquired & pleased to the distribution allow X important on which areas fast-growing in have our in leverage Florida are auction. and bankruptcy marketing markets. to stores in locations, reach Three stores us the Beyond Bath those

and location Destin that penetrate south, The our ideally major Pines position Miami is have we Florida. located to Petersburg is St. location in further Tampa, our strengthens near dynamic market underrepresented. Southeast The been a Pembroke, near where Coast. further Emerald adds

in the XX With units, have we'll of stores Florida. these addition

of Haven, South We're an in footprint. management store fourth exceptionally south sales suburb The and important Mississippi an our in our count and with adds state balance our experienced in growth sheet Memphis our solid XXth store and regions. grow to team position reaches our to strong

X stores opening year share. footprint keenly market growing executing and a our of our strategic our are on within We plan focused distribution

the While by new improvements recent tackling. we the we post-COVID experienced a surge are incoming orders, first customers' introduction in reactions falloff half, we're in product the from and that encouraged growth to opportunities new

life. to customers' help to our drilling vision their are of We home come

and will on shareholders. build As our returns deliver to reach. extend on for exciting is an that gain commitment, Havertys share our we we This time

our Burdette, the over to I'll call President. now Steve turn

Steve Burdette

proved and a Clarence, good Thank for quarter difficult morning. to results. very you, be us weaker-than-expected QX with

each in we have and making even to we're and tremendous customers' that serving happiness to important strides more every team made we However, customer. by needs basics our to getting our ensure the become efforts that members sure have as are back furnishing

supply network functioning real headwinds. chain with Our is no

inventories backlogs our remain down consistent. year, XX.X% and last Our were QX from

helping to X lead remain approximately in to us vendors continue our drive times business. our from Our weeks, special order

For expose over quarter engaged increases Also, and the services in year business upholstered XX% that the our have QX, our for to which quarter. to of encouraged grew business with be XX% future. These of more customers up X% in to opportunity average by with the our year. over last customers design design business was the the are ticket and represents last growing have of increase over over continued close special driven number XX% for we the order by to to business, design our our

progress making new website our with are with We the business partner.

site improvements more improve help and more are well to testing as and us in personalization. the experience user to analytics We are will continue drive now robust getting seeing as performance that AB

year our are with Labor weeks. our in few new design a teams. are gain which to looking We holiday to biggest forward The of that the promotion sales this in occurs year our traction merchandising starting brought Day, teams and earlier products

Clarence Bed Beyond easy from X will & As will be fit our footprint into bankruptcy. in retail we as are markets existing in XXXX. the Bath that open his feel in excited We mentioned the we an additional stores branches about and remarks, stores distribution new these

continue retention on we organization. and across to the our focus Finally, training execution,

current have normal to we on distribution were through delivery levels QX, in our the matching of mentioned and positions we which The call over conditions. able retail attrition achieve. to reduce last the to by networks May, plan end XXX I the business been our As in staffing was

Now I will over the to Richard. turn call

Richard Hare

million, sales quarter. quarter were down the store prior sales of period. Steve, year the net were you, prior XX.X% over year over the Thank and Comparable good In decrease morning. $XXX.X an XX.X% second XXXX,

points to from profit freight LIFO XX.X% in XXX primarily due a gross basis margins reductions adjustment. Our inventory increased to XX.X% positive and

$XXX administrative $X.X and decreased Selling, or million to expenses general X.X% million.

and a transportation the distribution of advertising, expenses up sales, prior costs XX.X% year XX.X% decreased the sales, of these experienced We quarter. during percentage As selling, from quarter. approximated in

and for quarter expense interest income Other second $X of due million was rates. negligible was approximately deposits income the on our during more we XXXX earned and to the as quarter interest second higher cash

$XX.X to million $XX.X decreased taxes million. income before Income

during the expense taxes. was the resulted second due effective XX.X%. state tax in rate rate difference tax income an $X rate Our to XXXX, of and of is in which effective the The quarter primary million statutory

Net income income per the for last XXXX in million or second quarter common of $X.XX diluted the $XX.X was per compared our $XX.X net on million quarter share share comparable year. $X.XX to or stock of

XXXX XXXX sheet balance the and the XX, was down quarter, We which of our our $XXX.X At from million second with end sheet the of ended the the December at XXXX, quarter our was second from XX, inventories debt million, of QX customer to versus the balance million no the were our the $XX.X balance balance. down which end turning million second December $XXX.X funded Now $X.X $X.X $XX.X million million, were cash quarter, XXXX $XX.X have cash at end deposits quarter. down on the million of QX equivalents, and we versus balance. down our and and

million Looking of at some capital the cash $XX.X flow, our expenditures for uses quarter. second of were

quarter the Florida distribution repurchased for reminder, million. beginning the of at we a our $XX.X facility As

to in second our regular Board in a payment resulting $X.X the In $X.XX share of a quarter, of $X.XX per increase addition, dividends. per the quarterly X.X% share, authorized million dividend from during Directors of

of buyback any approximately our existing buyback our authorization million program, didn't and we quarter, shares second the under we have $XX common stock in existing purchase During program.

list commentary. release to future of release metrics. financial additional additional will press for few, forward-looking out but expectations statements refer earnings highlight our several Our our certain indicating a I please

impacted XXXX by for of margins gross profit gross XX.X% costs XX%. in to our and our current expect our LIFO reserve. and estimates anticipate We We will be margins product be freight between changes profit

are XXXX, and for XX.X%, costs fixed million the range to XX.X% within range. The being SG&A over for the are to Our be in be million $XXX to $XXX of discretionary type inflation-driven. to SG&A XXXX with primarily XXXX increases in expenses expected expected variable-type

Our for $XX XXXX to increased planned million. CapEx has

bankruptcy In to X million spending anticipate auction. Bed the year-to-date we on current secured refurbishing through the calendar during stores year lease addition reformatting our Beyond and incremental an Bath the we former spending, $X

and information stores, this are to investments our million approximately for replacement $XX.X year. million new $XX.X $X.X be account or network distribution expansions to technology Anticipated be and expected remodels our in are expected in million, investments

effective XXXX anticipated be legislation. to this of impact expected vesting the rate excludes XX% is potential of projection tax and Our tax and any in awards stock

commentary any my for the to like results. on second questions at quarter up completes Operator, would This time. we the call financial this open

Operator

& And comes our Instructions] Company. of Lebiedzinski the question Sidoti with line [Operator Anthony from first

Anthony Lebiedzinski

can about that I some shed you color of Anything just would up the on you've seen. out incoming great. orders. wanted help improvements what recent to us the comments follow So Can more with, be you about

Richard Hare

to QX now. me back through let our back Anthony, trends kind Yes, business to written go of

low So our in to trends February March. in February in were teens, XX% the XX.X% XX% same, and first month, and the January down quarter, about and each down in around written January, XX% the

the XX%, XX% down quarter, In were then May. saw We were down written big we about business, in We XX% in down XX% April. improvement and a approximately XX.X% second then some drop saw in but we in between pretty June. and we're

that but we've seen and leveling his was April. teens the June. to remarks certainly believe challenging a an back quarter, Clarence April more in mentioned that seen the of we've the I in improvement low most So from in of kind May

Anthony Lebiedzinski

it. Got Okay.

here. in just terms -- wanted kind it to down, okay. the demand average still of at less looks all-time ticket, like I then of get So that and an soft freight -- bad, high, I And But still obviously, clarification. is costs are guess. your apparently, But

ticket So how average should here we of forward? think sustainability the going the about

Steve Burdette

continued is that's and ticket continued by, Steve. and grow, this I our grow there. we've our seen our and driven business obviously, increase design it's to Anthony, don't -- mainly average

to in really that more up door. we're and they customers we're the on about, exposing to as come talked I As XX%, focused

So we continue there's to really opportunity that. grow think to an

been us, not issue being for has we forward. an ticket going average an that So see issue don't and

Anthony Lebiedzinski

Okay.

Or increase go how And so who do that I up. as here, from you on to you plan else XX to financing all that take anything But And is Sounds we looks to see? we we should your -- just as get far -- there like promotions, is X% about try far offering wanted you're have the credit outlook obviously, now, but It demand? think demand the where that? then to that lever knows rates main your interest good. as for right months. know, as for gone

Richard Hare

Anthony, this is Richard.

XX we being it on more the that. on that extended time from last credit perspective, said doing but again as are to do certain period. Steve, are smaller do a Just for you offering promotions, credit less comment -- we quarter, to the promotion we period still But terms months. We disciplined want in

Steve Burdette

time the period actively are and using Richard not being running we'll drive still We're XX to to we are for said, promotions that. the time -- the we're We as Anthony, disciplined. it but months we that last holidays, in running major bigger the continue did But still more events. same bigger our periods do year, around

Operator

Our next Legg from Michael with comes the line of The Benchmark Company. question

Michael Legg

on Mickey is behalf This of Mike.

from here. seeing these too credit. industry competitors in in much know far X of you're just I'm don't I guys a what quick promotional go. a besides engage environment your Just curious as the you as that

just So from competitors. you're your what curious seeing

Clarence Smith

Mickey, different. I haven't anything seen really

I sales industry, seen using And declines significantly radically I pretty who anything promotions. I but seeing people you're the think different. But the board. anything across are and there haven't different don't are heavily, issues credit with see the

Michael Legg

from all Okay. like That's That's hear. what Great. us today. like we to

Operator

line the Telsey Our Group. Cristina next from comes Fernández question of Advisory with

Cristina Fernández

have questions. I couple a of

one, we expand to could to in Anthony's on see the demand response first I commentary The if wanted question.

colors in that affected? what quarter. And think weather cooler was you're that about mentioned you seeing impact there some broad-based any performing some I Can give better across others? are Or categories? categories trends areas the the than from initially you pretty

Steve Burdette

the an are but in strong the Yes. category, upholstery is of area. a uptick did us. getting first same lot We is our that quarter, I'd and room new we've case Cristina, dining seen in categories Steve. this for say bedroom still certainly in still goods, and performing

there's real change. trend So no

in which bedding, been we've in, that are to in all, it improvement a been steady. that things We category see. nice quarter. the have thing has in through been seen pretty we've seen improvement a has all some And But some but struggling

Cristina Fernández

in you to to to question quarter make the headcount level. is sales last a you the Then you saw have reductions half? to quarter, light align the feel expenses like need around you comfortable better second Do I reduction have you're on with you try when structure to more where back the profitability the are? Or did this

Steve Burdette

if through we distribution the look changes to we'll through service continue are that delivery just where and in review Cristina, our we but comfortable and -- that, and constantly quarter, make because that side. we're transitioned Right now, necessary we at and will

store have associates more member the been number needed, are sales side, are have a of there At that the X of run the needed our to on adjustments number that stores. but we

but distribution So case that's I the to that, going to because needed the side. the But of store don't carries would any right to would be see much further conditions be be adjustments for side, delivery we're and adjustment on not worsen in the be rest that the year. hopeful we're and forward positioned that --

Cristina Fernández

of those work have as on leases, Beyond, standards? get you open? it see & Bath can is congratulations is you I to when Bed your question When last stores -- the the what those the those. to required acquired And do today, type think Then the on

Richard Hare

Richard. with capital more the is million QX year, allocated over between $X required first the month. time capital We just $X.X We've -- $X it in refurbish Cristina, it period. million We took done beginning location this we that year. leases did half of probably to million of being in next to this the is Havertys of in location. of a this Each anticipate probably and make go and for

And so those with rent and into we forecast our now, we've that expense to obviously you start we going paying shared guys. baked are that on

as plans sublease these we We're temporary ramp locations or also up. seasonal a to sublease going on these a basis to things have to tenant we

lot the we're excited -- really rent. -- future offset our a we're think and locations, in in So But of business. the that we about says these offset investing some downturn that partially a in it will

Cristina Fernández

Actually, X clarifying question.

go locations next meet year, As year openings your we even those these kind will or beyond next think X year could about store for -- X openings? the should target a X of openings

Clarence Smith

Yes. think year next I that. beyond could go

Richard Hare

our That hope. would be

Clarence Smith

out of for have We sites we we we that do could signed. that. Yes. know a LOIs we're think until leases at, looking announce work that but And number don't don't and have us, they're

year next be could year. a it of So more

Cristina, and stores X or I think, over basically months we at open from history Sears able I'll took those go back our Homelife XXXX, to year XX over, in so.

boxes we're to be think very existing So good at we Havertys to they're and for opportunities converting us. going

Operator

for call this Ladies question-and-answer concludes to Richard and closing gentlemen, to remarks. the today's back session. like I'd Hare turn

Richard Hare

release talking we in to and appreciate we future the Well, this results third quarter participation today, everybody's our the call you in look forward later we when to year.

Operator

today's This concludes conference.

your You for may participation. disconnect lines you at your this time. Thank

Haverty Furniture Companies (HVT) 2 Aug 232023 Q2 Earnings call transcript