Haverty Furniture Companies Inc. (HVT), Mid/Small Cap AI Study of the Week

September 26, 2024

Weekly AI Study from the S&P 400 or S&P 600

Company Overview

Haverty Furniture Companies Inc. (Havertys) is a well-established specialty retailer of residential furniture and accessories, founded in 1885. It operates over 120 stores in 16 states across the Southern and Midwest regions of the United States. The company targets well-educated, middle to upper-middle income women, offering a variety of on-trend furniture styles and well-known mattress brands through both in-store and online channels. Havertys is recognized for its quality, fashion, value, and service, and it invests significantly in maintaining a strong online presence to complement its physical stores. Notably, in-home design consultations account for approximately 28.5% of sales, significantly boosting average sales tickets.

Havertys plans to expand by opening five new stores annually, supported by a robust distribution and delivery system, including their "Top Drawer Delivery" service that ensures efficient home delivery and warehouse productivity. As of December 31, 2023, the company employs 2,574 individuals and emphasizes a hazard-free work environment, strong safety programs, and values such as integrity, teamwork, and diversity. Employee retention and development are prioritized through competitive compensation, benefits, and extensive training programs, with employees consuming around 93,000 hours of learning in 2023. Operating in a highly competitive and fragmented retail home furnishings market, Havertys leverages competitive advantages like custom order capabilities, in-home design services, and a strong online presence to maintain its market position.

By the Numbers

• Annual Net Sales (2023): $862.1 million, a decrease of 17.7% from $1,047.2 million in 2022.
• Gross Profit Margin (2023): Improved to 60.7% of net sales, up from 57.7% in 2022.
• Gross Profit (2023): $523.1 million, down from $604.2 million in 2022.
• SG&A Expenses as % of Net Sales (2023): Increased to 52.9% from 46.4% in 2022.
• Income Before Taxes (2023): $72.7 million (8.4% of net sales), down from $119.5 million (11.4% of net sales) in 2022.
• Net Income (2023): $56.3 million (6.5% of net sales), down from $89.4 million (8.5% of net sales) in 2022.
• Sales per Weighted Average Square Foot (2023): Decreased to $197 from $241 in 2022.
• Average Ticket Value Increase (2023): 3.4%.
• Design Consultants' Contribution to Sales (2023): 28.5% with an average written ticket of $6,486.
• Effective Tax Rate (2023): Improved to 22.5% from 25.2% in 2022.
• Operating Cash Flow (2023): Increased to $97.2 million.
• Store Count and Selling Square Footage (End of 2023): 124 stores and 4,387 thousand square feet.
• Planned Net Selling Space Increase (2024): Approximately 2.8%.
• Capital Expenditures (2023): $53.1 million.
• Proposed Capital Expenditures (2024): $32 million.

Quarterly Net Sales (Q2 2024): $178.6 million, a decline of 13.4%.

• Comparable-Store Sales (Q2 2024): Decreased by 13.6%.
• Year-to-Date Total Sales (2024): $362.6 million, a 15.9% decrease.
• Year-to-Date Comparable-Store Sales (2024): Decreased by 16.2%.
• Gross Profit Margin (Q2 and H1 2024): Stable at 60.4%.
• SG&A Expenses Reduction (Q2 2024): Decreased by $6.9 million.
• SG&A Expenses Reduction (H1 2024): Decreased by $15.9 million.
• In-Home Design Services Contribution (2024): 34-35% of total written business.
• Projected Spending Decrease (2024): $8 million.
• Cash and Cash Equivalents (As of June 30, 2024): $109.9 million.
• Restricted Cash (As of June 30, 2024): $6.1 million.
• Net Cash from Operating Activities (H1 2024): $17.5 million, down from $40.1 million in H1 2023.
• Cash Used in Investing Activities (H1 2024): Decreased by $24.6 million.
• Planned Capital Expenditures (2024): $33 million.
• Planned Net Selling Space Increase (End of 2024): 3.4%.