Haverty Furniture Reports October Sales Decrease
Furniture World Magazine
Haverty Furniture Companies, Inc., reported sales for the month ended October 31, 2007.
Havertys' October sales decreased 1.6% to $62.4 million, compared with $63.5 million in October 2006. On a comparable-store basis, October sales decreased 4.4%.
Comparable-store sales do not include stores or locations opened, closed or otherwise non-comparable during the last 12 months. Sales for the first ten months of 2007 decreased 9.2% to $641.3 million compared with $706.5 million in 2006. On a comparable-store basis, sales decreased 10.9% for the first ten months.
Clarence H. Smith, president and chief executive officer, said, "Our October sales were down 1.6% in total, less of a decrease than in recent months as we benefited from reducing our unfilled order backlog. We are scheduled to receive strong shipments of sold goods in November, which should keep our backlog closer to planned levels.
"Incoming written business is still very difficult and was down 9% in total for October. We continue to have significant challenges in some of our regions related to the housing weaknesses and there is little visibility to when that will turn positive. We are pleased with the new merchandise that has recently arrived in our stores and several collections are quickly moving into our top sellers."
For the nine months ended September 30, 2007, the net income was $123,000 or $0.01 per diluted share of Common Stock versus net income of $12.8 million or $0.56 per diluted share of Common Stock for the same period in 2006.
As previously reported, net sales for the third quarter of 2007 were $200.7 million, a decrease of 10.0% compared to sales of $222.9 million for the corresponding quarter in 2006. Comparable-store sales decreased 11.6% for the quarter.
Clarence H. Smith, added, "Our third quarter was modestly profitable on a low level of sales. Gross profit as a percent of sales for the third quarter was flat compared with the margins for the full year of 2006 but approximately 30 basis points better than the first half of 2007. We have been tightening up on costs where possible and SG&A expenses for the third quarter were $4.0 million or 3.8% lower than last year's quarter. We had substantial decreases in warehouse and delivery costs, advertising, labor, commissions and administrative expenses. Partly offsetting these reductions was an increase in discount fees paid for outsourced free interest credit promotions as extended credit offers had longer terms and were used more frequently in the competitive environment for big ticket home furnishings. We also have experienced higher overall insurance costs and our new stores contributed to increased occupancy expenses.
"We are dedicated to keeping our balance sheet and cash flow strong. Inventory at the end of the third quarter was $ 31.0 million or 24.8 % below the year end balance and $24.3 million or 20.6% below year ago levels. These are slightly leaner than optimum but we expect to move toward more normalized levels in the fourth quarter. With lower capital expenditures and total assets employed during the year-to-date period we were able to reduce the amount owed under our bank revolver from $12.6 million to zero in addition to paying down long term debt by $8.3 million. We also purchased $5.2 million of treasury shares and still increased cash balances $5.7 million.
"In early October we launched our greatly enhanced havertys.com website which has already proven to be useful in reaching the growing number of consumers that use the internet to pre-shop before going to a store. The site also provides our sales associates a tool to further engage the customer while she is in the store and extend her shopping when she returns home. Among the site's new features are customer reviews, much expanded and better quality visual images and product descriptions, easier and more thorough searching methods, specific product availability dates for delivery to a customer's zip code and a locator for the nearest Havertys store displaying any particular merchandise item that peaks a consumer's interest. There are additional features to be implemented early next year including the processing of sales transactions.
"Our Rockville, Maryland store opened this past week and will be a great addition as our sixth location in the Metro-DC market. In October we opened a replacement store in Wilmington, North Carolina and one in Birmingham, Alabama is scheduled to open later this month.
"We believe we have the financial strength to weather this difficult period in our industry and plan to focus on highlighting the quality merchandise values we offer and the high levels of consumer satisfaction we consistently provide."
Havertys is a full-service home furnishings retailer with 123 showrooms in 17 states in the Southern and Midwestern regions providing its customers with a wide selection of quality merchandise in middle- to upper-middle price ranges. Additional information is available on the Company's website at www.havertys.com.