Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Haverty Furniture Companies Inc (NYSE:HVT) maintained strong gross margins of 61.9% for the quarter and 60.7% for the year.
• The company ended the year with zero funded debt and over $120 million in cash.
• Traffic improved over the quarter, marking the first positive gain year over year in traffic in the low single digits.
• The design business continued to improve, accounting for approximately 32% of the business, with the designer average ticket growing over 8%.
• Haverty Furniture Companies Inc (NYSE:HVT) successfully opened new stores in St. Petersburg, Florida, Greenwood, Indiana, and Houston, meeting expectations.

Negative Points

• Fourth quarter sales were down 12.5%, with comparable store sales down 13.7%.
• Total sales for the year decreased by 16.1%, with comparable store sales down 16.7%.
• Net income for the fourth quarter of 2024 was $8.2 million, a decrease from $15 million in the comparable quarter last year.
• The company is facing tariff issues with China, Canada, and Mexico, which could impact pricing and product flow.
• Selling, general, and administrative expenses as a percentage of sales increased to 57.4% from 54.4% in the prior year quarter.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with PRIM.

Q: Can you provide more details on the monthly trends for written and delivered sales during the fourth quarter? A: Richard Hare, CFO: On the delivered side, sales were consistent throughout the quarter, with October, November, and December down in the low 10s, averaging a 12.5% decrease for the quarter. For written business, October was down in the low 10s, November in the mid-single digits, and December was almost flat, resulting in a 6.7% decrease for the quarter.

Q: Has the positive momentum in sales carried over into the first quarter, particularly around the President's Day holiday? A: Steve Burdett, CEO: We do not provide guidance or comment on the current quarter's performance, so we will not discuss specifics about the first quarter or the President's Day holiday.

Q: Did you observe any regional differences in sales performance during the fourth quarter? A: Steve Burdett, CEO: Florida and the central part of the country showed some bounce back, while the west and east were slightly weaker. However, the differences were not significant.

Q: Can you expand on the gross margin guidance and the potential impact of tariffs? A: Richard Hare, CFO: We plan to mitigate the tariff impact on margins by working with vendors and adjusting retail pricing if necessary. We have experience from 2018 and 2019, and we expect margins to remain stable in 2025. Steve Burdett, CEO: We are committed to driving volume and maintaining flat margin guidance. Tariffs from Canada and Mexico will be managed through vendor collaboration and pricing adjustments.

Q: What is your outlook on the demand environment for 2025, considering higher mortgage rates and other economic factors? A: Steve Burdett, CEO: We anticipate a challenging environment due to housing struggles and economic uncertainties. However, we do not expect supply issues like those experienced in 2018-2019. We hope for some relief in mortgage rates and a potential bounce back later in the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.