- As previously announced, net sales decreased 1.9% to $207.6 million. Comparable store sales were down 2.9%.
- Total written sales were down 3.5% and written comparable store sales decreased 4.2%. During September 2017, 55 stores were closed for one or more days due to Hurricane Irma. The negative impact on third quarter total written sales and written comparable store sales because of these closures is estimated at 1.2%.
- Hurricane Irma caused only minor property damage but caused us to halt deliveries and close two distribution centers and our corporate offices.
- Average written ticket was up 0.5% and custom upholstery written business increased 2.6%.
- Gross profit margins increased 20 basis points to 53.9%. Execution on pricing and product mix and reduced product markdowns offset the higher freight and negative LIFO impact. There was a $0.5 million increase in the LIFO reserve in 2017 versus a $0.7 million decrease in 2016, a negative change of $1.2 million or 59 basis points.
- SG&A costs as a percent of sales were 49.2% in 2017 and 48.1% in 2016. Total SG&A dollars was relatively flat for the periods. The planned increases in advertising and marketing of $2.1 million and higher occupancy costs of $1.0 million due to greater depreciation and other store costs in 2017 were offset by $1.4 million lower administrative expenses for incentive compensation and health benefit costs and reduced warehouse and delivery expenses of $1.1 million.
- Other income includes a $0.4 million gain from insurance recovery related to our Wichita, Kansas and Lubbock, Texas locations in 2017 and $0.5 million for Lubbock in 2016.
- Net sales increased 0.7% to $604.9 million. Comparable store sales were down 0.6%.
- Average written ticket increased 2.0% and custom upholstery written business was up 4.0%.
- Gross profit margins were 54.3% versus 53.6% as a percent of sales. The LIFO reserve year-over-year negative change was $1.3 million or 21 basis points.
- SG&A costs as a percent of sales were 49.5% for 2017 versus 49.1% for 2016. Total SG&A dollars increased $4.5 million primarily due to rising occupancy costs of $2.9 million and greater advertising and marketing spending of $2.0 million partly offset by a $1.0 million reduction in administrative costs.
- Other income includes a $1.5 million gain from insurance recovery in 2017 and $2.5 million in 2016.
- Total written sales for the fourth quarter to date of 2017 are up approximately 0.4% over the same period last year and written comparable store sales are down 0.7%. Total delivered sales for the fourth quarter to date of 2017 are down 2.9% and comparable store sales decreased 3.7% over the same period last year.
- We expect that gross profit margins for the full year 2017 will be approximately 54.2%.
- Our estimate for fixed and discretionary type SG&A expenses for 2017 is $257.0 million compared to $249.9 million for these same costs in 2016. This is a change from our previous estimate of $259.0 primarily from reductions in group medical insurance and incentive compensation. The variable type costs within SG&A for the full year of 2017 are expected to be 18.2% percent of sales, the same rate in 2016.
- We opened a new store in Columbia, South Carolina in mid-October and closed a location in Birmingham, Alabama.
- We expect to increase standard selling square footage approximately 0.3% in 2017. Total capital expenditures are estimated to be approximately $28.0 million in 2017 and $18.0 million in 2018.
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Cost of goods sold||95,632||97,953||276,175||278,660|
|Credit service charges||38||54||126||173|
|Gross profit and other revenue||112,053||113,791||328,855||322.489|
|Selling, general and administrative||102,099||101,745||299,310||294,809|
|Provision for doubtful accounts||18||70||181||286|
|Other (income) expense, net||(276||)||(705||)||(1,430||)||(2,799||)|
|Income before interest and income taxes||10,212||12,681||30,794||30,193|
|Interest expense, net||493||556||1,641||1,719|
|Income before income taxes||9,719||12,125||29,153||28,474|
|Income tax expense||3,736||4,759||10,999||11,065|
|Other comprehensive income|
|Adjustments related to retirement plan; net of tax expense of $9 and $27 in 2017 and $12 and $34 in 2016||$||13||$||18||$||40||$||56|
|Basic earnings per share:|
|Class A Common Stock||$||0.27||$||0.33||$||0.82||$||0.77|
|Diluted earnings per share:|
|Class A Common Stock||$||0.27||$||0.33||$||0.81||$||0.76|
|Basic weighted average shares outstanding:|
|Class A Common Stock||1,798||2,021||1,804||2,026|
|Diluted weighted average shares outstanding:|
|Class A Common Stock||1,798||2,021||1,804||2,026|
|Cash dividends per share:|
|Class A Common Stock||$||0.1425||$||0.1125||$||0.3675||$||0.3025|
HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands - Unaudited)
|September 30, 2017||December 31, 2016||September 30, 2016|
|Cash and cash equivalents||$||86,903||$||63,481||$||75,567|
|Restricted cash and cash equivalents||8,089||8,034||8,025|
|Other current assets||6,973||7,500||6,409|
|Total current assets||213,245||194,115||202,573|
|Accounts receivable, long-term||311||462||509|
|Property and equipment||226,693||233,667||237,197|
|Deferred income taxes||21,339||18,376||20,241|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Current portion of lease obligations||3,733||3,461||3,389|
|Total current liabilities||98,155||95,950||96,309|
|Lease obligations, less current portion||51,523||52,013||52,915|
|Total liabilities and stockholders' equity||$||470,199||$||454,505||$||468,496|
HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands - Unaudited)
|Nine Months Ended|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||22,819||21,472|
|Stock-based compensation expense||3,045||2,992|
|Deferred income taxes||(2,990||)||(3,030||)|
|Gain on insurance recovery||(1,531||)||(2,460||)|
|Proceeds from insurance recovery||916||2,327|
|Provision for doubtful accounts||181||286|
|Changes in operating assets and liabilities:|
|Other assets and liabilities||1,977||(5,176||)|
|Accounts payable and accrued liabilities||(2,844||)||(7,603||)|
|Net cash provided by operating activities||48,748||47,236|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Maturities of investments||-||12,000|
|Proceeds from insurance recovery for destroyed property and equipment||1,045||2,312|
|Net cash used in investing activities||(14,321||)||(10,983||)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Payments on lease obligations||(2,577||)||(2,295||)|
|Taxes on vested restricted shares||(1,555||)||(883||)|
|Common stock purchased||-||(21,282||)|
|Construction allowance receipts||1,350||-|
|Net cash used in financing activities||(11,005||)||(31,345||)|
|Increase in cash and cash equivalents during the period||23,422||4,908|
|Cash and cash equivalents at beginning of period||63,481||70,659|
|Cash and cash equivalent at end of period||$||86,903||$||75,567|
Conference Call InformationThe company invites interested parties to listen to the live audiocast of the conference call on Wednesday, November 1, 2017 at its website, havertys.com under the investor relations section. If you cannot listen live, a replay will be available on the day of the conference call at the website or via telephone at approximately 1:00 p.m. ET through Wednesday, November 8, 2017. The number to access the telephone playback is 1-888-203-1112 (access code: 2246359). Safe Harbor This press release includes statements that constitute forward-looking statements within the meaning of the federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which are not historical in nature. We intend for all forward-looking statements contained herein or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Forward-looking statements may relate to, for example, future operations, financial condition, economic performance (including gross profit margins and expenses), capital expenditures, and demand for our products. The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, the state of the economy; state of the residential construction and housing markets; the consumer spending environment for big ticket items; effects of competition; management of relationships with our suppliers and vendors and disruptions in their operations; new regulations or taxation plans, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K and from time to time in the Company's filings with the SEC.
About HavertysHavertys (NYSE:HVT) (NYSE:HVT.A), established in 1885, is a full-service home furnishing retailer with 125 showrooms in 16 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, havertys.com. News releases include forward-looking statements, which are subject to risks and uncertainties. Factors that might cause actual results to differ materially from future results expressed or implied by such forward-looking statements include, but are not limited to, general economic conditions, the consumer spending environment for large ticket items, competition in the retail furniture industry and other uncertainties detailed from time to time in the company's reports filed with the SEC. Contact:Havertys (404) 443-2900Richard B. HareEVP & CFOJenny Hill ParkerSVP, Finance, Secretary and Treasurer SOURCE: Havertys