Haverty Furniture Companies, Inc. (HVT) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with increased pre-tax and net income, a rise in average ticket size, and growth in the design business. The Q&A indicates optimism for future growth, with plans for store expansions and refreshed product assortments. Despite some concerns about rising financing and fuel costs, management's strategic plans and positive guidance suggest a favorable outlook. The stock buyback and dividend payments further support a positive sentiment. Overall, the company's strategies and financial health indicate a positive stock price movement in the short term.
Key Financial Performance
Net Sales $189.1 million, a 4.1% increase year-over-year. The increase was driven by a 4.3% rise in comparable store sales and strong performance during the President's Day weekend.
Gross Margins 61.5%, up from 61.2% last year, a 30 basis point increase. Excluding LIFO expenses, adjusted gross profit margin increased 60 basis points to 61.8%. The improvement was attributed to better product and freight cost management.
Pre-Tax Income $6 million, a 3.2% operating margin, compared to $5.3 million or a 2.9% operating margin last year. The increase was due to higher sales and improved gross margins.
Net Income $4.3 million or $0.26 per share, compared to $3.8 million or $0.23 per share last year. The growth was driven by higher pre-tax income and stable tax rates.
Average Ticket $3,700, an 11.9% increase year-over-year. The rise was attributed to higher customer spending and an increase in design business contributions.
Design Business Contribution 35.3% of total business, a 6.3% increase year-over-year. The average ticket for design business rose 11.7% to approximately $8,300, driven by custom special order business growth.
Custom Special Order Business 10.1% increase, accounting for 34.5% of upholstered business. Growth was driven by offering over 1,000 fabric choices and styles.
Category Performance Occasional furniture sales were up double digits, upholstery and dining room sales were up mid-single digits, mattresses were up low single digits, bedrooms were flat, and accessories were down slightly.
Inventories $106.9 million, an increase of $10.7 million from December 31, 2025, and $18.2 million year-over-year. The increase was planned to introduce new products, maintain stock of best sellers, and pull forward orders ahead of Chinese New Year.
Customer Deposits $40.4 million, up $4.9 million from December 31, 2025, but down $2.3 million year-over-year.
Cash and Cash Equivalents $107.5 million, with no funded debt on the balance sheet.
Capital Expenditures $7 million for Q1 2026, used for store growth and infrastructure investments.
Dividends Paid $5.3 million in regular dividends during the quarter.
Stock Buyback $2 million of common stock purchased at an average price of $21.97, with $16.4 million remaining under the buyback program.
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Operating Highlights
Custom Special Order Business: Increased by 10.1% to 34.5% of upholstered business, driven by success in design and offering over 1,000 fabric choices.
Merchandising and Supply: Focused on bringing in latest trends and updating products with fresh looks to meet customer demand.
Category Performance: Occasional furniture up double digits, upholstery and dining room up mid-single digits, mattresses up low single digits, bedrooms flat, and accessories slightly down.
Store Expansion: Opened a new store in Fenton, Missouri, and planning to open additional stores in Nashville, Pittsburgh, Houston, Fredericksburg, McKinney, and East Atlanta. Total of 8 new stores planned for 2026 and early 2027.
Store Closures: Closing two stores in San Angelo and College Station, Texas, due to demographic shifts and weak housing growth.
Inventory Management: Inventories increased by $10.7 million to $106.9 million, driven by new product introductions, maintaining best sellers in stock, and pre-ordering ahead of Chinese New Year.
Marketing and Technology: Leveraging AI and new technology to optimize media placement and measure customer journey. E-commerce sales increased double digits.
Operational Costs: Rising oil prices and vendor input costs expected to impact margins and expenses in Q2.
Tariff Adjustments: Anticipating changes to Section 122 tariffs in Q3, which will impact costs.
Focus on Growth: Scaling back remodels to focus on new store openings and maintaining a debt-free position to support growth.
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Risk or Challenges
Weather disruptions: Weather disruptions in January caused a 10-day period of reduced traffic, impacting sales and operations.
Rising oil prices: Rising oil prices are expected to increase costs in several areas, including vendor input costs, fuel surcharges, and delivery fleet expenses, which will negatively impact margins and expenses.
Tariff changes: Uncertainty around Section 122 tariffs, including potential changes in tariff percentages, could affect costs and margins.
Credit costs: Increased use of 60 months no interest financing for competitive reasons has raised credit costs, which could impact financial performance.
Store closures: The closure of two stores in Texas due to demographic shifts and weak housing growth highlights challenges in aligning store locations with long-term growth strategies.
Inventory management: Inventory levels increased significantly due to planned actions, including pulling forward orders ahead of Chinese New Year, which could pose risks if demand does not align with inventory levels.
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Guidance & Outlook
Inventory Levels: The company expects inventory levels to drop below $100 million by the end of Q2 2026, aligning with customer delivery expectations.
Tariff Changes: The company anticipates further changes to tariff percentages by early Q3 2026, as the Section 122 tariffs are set to expire in mid-July.
Impact of Rising Costs: Rising oil prices and vendor input costs are expected to impact margins and expenses in Q2 2026. These costs are factored into the company's margin and expense guidance.
Marketing and Technology Investments: The company plans to continue leveraging AI data and technology for media placement and customer journey analysis. It will also focus on direct mail campaigns leading up to Memorial Day, its biggest promotion in the first half of the year.
Store Expansion and Closures: The company plans to open eight new stores by early 2027, including three additional leases signed for 2026. Two stores in Texas will be closed in mid-2026 due to demographic shifts and weak housing growth.
Gross Margin Guidance: Gross margins for 2026 are expected to remain between 60.5% and 61%, influenced by product, freight, and LIFO expenses.
SG&A Expenses: Fixed and discretionary SG&A expenses for 2026 are projected to be between $307 million and $309 million, with increases attributed to store growth and modest inflation. Variable SG&A costs are expected to range between 18.6% and 18.8%.
Capital Expenditures: Planned capital expenditures for 2026 are $34 million, with $27.7 million allocated for new or replacement stores, remodels, and expansions; $3.2 million for distribution network investments; and $3.1 million for information systems technology.
Effective Tax Rate: The anticipated effective tax rate for 2026 remains at 26%, excluding impacts from stock awards vesting and potential new tax legislation.
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Shareholder Return Plan
Dividends Paid: $5.3 million of regular dividends were paid during the quarter.
Share Buyback: $2 million of common stock was purchased during the quarter at an average price of $21.97. Approximately $16.4 million of existing authorization remains under the buyback program.
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Key Q&A
Q:Can you elaborate on consumer and demand trends throughout the quarter, including monthly progression and any changes in consumer behavior?
A:Richard Hare explained that written business trends showed a 9% increase in January, 5-5.5% in February and March, resulting in a 6.4% increase for the quarter. Financing costs increased by over $1 million due to higher third-party credit costs. Steven Burdette added that there were no significant changes in consumer behavior since implementing 60-month financing promotions last Labor Day, though higher ticket items are utilizing the more expensive financing options.
Q:How do you feel about the ability to achieve positive comps in the second half of the year given last year's 7-8% increases?
A:Steven Burdette expressed optimism for the remainder of the year, citing resilient customers, aggressive growth plans, new merchandising teams, and new products. Most store openings are planned for Q4, with two in Q3. Despite headwinds, management feels well-positioned.
Q:Can you clarify the store openings and closures for 2026?
A:Steven Burdette clarified that there will be seven store openings and four closures in 2026, resulting in a net growth of three stores. One store opening in Houston has been delayed to early 2027.
Q:Are there any specific new products or categories that you believe will significantly impact the business?
A:Steven Burdette highlighted efforts to refresh product assortments, focusing on on-trend items and smaller categories like barstools and accent chairs. The goal is to maintain a fresh lineup and create more special order opportunities.
Q:What changes have been made to the design program, and how do you see it evolving?
A:Steven Burdette noted that the design program has grown by over 200 basis points as a percentage of written sales. While no major changes were made, the company is refreshing design centers in stores, with one-third completed and plans to finish over half this year. The program could grow to represent over 50% of sales, with higher average tickets when entering homes.
Q:Does the gross margin guidance include potential tariff refunds?
A:Richard Hare stated that potential tariff refunds are not included in the gross margin guidance and would be incremental if received.
Q:How are you maintaining SG&A expense guidance despite higher fuel prices and financing costs?
A:Richard Hare explained that leveraging delivery and transportation costs in the second half of the year is expected to offset these headwinds. Non-variable costs like advertising and depreciation are already accounted for. Fuel costs impacting gross margins have been cushioned within the guidance.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the potential long-term impact of rising fuel prices, instead expressing hope that the situation would mitigate over time with the resolution of the Iran conflict.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Assistant Vice
Atlanta
College Station
DC
Dallas
Epic Fury
Financial Reporting
Haverty member
Investor Relations
President Financial
San Angelo
Section tariff
TV
Texas
Vice President
administration
commitment
comp sale
credit
design team
excitement
financing
fleet
fuel
level
medium
operation
plan
reason
sale comp
sale design
success
website
HVT Transcript
Haverty Furniture Companies, Inc. (HVT) Q1 2026 Earnings Call Transcript
Positive5-5
The earnings call highlights strong financial performance with increased pre-tax and net income, a rise in average ticket size, and growth in the design business. The Q&A indicates optimism for future growth, with plans for store expansions and refreshed product assortments. Despite some concerns about rising financing and fuel costs, management's strategic plans and positive guidance suggest a favorable outlook. The stock buyback and dividend payments further support a positive sentiment. Overall, the company's strategies and financial health indicate a positive stock price movement in the short term.
Haverty Furniture Companies, Inc. (HVT) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call reveals mixed signals: a slight increase in gross margin and cash reserves, but a decrease in net income due to higher SG&A expenses and tax rates. The Q&A highlights uncertainties, such as the impact of tariffs and suspended orders from China. However, management's optimism about resumed orders, strategic pricing, and promotional plans balances these concerns. The lack of clear guidance on some issues and consistent regional performance further supports a neutral sentiment. Without market cap data, a strong reaction is unlikely.
Haverty Furniture Companies, Inc. (HVT) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings call reveals several negative factors: declining net sales and comparable store sales, increased tariffs, and economic challenges impacting the housing market. While gross profit margins improved, there is weak guidance due to economic and regulatory uncertainties. The Q&A session highlighted price increases due to tariffs and competitive pressures, with no clear positive catalysts. Despite some operational improvements, the overall sentiment is negative due to external economic factors and competitive pressures, suggesting a potential stock price decline of -2% to -8%.
Haverty Furniture Companies, Inc. (HVT) Q4 2024 Earnings Call Transcript
Unknown2-25
The earnings call revealed declining sales and profitability, with a notable year-over-year decrease in net income. Despite effective inventory management and strong liquidity, the company faces competitive pressures, supply chain challenges, and potential tariff impacts. The Q&A highlighted management's reluctance to provide guidance, raising concerns. Share repurchases and dividends offer some support, but overall, the financial performance and market conditions suggest a negative outlook.
HVT Report
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025
10-Q
2025-10-31
HAVERTY FURNITURE COMPANIES INC 10-Q
10-Q
2025-08-05
HAVERTY FURNITURE COMPANIES INC 10-Q
10-Q
2024-08-06
HAVERTY FURNITURE COMPANIES INC 10-Q
10-Q
2024-05-07
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