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Financial, Retail

Havertys Reports Operating Results for First Quarter 2022

Havertys reports another strong quarter, despite cost increases and ongoing delays in case goods shipments.

5/3/2022
ATLANTA -- HAVERTYS (NYSE: HVT and HVT.A), today reported its operating results for the first quarter ended March 31, 2022.

First quarter 2022 versus first quarter 2021:

-- Consolidated sales increased 1.0% to $238.9 million. Comparable store sales increased 0.2%.
-- Gross profit margin of 59.0% versus 57.1% and above expectations due to merchandise mix and pricing.
-- Diluted earnings per common share (“EPS”) of $1.11 versus $1.04.

Clarence H. Smith, chairman and CEO, said, “We are pleased to report the results of another strong quarter. Our merchandising team has responded to cost increases by judiciously adjusting retail pricing. Sales generated by our free in-home design service are improving as COVID-19 concerns abate and were 23.5% of deliveries this quarter compared to 21.0% in the first quarter of last year. COVID-19 does remain a factor in our supply chain, and ongoing delays in case goods have impacted sales in this category.

"During the early part of the quarter our delivered and written business was good compared to the historic results in 2021. We experienced a return to increased consumer interest around traditional shopping holiday events and had a record Presidents' Day. However, we encountered significant declines in in-store traffic and written business in March. We believe discretionary consumer spending has been adversely impacted by rising inflation, including fuel costs, market volatility, and geopolitical concerns.

"We have a forward-thinking and resilient team and coupled with our competitive and financial strengths, we are confident in meeting near-term challenges and progressing on long-term goals. We remain governed by our mission: to delight our customers with personalized and outstanding customer service, with a commitment to our team members, and to deliver consistent value to our shareholders."

First Quarter ended March 31, 2022 Compared to Same Period of 2021

-- Total sales up 1.0%, comp-store sales up 0.2% for the quarter. Total written sales for the first three months of 2022 were down 8.8% compared to the same period of 2021 and written comp-store sales were down 9.6%.

-- Gross profit margins increased 190 basis points to 59.0% in 2022 from 57.1% for the same period of 2021 due to pricing merchandise mix and discipline.

-- SG&A expenses were 48.2% of sales versus 46.4% and increased $5.4 million. The primary drivers of this change are:
a.) Increase of $1.8 million in selling expenses due to increased compensation and benefit costs.
b.) Increase in distribution and delivery costs of $1.5 million due to demurrage fees and increases in compensation and fuel costs.
 
-- Increase in occupancy costs of $0.6 million primarily resulting from the timing of repairs and maintenance.

Balance Sheet and Cash Flow

-- Generated $20.6 million in cash from operating activities from solid earnings performance and funding of a $7.8 million increase in inventories and a $4.7 million increase in payables and other operating assets and liabilities.

-- Cash and cash equivalents at March 31, 2022 are $169.1 million.

-- Purchased 438,499 shares of common stock for $12.5 million and paid $4.3 million in quarterly cash dividends.

-- No funded debt.

Expectations and Other

We expect gross profit margins for 2022 will be between 57.7% to 58.0%, an increase from our previous estimate. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence. Our estimated gross profit margins are based on anticipated changes in product and freight costs and its impact on our LIFO reserve.

Fixed and discretionary expenses within SG&A for the full year of 2022 are expected to be in the $295.0 to $298.0 million. Variable SG&A expenses for the full year of 2022 are anticipated to be in the 18.0% to 18.2% range in 2022, an increase from our previous estimate based on increases in selling and delivery costs.

Our effective tax rate for 2022 is expected to be 25% excluding the impact from the vesting of stock-based awards, potential tax credits, and any new tax legislation.

Planned capital expenditures are approximately $37.0 million in 2022. We expect to increase retail square footage by 1%, opening four stores and closing two. Capital expenditures are also planned for the conversion of our home delivery center in Virginia to a regional distribution facility, and as part of our enhanced online presence, additional spend on information technology.

We have $12.5 million remaining for purchases of common stock under a current authorization. Read the full Havertys report here.
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