Haverty Furniture Companies, Inc. (NYSE:HVT)
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The Company is a specialty retailer of residential furniture and accessories.
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The Company is a specialty retailer of residential furniture and accessories.
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“Cold comfort” is what applies to Haverty Furniture, which sells its own brand and name-brand home furnishings and accessories in the middle to upper-middle price range. The Company operates through 120 stores serving 78 cities in 17 states in the southern and midwest regions.
Haverty saw a good third quarter with increase in sales and profit margins, however it started the fourth quarter with leaner backlogs, negatively impacting October sales. This is the result of softness in the retail industry, especially in furniture retail, as new home sales and existing home sales have been showing a declining trend over the past four quarters and the trend is expected to continue for a while. Higher borrowing costs also led consumers pull back from big-ticket purchases.
The Company is in for the soft trend and is learning to sail through by gaining market share in coming months as the tough times will force few furniture retailers out of business. Additionally, the company plans to open five new stores by next year and an e-commerce presence to fully integrate all its stores. Effects of the softness are vigilant on its October sales while other players have already reported lower quarterly results. Considering the macro economic factors and intense competition Havertys will have tough time sailing through.
Haverty Furniture sells its own branded home furnishings and accessories in the middle to upper-middle price range. Its recent financials reflect the slumping housing market. Sales of new houses in February 2007 were down 3.9% and 18.3% as compared to previous quarter and year. Remodeling activities also showed a very slow progress as year-end home improvements and repairs represented a marginal increase of 1.5% as compared to previous year. Average interest rates on conventional 30-year mortgage loans and 15 year fixed rate loans have been increased by 1 bps and 4 bps Y-o-Y. This has already put up a negative impact on the industries, operating in this market.Haverty sales dropped in its fourth quarter, followed by further drop in its first quarter of the beginning of this year. One can see the declining sales pattern month by month. Company saw a fine third quarter with increase in sales and profit margins; however it started the fourth quarter with leaner backlogs, negatively impacting October sales, and since then the trend remains the same. The company’s sluggish performance is both due to the soft retail conditions effecting company’s performance, as well as the internal management, which is unable to put forward any strategies to cope up with these circumstances.For a start company can do some thing about its increased inventory, which has piled up due to its longer lead-time. Management believes that its action taken to reduce the inventory will bring down the gross margins. It seems that the soft retail conditions will remain persistent for a while and so will the company’s performance.
This company is a piece of trash. Piont blank