Haverty Furniture Companies, Inc. (NYSE:HVT) Q4 2023 Earnings Conference Call February 22, 2024 10:00 AM ET

Company Participants

Richard Hare - Executive Vice President and Chief Financial Officer

Clarence Smith - Chairman and Chief Executive Officer

Steve Burdette - President

Conference Call Participants

Anthony Lebiedzinski - Sidoti

Michael Legg - The Benchmark Company

Cristina Fernandez - Telsey Advisory Group

Operator

Greetings and welcome to Haverty’s Fourth Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Richard Hare, Chief Financial Officer. Please go ahead, sir.

Richard Hare

Thank you, operator. During this conference call, we'll make forward-looking statements, which are subject to risks and uncertainties. Actual results may differ materially from those made or implied in such statements, which speak only as of the date they are made and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company's reports filed with the SEC.

Our Chairman and CEO, Clarence Smith, will now give you an update on our results and our President, Steve Burdette, will provide additional commentary about our business.

Clarence Smith

Good morning. Thank you for joining our 2023 fourth quarter and full-year conference call. Our fourth quarter sales were $210.7 million, down 24.9%. Total written sales were down 13.1% and written comp-store sales declined 14.3% for the quarter.

Total sales for the year were $862 million and $132 million, down 17.7% from 2022. Our current sales performance returned to the pre-COVID sales trends we experienced in 2019 and 2018.

In the fourth quarter, our teams did a solid job in expense control, higher gross margins and excellent inventory management. Improvement in average ticket designer sales and maintaining high-quality service helped produce pre-tax margins of 8.7% and $18.5 million.

For the full year, we produced $72.7 million pre-tax earnings versus $119.5 million in 2022. Following record sales and profit years post-COVID, the furniture industry was first hit by consumer spending on travel and entertainment and by most recently, the higher mortgage and interest rates, which significantly impacted housing sales.

For Haverty's, home sales in the South have historically been highly correlated to our furniture sales. Currently, home sales have been historic lows and have clearly impacted on our customers' interest in buying furniture. These trends are reflected in our recent performances. We're encouraged that we believe that home sales seem to have bottomed out after dramatic declines. It is evident now that we've experienced a two-year pull forward of furniture and accessory sales due to COVID and now have experienced a two-year falloff in sales. Our teams have done a fine job in reducing our cost and reaction to weakening sales trends and adjusting across all areas of our business.