ATLANTA, Nov. 5 /PRNewswire-FirstCall/ -- Haverty Furniture Companies, Inc. (NYSE:HVTNYSE:andNYSE:HVT.A) today reported a loss for the third quarter ended September 30, 2008. The net loss for the third quarter of 2008 was $1.5 million or $0.07 per diluted share of Common Stock, as compared to the third quarter 2007 net earnings of $643,000 or $0.03 per diluted share of Common Stock.
For the nine months ended September 30, 2008, the net loss was $2.8 million or $0.13 per diluted share of Common Stock versus net income of $123,000 or $0.01 per diluted share of Common Stock for the same period in 2007.
As previously reported, net sales for the third quarter of 2008 were $175.6 million, a decrease of 12.5% compared to sales of $200.7 million for the corresponding quarter in 2007. Comparable-store sales declined 14.9% for the quarter.
Clarence H. Smith, president and chief executive officer, said, "We have seen more deterioration in consumer spending for big-ticket purchases and the current outlook for the near term continues to be difficult. Our strategy to maintain a strong balance sheet and contain costs has proven to be particularly prudent. Subsequent to the end of the third quarter, all of our borrowings were repaid and we are closely managing our inventories. During the third quarter, we continued to adjust all aspects of our operations to business conditions and reduced our SG&A costs while improving our gross margins.
"Gross margins for the third quarter increased from 49.6% in 2007 to 51.5% this year. Reductions in markdowns and our cessation of in-house free financing for terms greater than one year were the primary contributors to the improvement in gross margins. Total SG&A expenses in the third quarter were $6.9 million lower in 2008 than in the prior year as we adjusted our advertising spending and corporate office, store, and distribution operations. The $8.0 million of reductions in these areas were partially offset by an increase of $1.1 million in our reserve for store closing costs, which includes amounts for potential defaults by our sub-tenants. All of our fixed costs are currently being analyzed for additional reductions. We are evaluating locations with leases reaching renewal for potential renegotiations of option terms or possible closures.
"Inventory levels are currently lower than those throughout the first half of the year. We no longer offer in-house free financing greater than one year and accounts receivable balances have continued to come down and serve as a source of cash. In early October we made the final scheduled payments on two unsecured notes and prepaid the remaining obligations associated with certain properties. Our capital expenditure plans are being curtailed as we spend on normal store maintenance but forego any additional new store activity. We expect to close on a $7.0 million sale-leaseback of one of our stores during the fourth quarter.
"Our total written business in the fourth quarter to date is down approximately 23% versus the same period last year. We cannot predict the depth or length of the current negative business cycle. Our attention is on tightly managing our business during this period, gaining market share from weaker and defunct competitors, and emerging from this historic down cycle as the most prominent furniture retailer in our markets." Havertys is a full-service home furnishings retailer with 123 showrooms in 17 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 at http://www.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.
The company will sponsor a conference call Thursday, November 6, 2008 at 8:00 a.m. Eastern Standard Time to review the third quarter. Listen-only access to the call is available via the web at http://www.havertys.com/ (About Us) and at http://www.streetevents.com/ (Individual Investor Center), both live and for a limited time, on a replay basis.
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Condensed Consolidated Statements of Income
(Amounts in thousands except per share data)
(Unaudited) Quarter Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007 Net sales $175,579 $200,666 $529,243 $578,843
Cost of goods sold 85,104 101,141 256,079 292,980
Gross profit 90,475 99,525 273,164 285,863 Credit service charges 468 591 1,530 1,853
Gross profit and other revenue 90,943 100,116 274,694 287,716 Expenses:
Selling, general and
administrative 92,879 99,798 278,139 288,638
Interest, net 273 (571) 348 (723)
Provision for doubtful
accounts 432 407 1,044 786
Other (income) expense, net (359) (77) (479) (728)
Total expenses 93,225 99,557 279,052 287,973 Income (loss) before income
taxes (2,282) 559 (4,358) (257) Income tax benefit (767) (84) (1,566) (380) Net income (loss) $(1,515) $643 $(2,792) $123 Basic and diluted earnings
(loss) per share:
Common Stock ($0.07) $0.03 ($0.13) $0.01
Class A Common Stock ($0.07) $0.03 ($0.13) $0.00 Weighted average shares - basic:
Common Stock 17,213 18,460 17,163 18,501
Class A Common Stock 4,090 4,146 4,107 4,174
Weighted average shares -
assuming dilution(1):
Common Stock 21,303 22,725 21,270 22,827
Class A Common Stock 4,090 4,146 4,107 4,174 Cash dividends per common share:
Common Stock $0.0675 $0.0675 $0.2025 $0.2025
Class A Common Stock $0.0625 $0.0625 $0.1875 $0.1875
(1) See additional details at the end of this release.
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited) Sept. 30, Dec. 31, Sept. 30,
2008 2007 2007 Assets
Cash and cash equivalents $18,724 $167 $17,823
Accounts receivable, net of allowance 31,773 58,748 64,708
Inventories, at LIFO cost 99,830 102,452 93,757
Other current assets 19,214 17,569 27,380
Total current assets 169,541 178,936 203,668 Accounts receivable, long-term 2,536 8,003 10,275
Property and equipment, net 201,565 209,912 214,700
Other assets 23,562 25,086 13,102 $397,204 $421,937 $441,745
Liabilities and Stockholders' Equity
Notes payable to banks $-- $-- $--
Accounts payable and accrued
liabilities 73,652 84,527 98,472
Current portion of long-term debt
and lease obligations 15,191 8,353 8,289
Total current liabilities 88,843 92,880 106,761 Long-term debt and lease obligations,
less current portion 7,265 20,331 22,457
Other liabilities 29,546 29,881 27,527
Stockholders' equity 271,550 278,845 285,000 $397,204 $421,937 $441,745 HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited) Nine Months Ended September 30,
2008 2007 Operating Activities
Net income (loss) (2,792) $123
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 16,217 16,889
Provision for doubtful accounts 1,044 786
Loss (gain) on sale of property
and equipment 8 (219)
Other 794 1,588 Changes in operating assets and liabilities 23,290 26,023 Net cash provided by operating
activities 38,561 45,190 Investing Activities
Capital expenditures (8,307) (10,173)
Proceeds from sale of land, property
and equipment 256 888
Other investing activities 141 110 Net cash used in investing
activities (7,910) (9,175) Financing Activities
Proceeds from borrowings under revolving
credit facilities 128,365 362,525
Payments of borrowings under revolving
credit facilities 128,365 (375,125) Net decrease in borrowings under revolving
credit facilities -- (12,600)
Payments on long-term debt and capital
lease obligations (6,228) (8,306)
Treasury stock acquired (1,806) (5,213)
Proceeds from exercise of stock options 186 319
Dividends paid (4,246) (4,531) Net cash used in financing
activities (12,094) (30,331) Increase in cash and cash equivalents 18,557 5,684 Cash and cash equivalents at beginning
of period 167 12,139 Cash and cash equivalents at end of period 18,724 $17,823 HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Reclassifications Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.
Income Taxes During the nine months ended September 30, 2008 and 2007, the Company
settled certain state tax audits and revised its assessments related to
state taxation issues resulting in a $0.3 million recognition of tax
benefits and reduction in its FIN 48 reserve.
Earnings per Share The following details how the number of shares in calculating the diluted
earnings per share for Common Stock are derived under SFAS 128 and EITF
03-6 (shares in thousands): Quarter Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007 Common Stock:
Weighted-average shares outstanding 17,213 18,460 17,163 18,501 Assumed conversion of Class A
Common shares 4,090 4,146 4,107 4,174 Dilutive options and stock awards -- 119 -- 152 Total weighted-average diluted
Common shares 21,303 22,725 21,270 22,827
Contact for information:
Dennis L. Fink, EVP & CFO or
Jenny Hill Parker, VP, Secretary & Treasurer
404-443-2900
DATASOURCE: Haverty Furniture Companies, Inc.
CONTACT: Dennis L. Fink, EVP & CFO or Jenny Hill Parker, VP, Secretary & Treasurer, both of Haverty Furniture Companies, Inc., +1-404-443-2900 Web site: http://www.havertys.com/
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