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Havertys reports 4.2% sales decline in Q1 – Furniture Today

Impact team
Written by Impact team

Havertys reports 4.2% sales decline in Q1  Furniture Today

ATLANTA – Havertys reported a 4.2% decline in its sales for the quarter ended March 31. Earnings per share were 9 cents, compared with 17 cents for the same period of 2019. And, the company reopened most of its stores, which had been closed since March 19, on May 1.

Havertys also announced that its board of directors declared a cash dividend to be paid on the outstanding shares of the two classes of $1 par value common stock of the company at a rate of 15 cents per share on the common stock and 14 cents per share on the Class A common stock. The dividend is payable on June 19 to stockholders of record at the close of business on June 4. Havertys has paid a cash dividend in each year since 1935, the company said.

Clarence H. Smith, CEO of Havertys, described the challenging retail climate that has confronted the retailer.

“Before the COVID-19 pandemic became a part of our daily conversation, our first quarter business was ahead of last year,” he said. “Sales were up 12.8% and comp-store sales were up 11.6% for the first two months of 2020 compared to 2019. March brought increased awareness, and a national health emergency was declared on March 13. To protect our team members, customers, and communities, we closed our stores March 19 and halted deliveries March 21.”

Smith said the past few weeks “have been challenging and extremely difficult, especially the decisions concerning our workforce made to protect the viability of our company during these unprecedented times. We used our credit facility for the first time since putting it in place in 2008 and completed a sale-leaseback transaction of three distribution facilities to enhance our liquidity position.

“We have reduced capital spending, cut salaries for senior management and reduced our quarterly dividend to our common stockholders 25%. Each step we have taken was made to help secure our brand as we face the unknown duration and severity of this pandemic.”

He also talked about how the retailer has reopened most of its stores.

“We reopened 103 of our 120 stores on May 1, and today we are serving customers, albeit behind a mask and socially distant, with a renewed enthusiasm in 116 stores,” Smith said. “Our deliveries resumed on May 5, and we are offering customers the option of delivery to the doorstep or in-home placement and set-up. Digital shopping has been elevated to new levels, and we have increased the number of team members that can serve online customers via chat.”

The company also announced that its selling square footage is expected to be slightly lower in 2020 compared with 2019. Havertys closed its outlet location in the first quarter, plans to close its Galleria location in Dallas in the third quarter and plans to open a store in Southlake, Texas in the fourth quarter. The company’s previously announced store expansions are delayed or under review. 

Havertys also announced that on May 18, it completed a sale and leaseback transaction of three properties with SunTrust Equity Funding, a subsidiary of Truist Financial Corp. The Coppell, Texas, location has approximately 394,000 distribution square feet used to serve Western stores, 44,000 retail square feet and 20,000 square feet of office space used for a call center and general management purposes. The Lakeland, Fla., property is a distribution center with approximately 335,000 square feet, and the Colonial Heights property is a distribution facility with 129,000 square feet.

The total sales price for these properties, excluding costs and taxes, is $70 million, and their net book value is approximately $39.8 million. Net proceeds from the sales will be used to strengthen the company’s liquidity and support corporate initiatives. The facilities will be leased back to Havertys via 15-year operating lease agreements with renewal options, the company said.

Source: furnituretoday.com

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