ATLANTA, Aug. 2 /PRNewswire-FirstCall/ -- Haverty Furniture Companies, Inc. today reported a loss in earnings for the second quarter ended June 30, 2007. The net loss for the second quarter of 2007 was $1.4 million or $0.06 per diluted share of Common Stock, as compared to the second quarter 2006 net income of $3.6 million or $0.16 per diluted share of Common Stock.
For the six months ended June 30, 2007, the net loss was $520,000 or $0.02 per diluted share of Common Stock versus net income of $8.7 million or $0.38 per diluted share of Common Stock for the same period in 2006.
Net sales for the second quarter of 2007 were $187.1 million, a decrease of 11.3% compared to sales of $211.0 million for the corresponding quarter in 2006. As previously reported, comparable-store sales decreased 12.7% for the quarter.
Clarence H. Smith, president and chief executive officer, said, "Severely weak sales volume early in the quarter created a difficult hurdle for us and produced a quarterly loss. We had noted in our May and June sales releases that with the double-digit sales declines we would not be profitable. Sales were especially poor in the first half of the quarter but we were heartened by the improvement in volume and return to profitability for June.
"The close management of our merchandise flow and clearance activity resulted in a reduction in inventory of $15.5 million or 13.1% as compared to year ago levels. The increased clearance sales contributed to a 64 basis point reduction in gross profit margins versus the second quarter last year.
"SG&A expenses were $4.9 million lower than last year's second quarter with decreases in all major categories except occupancy, which was up approximately $1.0 million due to overhead associated with new stores.
"The second quarter is typically the weakest of the year for Havertys. We expect to return to profitability in the second half as fixed expenses are leveraged with the seasonally higher sales volume anticipated."
Havertys is a full-service home furnishings retailer with 122 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 web site 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 Friday, August 3, 2007 at 10:00 a.m. Eastern Daylight Time to review the second quarter. Listen-only access to the call is available via the web at http://www.havertys.com/ (For Investors) 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 Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Net sales $187,104 $211,034 $378,177 $420,122
Cost of goods sold 96,197 107,143 191,839 211,457
Gross profit 90,907 103,891 186,338 208,665
Credit service charges 606 692 1,261 1,454
Gross profit and other
revenue 91,513 104,583 187,599 210,119
Expenses:
Selling, general and
administrative 93,713 98,574 188,840 197,124
Interest, net (94) 96 (152) 62
Provision for doubtful
accounts 234 82 378 116
Other (income) expense, net (171) (19) (651) (1,237)
Total expenses 93,682 98,733 188,415 196,065
(Loss) income before income
taxes (2,169) 5,850 (816) 14,054
Income taxes (818) 2,259 (296) 5,360
Net (loss) income $(1,351) $3,591 $(520) $8,694
Basic (loss) earnings per
share:
Common Stock $ (0.06) $0.16 $ (0.02) $0.39
Class A Common Stock $ (0.06) $0.15 $ (0.03) $0.37
Diluted (loss) earnings per
share:
Common Stock $ (0.06) $0.16 $ (0.02) $0.38
Class A Common Stock $ (0.06) $0.15 $ (0.03) $0.37
Weighted average shares -
basic:
Common Stock 18,558 18,308 18,522 18,236
Class A Common Stock 4,179 4,256 4,188 4,271
Weighted average shares -
assuming dilution (1):
Common Stock 22,888 22,751 22,901 22,686
Class A Common Stock 4,179 4,256 4,188 4,271
Cash dividends per common
share:
Common Stock $0.0675 $0.0675 $0.1350 $0.0135
Class A Common Stock $0.0625 $0.0625 $0.1250 $0.0125
(1) See additional details at the end of this release.
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
June 30, December 31, June 30,
2007 2006 2006
Assets
Cash and cash equivalents $8,895 $12,139 $7,495
Accounts receivable,
net of allowance 66,928 63,996 64,671
Inventories, at LIFO cost 103,203 124,764 118,698
Other current assets 24,727 18,410 22,930
Total Current Assets 203,753 219,309 213,794
Accounts receivable, long-term 13,123 14,974 9,113
Property and equipment, net 217,079 221,245 218,162
Other assets 13,361 14,226 11,967
$447,316 $469,754 $453,036
Liabilities and Stockholders' Equity
Notes payable to banks $12,200 $12,600 $4,950
Accounts payable and
accrued liabilities 84,959 99,500 97,776
Current portion of long-term debt
and lease obligations 8,284 10,334 12,639
Total Current Liabilities 105,443 122,434 115,365
Long-term debt and lease
obligations, less current portion 24,525 27,515 24,965
Other liabilities 26,990 27,882 25,297
Stockholders' equity 290,358 291,923 287,409
$447,316 $469,754 $453,036
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30,
2007 2006
Operating Activities
Net (loss) income $(520) $8,694
Adjustments to reconcile net (loss)
income to net cash
provided by operating activities:
Depreciation and amortization 11,340 10,528
Provision for doubtful accounts 378 116
Deferred income taxes 224 536
Gain on sale of property and
equipment (218) (1,184)
Other 1,028 519
Changes in operating assets and
liabilities (887) (5,533)
Net cash provided by operating
activities 11,345 13,676
Investing Activities
Capital expenditures (5,932) (13,204)
Proceeds from sale of property and
equipment 886 2,898
Other investing activities 158 273
Net cash used in investing
activities (4,888) (10,033)
Financing Activities
Proceeds from borrowings under
revolving credit facilities 350,775 503,395
Payments of borrowings under
revolving credit facilities (351,175) (502,745)
Net (decrease) increase in
borrowings under revolving
credit facilities (400) 650
Payments on long-term debt and lease
obligations (6,241) (6,557)
Treasury stock acquired (353) --
Proceeds from exercise of stock
options 319 1,540
Dividends paid (3,026) (2,998)
Other -- 96
Net cash used in financing
activities (9,701) (7,269)
Decrease in cash and cash
equivalents (3,244) (3,626)
Cash and cash equivalents at
beginning of period 12,139 11,121
Cash and cash equivalents at end of
period $8,895 $7,495
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.
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 Six Months Ended
June 30 June 30
2007 2006 2007 2006
Common Stock:
Weighted-average shares
outstanding 18,558 18,308 18,522 18,236
Assumed conversion of Class A
Common shares 4,179 4,256 4,188 4,271
Dilutive options, awards and
Common stock equivalents 151 187 191 179
Total weighted-average diluted
common shares 22,888 22,751 22,901 22,686
Contact: Dennis L. Fink, EVP & CFO or Jenny Hill Parker, VP, Secretary & Treasurer 404-443-2900
