ATLANTA, Aug. 4 /PRNewswire-FirstCall/ -- Haverty Furniture Companies, Inc. today reported a loss for the second quarter ended June 30, 2008. The net loss for the second quarter of 2008 was $2.3 million or $0.11 per diluted share of Common Stock, as compared to the second quarter 2007 net loss of $1.4 million or $0.06 per diluted share of Common Stock.
For the six months ended June 30, 2008, the net loss was $1.3 million or $0.06 per diluted share of Common Stock versus a net loss of $0.5 million or $0.02 per diluted share of Common Stock for the same period in 2007.
As previously reported, net sales for the second quarter of 2008 were $168.4 million, a decrease of 10.0% compared to sales of $187.1 million for the corresponding quarter in 2007. Comparable-store sales decreased 12.7% for the quarter.
Clarence H. Smith, president and chief executive officer, said, "The current economic conditions, which have had a brutal impact on the residential furniture industry, show few signs of abating in the near term. Our focus is on cost containment and maintaining our strong balance sheet while enhancing our competitive positions in the markets we serve. Gross margins for the second quarter reflect our continuing commitment to closely managing our inventories and the decision to shift more of the greater than one-year customers' financing to our third party provider. These strategies were the primary contributors to the gross margin improvement from 48.6% in the prior year's second quarter to 51.2% this year.
"Our SG&A expenses are lower in most areas as we have adjusted much of our store and delivery operations to the current business levels. These reductions were partly offset by increases in delivery fuel costs and third-party credit expense in the second quarter as compared to last year's quarter. We are currently analyzing additional reductions in our SG&A fixed costs given the severity and protracted nature of this business cycle.
"Inventories are at a level appropriate for the current sales environment and are well balanced. Accounts receivable balances have continued to decline as we reduced our offering in 2008 of in-house financing greater than one year. We will be making the final scheduled debt payments on two unsecured notes and obligations associated with four retail stores and a distribution center over the next ten months, so these amounts are now included in our current liabilities.
"As we look for the best deployment of our capital, we have significantly curtailed our store growth. Our current capital expenditure plans related to stores of $7.0 million are for projects that were initiated in prior periods and normal store maintenance. Planned capital expenditures during 2008 for distribution and information technology are $5.7 million.
"After today's July sales release, we will no longer be reporting monthly sales results. We will continue to release total sales and comparable store sales for each quarter as soon as practical.
"The economic conditions in which we operate are very difficult. We believe that our financial strength will allow us to adapt to this challenging environment and opportunities that are ahead of us," Smith concluded.
Havertys is a full-service home furnishings retailer with 124 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 Tuesday, August 5 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/ (About Us, Investor Information) 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, 2008 2007 2008 2007 Net sales $168,412 $187,104 $353,665 $378,177 Cost of goods sold 82,158 96,197 170,975 191,839 Gross profit 86,254 90,907 182,690 186,338 Credit service charges 497 606 1,062 1,261 Gross profit and other revenue 86,751 91,513 183,752 187,599 Expenses: Selling, general and administrative 90,222 93,713 185,260 188,840 Interest, net 206 (94) 75 (152) Provision for doubtful accounts 284 234 612 378 Other (income) expense, net (77) (171) (119) (651) Total expenses 90,635 93,682 185,828 188,415 Loss before income tax benefit (3,884) (2,169) (2,076) (816) Income tax benefit (1,575) (818) (799) (296) Net loss $(2,309) $(1,351) $(1,277) $(520) Basic and diluted loss per share: Common Stock $ (0.11) $ (0.06) $ (0.06) $ (0.02) Class A Common Stock $ (0.11) $ (0.06) $ (0.06) $ (0.03) Weighted average shares - basic: Common Stock 17,162 18,558 17,137 18,522 Class A Common Stock 4,105 4,179 4,116 4,188 Weighted average shares - assuming dilution(1): Common Stock 21,267 22,737 21,253 22,710 Class A Common Stock 4,105 4,179 4,116 4,188 Cash dividends per common share: Common Stock $0.0675 $0.0675 $0.1350 $0.1350 Class A Common Stock $0.0625 $0.0625 $0.1250 $0.1250 (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, 2008 2007 2007 Assets Cash and cash equivalents $1,926 $167 $8,895 Accounts receivable, net of allowance 40,017 58,748 66,928 Inventories, at LIFO cost 104,873 102,452 103,203 Other current assets 19,814 17,569 24,727 Total current assets 166,630 178,936 203,753 Accounts receivable, long-term 3,185 8,003 13,123 Property and equipment, net 204,114 209,912 217,079 Other assets 25,054 25,086 13,361 $398,983 $421,937 $447,316 Liabilities and Stockholders' Equity Notes payable to banks $5,400 $ - $12,200 Accounts payable and accrued liabilities 66,206 84,527 84,959 Current portion of long-term debt and lease obligations 17,179 8,353 8,284 Total current liabilities 88,785 92,880 105,443 Long-term debt and lease obligations, less current portion 7,346 20,331 24,525 Other liabilities 28,995 29,881 26,990 Stockholders' equity 273,857 278,845 290,358 $398,983 $421,937 $447,316 HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2008 2007 Operating Activities Net loss $(1,277) $(520) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,853 11,340 Provision for doubtful accounts 612 378 Gain on sale of property and equipment - (218) Other 690 1,252 Changes in operating assets and liabilities (1,039) (887) Net cash provided by operating activities 9,839 11,345 Investing Activities Capital expenditures (5,171) (5,932) Proceeds from sale of property and equipment 203 886 Other investing activities 282 158 Net cash used in investing activities (4,686) (4,888) Financing Activities Proceeds from borrowings under revolving credit facilities 127,765 350,775 Payments of borrowings under revolving credit facilities (122,365) (351,175) Net (decrease) increase in borrowings under revolving credit facilities 5,400 (400) Payments on long-term debt and lease obligations (4,159) (6,241) Treasury stock acquired (1,806) (353) Proceeds from exercise of stock options - 319 Dividends paid (2,829) (3,026) Net cash used in financing activities (3,394) (9,701) Increase (decrease) in cash and cash equivalents 1,759 (3,244) Cash and cash equivalents at beginning of period 167 12,139 Cash and cash equivalents at end of period $1,926 $8,895 HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES Earnings per Share The following details how the number of shares in calculating the diluted loss 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 2008 2007 2008 2007 Common Stock: Weighted-average shares outstanding 17,162 18,558 17,137 18,522 Assumed conversion of Class A Common shares 4,105 4,179 4,116 4,188 Total weighted-average diluted common shares 21,267 22,737 21,253 22,710 Contact for information: Dennis L. Fink, EVP & CFO or Jenny Hill Parker, VP, Secretary & Treasurer 404-443-2900
