Earnings Call Excerpt
Haverty Furniture Companies, Inc. (HVT)
Q1 2008 Earnings Call
May 1, 2008 10:00 am ET
Executives
Dennis L. Fink – Executive Vice President and Chief Financial Officer
Clarence H. Smith – President and Chief Executive Officer
Analysts
Rexford Henderson – Raymond James
Todd Schwartzman – Sidoti & Co.
Laura Champine – Morgan Keegan & Company
Analyst for John Baugh – Stifel Nicolaus & Company, Inc.
Carlos Ryerson – Luxor Capital Group
Presentation
Operator
Welcome to the first quarter 2008 earnings release conference call. (Operator Instructions) I would now like to turn the conference over to Dennis Fink, Executive Vice President and CFO.
Dennis L. Fink
During this call we will make forward-looking statements which are subject to risks and uncertainties and assumptions that are difficult to predict. Actual results may differ materially from those expressed in such statements.
We speak only as of the date that they are made and we undertake no obligation to publicly update or revise. Factors that could cause Haverty’s actual results to differ materially from the expected results are disclosed in the company’s reports filed with the SEC and we caution you to give consideration to those possibilities.
Our President and CEO, Clarence Smith, will now give you his update.
Clarence H. Smith
Sales for the quarter came in at $185 million, down 3% from last year. Margins were greatly improved, ahead of our budget, at 52.1%. And we held our SG&A expenses flat producing an increase in net income to slightly over $1 million, or $0.05 per share versus $0.04 last year.
We outlined the three areas that affected our gross margin increase in our press release. These improvements were due approximately 1/3 to our exclusive product, 1/3 due to better inventory management, and 1/3 due to our move to more third-party credit.
I would add that our team has adapted well to the shift to global supply of our product from our former model of domestic suppliers located a few hours from our DCs.
We are finally beginning to get some credit for the exclusive product development our merchandising team has undertaken and we’re handling the flow and movement of the product from the worldwide factories to our customers’ homes much more efficiently. This has helped us significantly reduce our markdowns, closeouts, and demurrage, while we are reacting quicker and better to solve our customers’ home furnishings needs.
We are much further along the learning curve of being a fully developed branded retailer from one only selling other manufacturers’ brands. Our inventories are 7% higher than last year end due in part to building stock because the impact of Chinese New Year. However, inventories were 8.5% below the March 2007 level, in line with budget and balanced.
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