Haverty (HVT) Q4 2025 Earnings Call Transcript

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Date

Tuesday, February 24, 2026 at 10 a.m. ET

Call participants

• President and Chief Executive Officer — Steven G. Burdette
• Executive Vice President and Chief Financial Officer — Richard B. Hare
• Chief Marketing Officer — Tiffany Hinkle

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Takeaways

• Net Sales -- $201.9 million for Q4, representing a 9.5% increase, with comparable store sales up 8.2%.
• Gross Margin -- 60.4% for Q4, down from 61.9%, including $3.9 million in LIFO charges; adjusted gross margin was 62.4% after excluding LIFO impact.
• Pretax Income -- $10.8 million for the quarter, yielding a 5.3% operating margin compared to $9.6 million and 5.2% previously.
• Net Income -- $8.5 million or $0.51 per diluted share, up from $8.2 million or $0.49 per share.
• SG&A Expense -- $112.5 million, up 6.3% year over year; as a percentage of sales, declined to 55.7% from 57.4%.
• Written Sales Trend -- Sequentially, written business was up high single digits in October, mid-single digits up in November, and down low single digits in December.
• Delivered Sales Trend -- Deliveries rose 10% in October, increased mid-single digits in November, and accelerated to nearly 15% growth in December.
• Average Ticket Values -- Q4 average ticket rose 10.9% to $3,759; design average ticket rose 11.9% to $8,072, with overall after-Thanksgiving average ticket exceeding $4,400.
• Design Business Contribution -- Accounted for 33.3% of quarterly sales, led by upholstery special order growth of 14.8%.
• Inventory Position -- Year-end inventories were $96.2 million, up $12.7 million; inventory increase driven by proactive Q4 tariff-related purchases.
• Customer Deposits -- $35.5 million at quarter-end, down $5.2 million since year-end 2024 and $8.4 million versus Q3 2025.
• Cash & Debt -- $125.3 million in cash and cash equivalents, with no funded debt reported at period-end.
• Capital Expenditures -- $4.4 million for Q4; $19.7 million for 2025, with a 2026 CapEx budget of around $33.5 million.
• Shareholder Returns -- $5.3 million in regular dividends paid in Q4; $2.8 million of common stock repurchased in the quarter at an average price of $22.63 per share.
• Board Authorization -- $15 million newly authorized for share buybacks as of February 20, 2026, increasing available repurchase authorization to $18.3 million.
• Store Expansion -- Operating 129 stores at year-end, with five new locations planned for 2026, including an entry into Pennsylvania.
• 2026 Guidance -- Gross margins guided to 60.5%-61%; fixed and discretionary SG&A projected at $307-$309 million; variable SG&A cost range held at 18.6%-18.8% of sales.
• Tariff Updates -- Effective immediately, a 10% worldwide tariff under Section 122 replaces IEEPA tariffs and lasts 150 days through July 24, 2026; not stackable with Section 232 tariffs but stackable with Section 301 tariffs.
• E-commerce Performance -- Written e-commerce sales grew 12.3% for Q4; web traffic and site engagement increased double digits year over year.

Summary

Haverty Furniture Companies (NYSE:HVT) highlighted a return to consecutive quarters of positive comparable sales and reported stable annual earnings per share despite margin compression from LIFO charges. Leadership emphasized deliberate management of evolving tariff regimes, with inventory strategies in place to address imminent cost impacts and guidance reaffirmed for gross margins and SG&A. Announced store expansion into a new state signals continued geographic growth, supported by significant planned capital expenditures for 2026.

• Leadership stated, "this new tariff is only for 150 days. So it expires on July 24," referencing the temporary impact window for Section 122 tariffs on product costs.
• Haverty plans four store remodels and a bedding/design center refresh impacting about 35% of locations in the coming year.
• Shareholder capital return priorities remain balanced between ongoing dividends and renewed buyback authorization after the latest board approval.
• Sales momentum was most pronounced after-Thanksgiving, coupled with a notable rise in average ticket values and sales mix from design services.
• Management noted that "marketing spend to be flat with 2025," indicating no expected pressure on sales leverage from advertising in 2026.

Industry glossary

• LIFO (Last-In, First-Out): Inventory accounting method where the most recently acquired items are expensed first, affecting cost of goods sold during inflationary periods.
• IEEPA Tariffs: Trade duties imposed under the International Emergency Economic Powers Act, now ruled illegal and replaced by Section 122 tariffs.
• Section 122 Tariff: Temporary import tariffs authorized under the 1974 Trade Act, currently set at 10% worldwide with a defined expiration.
• Section 232 Tariff: Tariffs imposed for national security reasons, with current rates affecting certain furniture imports.
• Section 301 Tariff: Tariffs levied in response to unfair trade practices, stackable with Section 122 tariffs but not Section 232.

Full Conference Call Transcript

Steven G. Burdette: Good morning, and thank you for joining our 2025 fourth quarter and 2025 year-end conference call. We are excited to report an increase in both written and delivered comp sales for Q4, marking our second consecutive quarter of positive comps. Our net sales for Q4 were $201,900,000, which was up 9.5% with comps up 8.2%. Total written sales were up 3.5% with comps up 3.2%. Gross margins for the quarter came in at 60.4% versus 61.9% last year. However, we did incur $3,900,000 in LIFO charges during the quarter. Pretax income for the quarter was $10,800,000 or a 5.3% operating margin versus $9,600,000 or a 5.2% operating margin, resulting in $0.51 a share versus $0.49 a share.

For the calendar year 2025, our net sales came in at $759,000,000, which was up 5% with comps up 2.1%. Gross margins for the year were flat with last year, coming in at 60.7%, including $4,600,000 in LIFO charges. Pretax profits were $26,800,000 or a 3.5% operating margin versus $26,200,000 or a 3.6% operating margin, resulting in $1.19 a share, which was flat with last year. Richard will provide additional details regarding our SG&A expenses and LIFO impact in his discussion. During the quarter, we saw our written sales fall off as the quarter progressed.

However, it was nice to see our after-Thanksgiving sales up 6.2% with strong average ticket in design at approximately $8,500 and our overall average ticket at $4,400 plus. For Q4, our average ticket increased 10.9% to $3,759 with design average ticket growing 11.9% to $8,072. Our design business accounted for 33.3% of our sales driven by our upholstery special order business up 14.8%. Traffic for the quarter followed our written sales trend during the quarter, ending with a decrease in the low single digits for the quarter overall. It is important to remember for comparison purposes that we had just experienced our first positive traffic increase in November and December 2024 following the presidential election in several years.

Conversion rates remained slightly down for the quarter. For the calendar year, our written business was up 2.8%, with comps up 0.7%. Our average ticket came in at $3,530, up 4.7%, and our designer average ticket was $7,781, up 9.7%. Traffic was up in the mid-single digits, with conversion rates continuing to show improvement. Our merchandising and supply chain teams continue to partner with our outstanding vendors to ensure that our products are flowing consistently to avoid any disruptions for our customers.

Our merchandising team continues to challenge our assortment to make sure that we are testing new styles, new colors, new price points, and new categories, which creates excitement for our teams and customers by helping to differentiate ourselves from our competition. From a category perspective for the quarter, bedroom and upholstery were up mid-single digits, followed by occasional up low single digits, and dining, mattresses, and decor coming in flat. Our inventories are in great position as we continue to focus on having best sellers in stock for immediate gratification for our customers. At year end, our inventories were up $12,700,000 versus last year to $96,200,000.

We do expect to see this drop over the next six months as we got in front of some of the most recent tariffs in Q4 with our inventory purchases and new product arrivals. We did get some good news in late December when the administration delayed the additional 5% tariff on Section 232 upholstered wood furniture, leaving it at 25%. However, last Friday, we finally heard from the Supreme Court as they ruled that the IEEPA tariffs were illegal. As we heard over the weekend from the administration, and we verified this morning, effective at 12:01 a.m. today, a 10% worldwide tariff has been issued through Section 122 of the 1974 Trade Act.

This tariff, to our understanding, will replace the IEEPA tariffs, and these Section 122 tariffs are not stackable on Section 232 tariffs or applicable under the current USMCA agreement. However, they are stackable with the Section 301 tariffs. Haverty Furniture Companies, Inc. will be thoughtful and deliberate in our approach with the continuing tariff adjustments so that we have a minimal impact on our customers, team members, and shareholders. Our marketing, creative, and media plans continue to resonate with our customers through broadcast, connected TV, and digital marketing channels. We saw web traffic and key site engagement increase double digits year over year, contributing to our in-store success, and our written e-commerce sales increased 12.3% for the quarter.

We ran our second direct mail campaign in late October in preparation for the after-Thanksgiving shopping period. It was a 16-page piece mailed to approximately 750,000 new customers that highlighted our product assortment and design capabilities. We refined our targeting models based on results from the first campaign and added pricing we believe helped contribute to an improved conversion rate. Our marketing dollars were down slightly for the quarter as a percent of net sales as we were able to leverage the increase in sales. We continue to emphasize 60 months no interest for competitive reasons in our promotions, creating an increase in our credit cost for the quarter. However, these credit costs remain slightly down for the year.

We ended the year at 129 stores but already have plans for five new stores in 2026. Four of the stores have been announced in St. Louis, Nashville, and two in Houston. We are excited to announce today that we will be entering Pennsylvania, which will be our eighteenth state. We will open in Q4 in North Pittsburgh across from the Ross Township Mall. We are currently in lease negotiations on several other locations that we hope to be able to announce by next quarter’s call.

The opening of five new stores in 2026 along with four planned remodels, a refresh of the mattress and design areas in our stores, of which approximately 35% will be done, will push our CapEx budget to around $33,500,000, which Richard will cover in more detail. After careful evaluation, we have decided to close our Alexandria, Louisiana location in March. This decision to close was driven by significant demographic shifts in the market, stagnant housing growth, and the need for a major remodel. We want to thank all our team members who have served the Alexandria customer and surrounding markets for over forty plus years.

Our dedicated distribution, home delivery, and customer service teams continue their wonderful work serving our customers across our 17, soon to be 18, states. All of our new store growth will be served by our current distribution network, requiring no new investments. The ability of the teams to adjust the business to the current demands is outstanding, allowing us to provide our customers with a memorable experience on each and every encounter. The industry continues to face ongoing challenges, but even with all the uncertainty, our optimism remains high as we rebounded in 2025, feeling like we hit an inflection point in Q3 with the momentum continuing into Q4.

Our push in 2026 is to continue our focus on testing new ideas and processes along with continuing our organic store growth. Thank you to all our Haverty team members for your dedication to our customers and our company’s success. Our people define us, and I am proud to be a part of this great team. I want to continue to repeat that our debt-free balance sheet, our Haverty-branded products, our operational consistency, our integrity, our consumer focus, our design services, our commitment to quality, and our regret-free experience provide our customers with the comfort and confidence to know that furnishing their homes with Haverty Furniture Companies, Inc. is a great long-term investment.

I will now turn the call over to Richard B. Hare.

Richard B. Hare: Thank you, Steve, and good morning. In the 2025 fourth quarter, net sales were $201,900,000, a 9.5% increase over the prior year quarter. Comparable store sales were up 8.2% over the prior year period. Our gross profit margin decreased 150 basis points to 60.4% from 61.9%. Excluding the impact of the $3,900,000 LIFO expense in the 2025 fourth quarter and the $925,000 LIFO pickup in the prior year quarter, our adjusted gross profit margin increased 100 basis points to 62.4% from 61.4%. Selling, general and administrative expenses increased $6,600,000 or 6.3% to $112,500,000. As a percent of sales, these costs approximated 55.7% of sales, down from 57.4% in the prior year’s quarter.

We experienced increased selling, occupancy, and administrative costs during the quarter. Other income (expense) in the 2025 fourth quarter was $29,000, and interest income was approximately $1,200,000 during the 2025 fourth quarter. Income before income taxes increased $1,200,000 to $10,800,000. Our tax expense was $2,300,000 for the 2025 fourth quarter, resulting in an annual effective tax rate of 26.5% for the year. Net income for the 2025 fourth quarter was $8,500,000 or $0.51 per diluted share on our common stock, compared to net income of $8,200,000 or $0.49 per share in the comparable quarter last year. Now turning to our balance sheet.

At the end of the fourth quarter, our inventories were $96,200,000, up $12,700,000 from 12/31/2024, and up $3,700,000 versus Q3 2025. At the end of the fourth quarter, our customer deposits were $35,500,000, which was down $5,200,000 from the 12/31/2024 balance and down $8,400,000 from the Q3 2025 balance. We ended the quarter with $125,300,000 cash and cash equivalents, and we have no funded debt on our balance sheet at the end of 2025. Looking at some of our cash flow usage, capital expenditures were $4,400,000 for Q4 2025 and $19,700,000 for the calendar year. We also paid out $5,300,000 of regular dividends in the quarter and $20,800,000 for the calendar year.

We purchased $2,800,000 of common stock during the quarter at an average price of $22.63. During the calendar year, we purchased a total of $4,800,000 of common stock, representing 216,482 shares. On 02/20/2026, our Board of Directors approved an additional $15,000,000 authorization for our share buyback program. We currently have approximately $18,300,000 of existing authorization in our buyback program. Our earnings release lists out several additional forward-looking statements, including our future expectations of certain financial metrics. I will highlight a few, but please refer to our press release for additional commentary. On 02/20/2026, the Supreme Court invalidated certain tariffs imposed by the administration under the International Emergency Economic Powers Act during 2025.

The administration announced its intentions to impose new tariffs under different regulations. Our 2026 guidance includes the impact of the new tariffs announced by the administration. We continue to monitor tariff developments and assess their potential impact on our business. We expect our gross margins for 2026 to be between 60.5%–61%. We anticipate gross profit margins will be impacted by our current estimates of product, freight, and LIFO expenses. Our fixed and discretionary-type SG&A expenses for 2026 are expected to be in the $307,000,000 to $309,000,000 range. The increases over 2025 are primarily related to store growth and modest inflation. The variable-type costs within SG&A for 2026 are expected to remain in the range of 18.6% to 18.8%.

Our planned CapEx for 2026 is $33,500,000. Anticipated new or replacement stores, remodels, and expansions account for $27,200,000. Investments in our distribution network are expected to be $3,200,000, and investments in our information technology are expected to be approximately $3,100,000. Our anticipated effective tax rate in 2026 is expected to be 26%. This projection excludes the impact from vesting of stock awards and any potential new tax legislation. This completes my commentary on the fourth quarter financial results. Operator, we would like to open up the call for any questions at this time.

Operator: Thank you. We will now be conducting a question-and-answer session. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using telephony equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from Anthony Chester Lebiedzinski with Sidoti & Company. Go ahead.

Anthony Chester Lebiedzinski: Thank you, and good morning, everyone, and thanks for taking the question. Certainly nice performance here in the fourth quarter. You first just start us off with just some further details about your same-store sales trends throughout the quarter. If you could just kind of walk us through October through December, provide some additional color on that.

Richard B. Hare: Sure. Good morning, Anthony. So in terms of the trend for the business, in terms of written business, we were up high single digits in October. In November, we were middle single digits up. In December, we were down around low single digits. In terms of deliveries, we were up 10% in October, mid-single digits in November, and up almost 15% in December.

Anthony Chester Lebiedzinski: That is very helpful. Okay. Thanks for that. Okay. And then I guess the other thing is, you know, as we look at the guidance for variable SG&A expenses for 2026, you know, it implies essentially flattish percentage from 2025. You have talked about some sales momentum here that you had. I know there was a deceleration in the last month of the quarter, but nevertheless, you know, second consecutive quarter of positive same-store sales. So maybe if you could just kind of walk us through the different puts and takes in terms of what is affecting the variable component of your SG&A outlook for 2026?

Richard B. Hare: Sure, Anthony. So we came in, I believe, at 18.9% for the fourth quarter. We felt good about our guidance for 2025 being between 18.6% and 18.8%. Looking at this year, we felt like we needed to keep it in line even though we anticipate having some leverage. We do anticipate having higher pressure on the selling cost in 2026 with higher sales commissions, and we need to remain competitive, so there could be some additional third-party credit costs into the next year. So we wanted to keep that basically flat as a percentage. Then you noticed on the gross profit margins, we increased those.

We had some significant pressure this year that we called out in the press release related to LIFO. As prices stabilize in 2026, we do not anticipate having that level of pressure. So we felt some confidence with our gross profit margin guidance going up. And then just overall with the non-variable piece, I mentioned in my remarks that was primarily store growth and inflation. So I think that if you take 2025, we ended at $298,000,000, and the middle of the estimates is $308,000,000. It is about a $10,000,000 spread. About 40% of that increase is going to be occupancy cost as we grow the business.

And the rest is around about a 2% modest inflation on wages and incentives. We do not really anticipate a great deal more of advertising cost. I think most of the pressure on the non-variable is in occupancy cost, and then just overall inflation with wages and insurance, etcetera.

Anthony Chester Lebiedzinski: That is very helpful. Okay. And then with the evolving tariff environment, how do you guys think about as far as any additional potential new pricing actions? Is there anything already in the works, or are you going to be holding off for now? I am just wondering if you could speak to that.

Steven G. Burdette: Yes, Anthony, this is Steve. We are going to be very deliberate on that process. Obviously, our current inventories already have the tariffs baked in them. So we have got to work through those inventories as well before we get any impact of the new tariffs, and if they are, how sustainable are they, right? I mean, we are already at 10% now, but obviously, over the weekend, we talked about the administration moving it to 15%. Is that going to happen? When will that happen? So, you know, at this point, there is not going to be any actions or reaction off of it.

We are going to wait and see how it kind of plays out over the next few months and as we work this inventory through.

Anthony Chester Lebiedzinski: Gotcha. Yes. Thanks, Steve. And my last question here. So as we look to update our quarterly models, is there anything that we should be aware of in terms of seasonality or timing of expenses or anything related to recent weather events that you guys need to call out? We just would love to hear your thoughts on that.

Steven G. Burdette: I will say it, Richard can jump in here. I would say no, Anthony.

Anthony Chester Lebiedzinski: And as far as weather events?

Steven G. Burdette: We always have snow and weather in January and February, so that is not something that is unusual. So I do not see anything that would be a callout.

Anthony Chester Lebiedzinski: Okay.

Operator: Thank you. Your next question comes from Cristina Fernández with Telsey Advisory Group. Please proceed.

Cristina Fernández: Hey, good morning. Thank you for taking my question. I wanted to follow up on the tariff question. If the tariff goes to 15% from 10%, does that change the gross margin guidance you gave, and perhaps a little bit more color on the timing of the inventory you have today at the tariff rate that was in effect in the fourth quarter? How long will it take to work through that inventory? Are we mostly looking at, you know, the first half or a little bit longer?

Steven G. Burdette: You know, as far as the guidance, I do not see there be any change. We have got that baked in as to where it is, whether it is 10% or 15%, Cristina, as far as going forward. And then as far as working through the inventory, I think it will take us the first half of the year, but we will be strategic about it. And if there are things that we need to address to be competitive in certain price points, we will move on those. But, again, we will move on those and still be able to maintain the guidance that we have given on the margins as far as going forward.

But, you know, we feel like at this point, the current inventory where we are probably will work through first half of the year, and then we will bring in, obviously, the newer inventory, the newer cost. And again, this new tariff is only for 150 days. So it expires on July 24. And we know the administration is aggressively looking at other alternatives under Section 232, Section 301, and how they can get, you know, further increases in the tariffs. So time will tell.

Cristina Fernández: Thanks for that. And then wanted to ask about the trends in the quarter that you talked about, specifically the written order trends that they decelerated a bit. Do you feel it is more a function of the year-over-year comparisons, or did you notice any change on the underlying consumer behavior as you look at your regions or traffic or kind of what consumers were looking for when they came into the stores?

Steven G. Burdette: I do not think there is anything specific. But I will tell you, I do not think the government shutdown helped us. Being shut down for almost forty-five days or so, that did not set a good precedent as we move forward and kind of created some, you know, unknowns out there. But, you know, we talked about traffic. You know, when we compare back to 2024, Cristina, we were up double digits in traffic in November and December 2024. So we are not concerned about the traffic. We were not overly concerned. We were excited about the average ticket that we were able to continue to drive up, and we were able to drive it through design.

We are actually seeing an increase in design in the number of pieces per ticket. That is encouraging, you know, as we go forward. So nothing that would be a callout or alarming to us in the overall trend. And, obviously, we are happy with the numbers overall.

Cristina Fernández: And then my last question is regarding the mattress or bedding refresh program. I think you tested it at a couple of stores. So can you talk about the lift you have gotten in the stores that you tested it, and I guess what is changing the most? Is it the presentation, the merchandising? Maybe a little more detail on what consumers will see as you go through that program.

Steven G. Burdette: Yes. It will take us to get through all the stores in the next year to complete. As I said, we are doing about 35% of the stores this year where we do the mattress and design centers. We have seen traction with our bedding and improvement. I think more of it is more about it is more informational. It is easier for the consumer to understand what they are looking at with each mattress set, and it is also easier for our sales consultants on the information needed to provide for that customer. So it is just a better presentation.

I think it calls out the brands more in the consumer’s face when they come into the store, makes them aware that we are in the business, where before we were a little subdued in our presentation. So I think calling out the brands has certainly helped attract the consumer attention to that area. And I do think, you know, I think some of the recent reports showed the mattress business, some of the people have reported already that the mattress business was down in the fourth quarter in the mid-single digits, if not higher. And, you know, we were flat. So we feel good about our traction that we are having in the specialist stores that have gotten redone.

Cristina Fernández: And the last question I had was on the marketing and advertising side. You made some investments and changes through 2025. So, I mean, I think you said fourth quarter spending was down. So as we look at 2026, do you expect, I guess, marketing and advertising to be flat as a percentage of sales, or how should we think about that expense item and investments there?

Steven G. Burdette: Yes. In 2025, we increased our spend, I think it is up about $4,000,000 for the year, and that was because we cut it too much in 2024. But we do feel like we are at that level, and in 2026, we anticipate our marketing spend to be flat with 2025.

Operator: Thanks so much, and good luck this quarter.

Steven G. Burdette: Thanks, Cristina. Thank you. I would like to turn the floor over to Tiffany Hinkle for closing remarks.

Tiffany Hinkle: Thank you for your participation in today’s call. We look forward to speaking with you in the future when we release our first quarter 2026 results. Have a great day, everyone.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time, and thank you for your participation.

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