HAVERTY FURNITURE COMPANIES INC (HVT) Q2 2025 Earnings Summary

Executive Summary

• Havertys delivered modest top-line growth with net sales of $181.0M (+1.3% YoY) and maintained strong gross margin (60.8%), but EPS fell to $0.16 on higher SG&A as a percent of sales (59.3%) and a higher quarterly effective tax rate; comps were -2.3% .
• Bold beat on both revenue and EPS versus Wall Street consensus*, reflecting marketing-driven traffic and conversion improvements despite tariff uncertainty and ongoing housing softness* .
• Management maintained FY 2025 gross margin guidance (60.0%–60.5%) and fixed SG&A ($291–$293M), lowered variable SG&A (18.5%–18.8%), and kept CapEx at $24M; retail square footage now expected to be flat vs 2024, a reduction from prior guidance .
• Catalysts going forward: Q3 resumption of special orders (China vendors) and continued marketing/price architecture efforts; watch tariff implementation details and promotional intensity across the industry for margin cadence .

What Went Well and What Went Wrong

What Went Well

• First increase in written and delivered sales in over two years; Memorial Day event drove double-digit traffic and strong conversion, with web sales up 8.4% and organic traffic +15.6% following an Adobe Edge rollout .
• Gross margin expanded 40 bps YoY to 60.8%, underscoring merchandising discipline; management maintained full-year margin guidance despite tariff uncertainty .
• CEO highlighted AI-driven digital advertising and differentiated in-house final-mile delivery as competitive advantages; “our debt-free balance sheet” and brand strength position Havertys to capture share .

What Went Wrong

• Comparable store sales declined 2.3%; EPS fell to $0.16 vs $0.27 last year on higher SG&A and a quarterly effective tax rate of 37.8% (vs 31.2% LY) .
• Temporary suspension of special orders from China due to a sudden 145% additional tariff (later reduced to 30%) pressured design/special order sales mid-single digits .
• Promotional environment intensified industry-wide; Havertys increased advertising (+$1.1M) and ran 60-month financing while credit usage remained stable—supportive for traffic but elevates cost intensity .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

Actuals vs Wall Street Consensus (Q2 2025)

Values retrieved from S&P Global.*

Segment/Category Performance (YoY Directional)

KPIs and Operational Metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are excited to report our first increase in written and delivered sales for Q2 in over two years… Our sales for Q2 were $181 million, up 1.3%, with comps down 2.3%.” — Steve Burdette, President & CEO .
• “Our gross profit margin increased 40 basis points to 60.8%… Selling, general, and administrative expenses increased $4.2 million… interest income approximately $1.5 million.” — Richard Hare, CFO .
• “We continue to use AI algorithms… Since [Adobe Edge] change, we have seen a 15.6% increase in organic traffic… contributed to our web sales growth of 8.4% for the quarter.” — Steve Burdette .
• “We do not outsource… final mile delivery… our regret-free experience… helps separate us from our competitors.” — Steve Burdette .
• “We continue to expect our gross margins for 2025 to be between 60% and 60.5%… Fixed SG&A $291M–$293M… Variable SG&A 18.5%–18.8%… Planned CapEx $24M.” — Richard Hare .

Q&A Highlights

• Cadence & Regions: Written sales improved sequentially April (-2%) → May (+1%) → June (+2.5%); delivered sales April (+5%), May (+2%), June (-3%); performance broadly similar across districts .
• Tariffs & Pricing: Initial pricing actions taken in May; team ready to adjust as final tariff details post; majority of increases to be passed through with margin buffer maintained .
• Promotions & Credit: Expanded promotions (including 60 months); direct mail returning; credit usage stable while credit costs fell YoY .
• Special Orders: Pause on China vendors due to tariff; special orders expected to resume fully in Q3 across vendors .
• Real Estate & Rents: Some openings pushed to 2026; rents not down; YE 2025 store count expected ~129 (flat vs 2024) .

Estimates Context

• Q2 2025 actuals beat consensus on both revenue and EPS: Revenue $181.0M vs $176.9M*; EPS $0.16 vs $0.145* .
• Only two covering estimates for each of revenue and EPS, suggesting limited analyst coverage; estimates likely to reflect stronger margin discipline but elevated SG&A run-rate*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Revenue and EPS beat consensus*, aided by marketing and conversion improvements despite negative comps and tariff uncertainty .
• Gross margin remains resilient at 60.8% with full-year guide maintained; variable SG&A guide lowered, signaling continued operational efficiencies .
• Near-term catalyst: resumption of China-related special orders in Q3; monitor pricing adjustments and tariff registry details for margin trajectory .
• Sequentially, revenue held near flat vs Q1 while EPS declined on higher SG&A mix and a discrete quarterly tax rate; watch SG&A cadence and tax normalization .
• Balanced sheet strength (no debt, $107.4M cash) provides investment flexibility; CapEx steady at $24M with store growth pushed to 2026 .
• Trading setup: “beat and maintain” quarter with visible Q3 operational tailwinds; industry promotions and tariff outcomes are the main swing factors for near-term margin and comp trends .