Haverty Furniture Companies NYSE: HVT reported higher second-quarter sales and earnings, citing double-digit written sales growth, improving delivered sales trends and continued momentum in its Design business.
Net sales increased 7.7% year over year to $194.9 million, while comparable-store sales rose 8%. Written sales climbed 12.6%, including a 12.3% comparable-sales increase. President and CEO Steve Burdette said the company recorded its fourth consecutive quarter of positive written and delivered comparable sales.
Net income totaled $5.3 million, or $0.32 per diluted share, compared with $2.7 million, or $0.16 per share, a year earlier. Income before taxes increased to $7.4 million from $4.3 million.
Sales Growth Driven by Higher Tickets and Design Business
Burdette said written sales increased by double digits in each month of the quarter. During the company’s Memorial Day promotion, sales rose 9.7% during the four-day event and 14.1% during the two-week promotional period.
Traffic increased slightly and closing rates remained steady, while the average ticket increased 14% to more than $3,800. The Design average ticket rose 15.7% to more than $8,800. Design represented 36.5% of sales during the quarter, and custom special-order business rose 23.6%.
Management said all merchandise categories posted gains. Upholstery, bedroom, dining and occasional furniture recorded double-digit increases, while mattresses and décor posted mid-single-digit growth.
During the question-and-answer session, CFO Richard Hare said delivered sales gained momentum during the quarter, rising approximately 4% in April, 8% in May and 11% in June. Burdette said every company district delivered positive results, with continued strength in the Midwest and East. Florida and Texas faced more difficult comparisons but were also positive.
Burdette said average-ticket growth reflected both pricing and more units per transaction, with units per ticket increasing in the mid-single-digit range. He also said the company sees further opportunity to expand the Design business, noting that Design currently reaches only a high-teens percentage of customers and that management believes participation could exceed 25%.
Margins, Tariff Refunds and Cost Pressures
Gross margin expanded 60 basis points to 61.4% from 60.8% a year earlier. However, the company recognized approximately $1.5 million of IEEPA tariff refunds as a reduction in cost of sales. Excluding that benefit, gross margin was 60.7%.
Hare said the company received $2.1 million in IEEPA tariff refunds associated with its direct import program during the quarter. In addition to the cost-of-sales benefit, $140,000 was recorded as a reduction to inventory, $67,000 was recorded as interest income, and the remaining amount was rebated to certain supplier partners. Excluding the income-statement impact of those refunds, net income was $4.2 million, or $0.25 per diluted share.
The company expects no further refunds tied to directly sourced products. Hare said discussions remain underway regarding refunds for indirectly sourced products involving third-party suppliers. He said the ultimate amount could be roughly comparable to the direct-source refunds, plus or minus $1 million to $1.5 million, although supplier legal costs and other factors could affect the amount received. Haverty expects it may receive an indirect refund during the current calendar year.
Burdette said new Section 301 tariffs that replaced Section 122 tariffs on July 24 were set at 10% and 12.5%, while Section 232 tariffs on upholstered wood furniture remained at 25%. The company is also managing expected increases in container costs, diesel-related transportation and delivery expenses, and product input costs tied to fuel prices.
Haverty maintained its full-year gross-margin outlook of 60.5% to 61%, excluding any additional tariff refunds. Hare said fixed and discretionary SG&A expense guidance remains $307 million to $309 million, while variable SG&A costs are expected to range from 18.7% to 18.9% of sales. He attributed higher selling expenses in part to increased third-party credit costs.
Inventory, Store Growth and Capital Allocation
Inventory declined to $100.5 million at the end of the second quarter from $106.9 million at the end of the first quarter. Management expects third-quarter inventory to end near $95 million, with a potential 5% variance depending on sales and product flow.
Haverty ended the quarter with $104.3 million in cash and cash equivalents, no funded debt and $100 million in credit availability after amending its revolving credit facility in June. Customer deposits were $43.3 million, up $7.8 million from year-end.
Capital expenditures totaled $13.1 million in the first six months of 2026. The company paid $10.6 million in regular dividends year to date and repurchased approximately 723,000 shares for $16.6 million, including 600,000 shares repurchased in June for about $13.9 million through a privately negotiated transaction. About $1.8 million remained under the repurchase authorization.
Haverty opened stores in St. Louis and Nashville during the quarter, and Burdette said both locations were ahead of budgeted traffic and volume expectations. The company plans six store openings in the second half, including one relocation, and expects to end 2026 with 133 stores. Planned openings include Fredericksburg, Virginia; Pittsburgh; McKinney, Texas; Baytown, Texas; and Richmond, Texas, as well as a relocation in Snellville, Georgia.
The company closed its San Angelo, Texas, store on June 30 and plans to close its College Station, Texas, location on Aug. 31. Haverty also expects to have just over half of its stores refreshed with updated mattress departments and Design centers by year-end, with remaining work scheduled for 2027.
For 2026, Haverty expects approximately $34 million in capital expenditures, including $27.7 million for new or replacement stores, remodels and expansions, $3.2 million for distribution-network investments and about $3.1 million for information technology.
About Haverty Furniture Companies (NYSE:HVT)
Haverty Furniture Companies, Inc operates as a specialty retailer of residential furniture and home décor in the United States. Founded in 1885 by J.J. Haverty and headquartered in Atlanta, Georgia, the company offers a broad assortment of upholstered furniture, case goods, mattresses, area rugs and decorative accessories. Customers can shop through a network of company-owned showrooms as well as an e-commerce platform, supported by in-house design services, delivery options and consumer financing programs.
Over more than a century of operation, Havertys has expanded its presence primarily across the Southeast and select markets beyond.
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