Haverty Furniture Companies Inc. (NYSE:HVT.A) Q2 2018 Earnings Conference Call - Final Transcript

Aug 01, 2018 • 10:00 am ET


Haverty Furniture Companies Inc. (NYSE:HVT.A) Q2 2018 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Haverty's Second Quarter Financial Results Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Mr. Richard Hare. Please go ahead.

Richard Hare

Thank you, operator.

(Forward-Looking Cautionary Statements)

Our President, CEO and Chairman, Clarence Smith, will now give you an update on our results and provide commentary about our business.

Clarence Smith

Good morning. Thank you for joining our second quarter conference call. We were pleased to see that we had positive sales for the second quarter and for the first half. Every region was up and delivered sales for June, which was the strongest delivered sales increase in over a year. Our store traffic was down for the quarter, but was offset by stronger store efficiencies, with higher closing rate and a higher average ticket of over $2,250. H Design sales for the second quarter were up to 25% of our total sales and continue to grow and help drive our average sales increases.

In-store tablets have helped store transaction and allows our sales consultants to stay fully engaged with the customer throughout the sales process. Our 3D and 2D room planners help our designers engage better with our customers, providing services that are helping our customers vision of their homes come true.

Sales in havertys.com were up 18% for the second quarter. We continue to invest in making our website inspirational and easier to use by our customers and by our sales team. Our marketing team has invested a great deal in the first half to improve our SEO and organic search, which has helped increase visits to our site. Mobile traffic has increased to 80% of the total traffic.

Over a year ago, we began a concerted effort to reduce our damage and discontinued inventory, and we now have the most current and cleanest in-stock inventory we've had in several years. We have significant number of higher quality bedroom and dining room collections planned to hit our store this quarter, which we believe will be exciting for our teams and our customers. Our merchandising and supply chain teams have begun aggressive processes to make sure that we have inventory in our bestsellers for full year 2018.

In some cases, we are accelerating the receipt of goods, protecting us as best as possible from potential Chinese tariffs. We do note that the following Chinese currency has recently led one Chinese vendor to reduce their current price. This reduction will temper any potential tariff.

While we've imported close to $100 million annually from China, we're moving several of our top-selling groups to factories in Vietnam. Last year, we set up an office in Ho Chi Minh to operate a significant quality control team, which covers Vietnam and China. We see the increasing cost pressures and potential Chinese tariffs pushing more of our furniture production to other countries, especially to Vietnam. While Haverty's have been importing from some of the best factories in China for almost 20 years, we've developed