Haverty Furniture Companies, Inc. (NYSE:HVT) Q2 2020 Earnings Conference Call - Final Transcript

Aug 11, 2020 • 10:00 am ET


Haverty Furniture Companies, Inc. (NYSE:HVT) Q2 2020 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Haverty's Second Quarter 2020 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Richard Hare. Please go ahead, sir.

Richard B. Hare

Thank you, operator. During this conference call, we'll make forward-looking statements, which are subject to risk and uncertainties. Actual results may differ materially from those made or implied in such statements, which speak only as of the date they are made and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company's reports filed with the Securities and Exchange Commission.

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

Clarence H. Smith

Good morning. Thank you for joining our Q2 conference call. As we previously released, our stores and distribution teams were closed the entire month of April due to COVID-19 to comply with government and CDC requirements to protect our team members and customers.

Sales for the quarter were $110 million compared to $191 million in Q2 2019. We were pleased to open most of our stores May 1, operating with a limited staff. Our distribution and delivery teams began delivering later that week. We quickly realized a much stronger demand than we expected. May and June written sales were up 13.9%, with comparable store written sales up 17.5%. Our delivered sales were down 13.4% for that same period, because we were scrambling to build back our delivery and distribution staff and bring in oversold products from vendors who had closed also during the quarter.

We now have a very strong backlog of orders. This dramatic reversal of direction was unprecedented for Haverty's in the entire industry. We found ourselves in the interesting position of not only playing defense, but now playing in aggressive offense. And we've been doing a lot over the last several months. Clearly, the importance of home is a major trend. A recent article from McKinsey used the term, the homebody economy. We are in a sweet spot for now.

We're working very closely with our vendors to prioritize shipments, while we're having to pay increased pay for our distribution and delivery team members to handle the product. Ramping up our delivery and our receiving to match our written business is a difficult challenge, but we feel that we'll be able to service and supply our customers better than most of our competitors in the coming months.

Most of our current key statistics look very good. We're seeing traffic, written average ticket, sales per square foot, closing rates and gross margins at record levels. This is creating record sales with a significantly reduced staff and reduced store hours. Because of COVID-19, we have a challenge with our designers with home visits when we're doing more virtual and 3D room planning and getting excellent response and feedback. This double-digit sales pace continues if