Atlanta-based Havertys posted is first positive same-store sales increase of 2019 in the fourth quarter, up 1.4% from the same quarter a year ago — welcome news after a long, tariff-challenged period.
On the quarterly call with the investment community, President, CEO and Chairman Clarence Smith discussed this and other milestones and hinted at what to expect this year. Here are a few more takeaways from the call:
Havertys is celebrating 135 years in business with new messaging to employees and customers. In January, the retailer hired EP + Co and Trilia as its media agency of record to work with its in-house team on media, creative and digital planning efforts, including anniversary related messaging rolling out now. “Our message to our customer is that we have 135 years of wisdom in every piece of furniture,” Smith said. “Our team members are energized to make 2020 a breakthrough year in delivering premium service and market share gains.”
An average ticket worth bragging about For the full year, Havertys’ average ticket increased 6.4% to $2,323, Smith reported, and the fourth quarter also was its 21st quarter in a row to see growth in the metric. What’s more, the average ticket for Havertys’ H Design complimentary design business was twice the store average sale.
Asked if the retailer will be able to sustain that momentum, Smith said, “I think it will continue to grow,” maybe not at the same rate, “but we are building on that whole area of design. We are doing more custom, more special order. I think we are starting to get more credit for the fact that we offer this service, and we want to make sure that the market understands that.” Indeed this is one of the charges of the new media agency, he added.
Chinese tariff headaches are largely in the rearview mirror. Last year, Havertys moved “a significant amount” of goods out of China and into Vietnam, which lowered the percentage of total China-made furniture purchases to about 15% to 20% by yearend, Smith said.
“We are in a better position with our in-store product as we start this year, compared to the tariff-impacted situation in the first half of 2019,” he said, noting that Havertys built up inventory of a lot of best-sellers prior to the Lunar New Year.
But the coronavirus could cause some problems as early as the second quarter. Inventories are in good shape now. “And the factories are starting back up. But we are already seeing some of the supplies that (producers) need and have been getting from China are going to be delayed, which will slow down shipment of product,” Smith said in response to a question about the virus impact.
“Our merchandising and supply chain teams are closely watching the impact of the delayed opening of Chinese factories,” he said in prepared remarks. “We expect to have some product shipment delays, which could affect stock availability in the second quarter. We’re in constant contact with all of our key suppliers and factories to make sure that we have our best-selling goods flowing. Our key sourcing team members are traveling later this week to our Vietnamese factories.”
With Tempur-Pedic and Mattress Firm back together, will Havertys’ bedding business suffer? Smith essentially said, no, in response to an analyst question about the impact of this renewed relationship. “The mattress business was really good for us in 2019, and we expect it to be good in 2020,” he said. Sure, Tempur and Firm are back in bed after their earlier falling out, but “we built a really good reputation of being the place to go for that,” he said. “They (Mattress Firm) will get some business. They’ll push it,” but Smith added he’s not worried about it.
“We have got several brands that are important to us, including Beautyrest and Stearns & Foster and other lines. I don’t see that we would have a decrease in that particular category. We compete very aggressively with anybody selling mattresses against us, so we don’t expect to lose share.”
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