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Havertys beats Q4 estimates


Better control over pricing and inventory helped boost Havertys fourth quarter earnings, beating analyst expectations.

Net sales for the quarter ended December 31, 2016, increased 2.2% to $220.6 million, compared to analyst expectations of $220.61 million.

Same-store sales rose 2.5%, and the average written ticket was up 2.6%, while custom upholstery written business rose 1.9%.

Gross profit margin increased 100 basis points to 54.9%. There was also a $0.8 million decrease in the LIFO cost of inventory reserve in 2016 versus a $0.2 million increase in 2015, a positive change of $1.0 million or 44 basis points.

“We are pleased with our strong finish to the quarter. Gaining greater productivity from our existing store base is a primary focus, and average ticket increased over its prior year comparable period for the ninth consecutive quarter,” said Clarence Smith, Havertys chairman, president and CEO.

“Generating store and site visits remains challenging and expensive for retailers as methods for reaching the consumer continue to change and fragment,” he said. “The Havertys brand merchandise, pricing discipline, and tight control of inventory were factors in our gross profit margin expansion.”

These factors also impacted earnings for the fiscal year ended December 31, 2016. Net sales totaled $821.6 million, compared with $804.9 million in 2015, an increase of 2.1%. Comparable store sales increased 2.1% for the same period.

Similarly, the average written ticket was up 2.3%, and custom upholstery written business rose 4.0%.

“We remain confident in our ability to serve the on-trend furniture customer and grow our business, despite challenges in the current economic and political climate,” Smith added.

Looking ahead, the retailer expects gross profit to hit 53.6%, a slight decrease from 54.0% in 2016, due to the impact of the estimated increase to the LIFO reserve, the company said. First half gross profit margin is projected to be 20 basis points higher than the average for 2017, with the second half running approximately 20 basis points lower.

Havertys is also planning capital expenditures for 2017 to be $26.9 million. This includes opening one store in a new market, two relocations, one store closure and starting on the expansion of its western distribution center. These changes will increase selling square footage approximately 0.3% and our store count is planned to remain at 124, the company added.
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