HVT-A — Haverty Furniture Companies, Inc.

Summary of Haverty's Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Net Sales: $201.9 million, up 9.5% year-over-year.
• Comparable Store Sales: Increased by 8.2%.
• Gross Margin: 60.4%, down from 61.9% in Q4 2024; adjusted gross margin (excluding LIFO charges) improved to 62.4%.
• Pretax Income: $10.8 million (5.3% operating margin), compared to $9.6 million (5.2% operating margin) in Q4 2024.
• Net Income: $8.5 million, or $0.51 per diluted share, compared to $8.2 million or $0.49 per share in the prior year.
• Annual Performance: For 2025, net sales totaled $759 million (up 5%), with comparable sales up 2.1%.

2. Strategic Updates and Business Highlights:

• Sales Growth: Positive comp sales for two consecutive quarters; strong performance in design services, with design sales accounting for 33.3% of total sales.
• Inventory Management: Year-end inventories were $96.2 million, up $12.7 million from 2024, with expectations to decrease over the next six months due to tariff-related inventory purchases.
• Store Expansion: Plans to open five new stores in 2026, including entry into Pennsylvania, and four remodels.
• Marketing Initiatives: Successful direct mail campaigns and increased web traffic contributed to sales; marketing spend was down as a percentage of sales.

3. Forward Guidance and Outlook:

• 2026 Expectations:
  • Gross margins projected between 60.5% and 61%.
  • SG&A expenses expected to be $307 million to $309 million, with variable costs remaining flat.
  • Planned capital expenditures of $33.5 million, primarily for new store openings and remodels.
  • Anticipated effective tax rate of 26%.

4. Bad News, Challenges, or Points of Concern:

• Gross Margin Pressure: Decline in gross margin due to LIFO charges and potential impacts from new tariffs.
• Traffic Trends: Written sales declined in the latter part of Q4, with traffic down in low single digits overall.
• Tariff Uncertainty: New tariffs imposed and potential increases could impact pricing strategies and margins; management is cautious about future pricing actions.
• Market Conditions: The government shutdown and demographic shifts in certain markets have created uncertainty.

5. Notable Q&A Insights:

• Sales Trends: Written sales were high single digits in October, mid-single digits in November, and low single digits in December, indicating a deceleration.
• Tariff Impact: Management will be deliberate in adjusting pricing in response to tariffs, with current inventories already reflecting existing tariffs.
• Consumer Behavior: No significant changes in consumer behavior were noted, although the government shutdown may have affected sentiment.
• Bedding Refresh Program: Positive feedback on the mattress department redesign, which is expected to enhance customer experience and sales.

Overall, Haverty's demonstrated solid growth in Q4 2025, but faces challenges related to margin pressures and external economic factors. The company remains optimistic about its strategic initiatives and growth plans for 2026.