Haverty signals return to $1B+ sales amid 10.6% Q3 growth, supported by robust category gains and tariff adaptation

Earnings Call Insights: Haverty Furniture Companies, Inc. (HVT) Q3 2025

MANAGEMENT VIEW

* Steven Burdette, President and CEO, opened the call reporting "an increase in both written and delivered comp sales for Q3" with total sales of $194.5 million, a 10.6% increase, and comps up 7.1%. Burdette highlighted, "Our steady growth in written and delivered sales over the past 4 quarters reflects improvements across marketing, merchandise assortments, promotions, supply chain, distribution, home delivery, service and store execution."
* Burdette stated the company is focused on "significant opportunities... that will allow our return to a $1 billion-plus company with no additional investments needed in our distribution infrastructure."
* Key drivers included a strong Labor Day event and robust category performance. Burdette noted "bedroom and bedding outperformed all categories with increases in the low to mid-double digits, followed by upholstery and occasional in the high single digits and dining room and decor in the mid-single digits."
* Burdette emphasized the impact of new tariffs, saying, "these new tariffs were finalized at 25% on all upholstered wood products out of Mexico, along with Vietnam, Cambodia, Thailand and Indonesia beginning October 14, but will be moving to 30% beginning January 1, 2026."
* The CEO detailed ongoing store growth, noting a new store in Houston and plans to "return to our store growth goals of 5 per year in 2026."
* Marketing investments increased, including a $2.8 million spend this quarter and a direct mail campaign that "proved to be very successful in attracting new customers."
* Richard Hare, EVP & CFO, stated, "net sales were $194.5 million, a 10.6% increase over the prior year quarter. Comparable store sales were up 7.1% over the prior year period. Our gross profit margin increased 10 basis points to 60.3% from 60.2%."

OUTLOOK

* The company expects gross margins for 2025 to be between 60.4% and 60.7%.
* SG&A expenses for 2025 are now projected at $296 million to $298 million, "an increase from our previous guidance due to higher anticipated advertising and admin costs."
* Variable costs within SG&A for 2025 are expected in the range of 18.6% to 18.8%.
* Planned CapEx for 2025 remains at $24 million; store growth targets reaffirmed for 2026.
* The effective tax rate in 2025 is expected to be 26.5%.
* Changes from the previous quarter include an upward revision in SG&A guidance and affirmation of store expansion plans and gross margin targets.

FINANCIAL RESULTS

* Net sales for Q3 2025 were $194.5 million, up 10.6% from the prior year quarter.
* Gross profit margin was 60.3%.
* SG&A expenses increased $11.4 million or 11.3% to $112.3 million.
* Income before income taxes was $6.4 million.
* Tax expense was $1.7 million, with an effective tax rate of 26.4%.
* Net income was $4.7 million or $0.28 per diluted share, compared to $4.9 million or $0.29 per share in the comparable quarter last year.
* Inventories ended the quarter at $92.4 million; customer deposits at $43.9 million; cash and cash equivalents at $130.5 million; no funded debt.
* CapEx for Q3 2025 was $3.6 million; $5.2 million paid in dividends; no share repurchases in the quarter.

Q&A

* Anthony Lebiedzinski, Sidoti & Company, LLC: Asked about monthly trends and regional differences. Richard Hare responded, "written business trends in the third quarter... about 10.6% in July, 10.9% in August and a little over 8% in September... all districts were positive across the board."
* Lebiedzinski inquired on tariff impact. Steven Burdette said, "we make strategic price changes immediately once we know the tariffs... the impact would come on LIFO," with Hare adding, "we have LIFO expense for the first 3 quarters of about $750,000... expect to continue to see some more LIFO expense roll through the P&L."
* Lebiedzinski asked about expense guidance. Hare stated, "we went up maybe about $5 million band on our non-variable costs from the last quarter to this quarter for the year... have not developed our full budget for next year, but I would expect basically normal inflationary type increases."
* Cristina Fernandez, Telsey Advisory Group, LLC: Asked about comp composition and price increases. Burdette replied, "average ticket is driving that... price increases are having an impact... but there's certainly both of those."
* Fernandez inquired about timing of price increases for Section 232 tariffs. Burdette answered, "price changes were made early to mid-October. So they are already in place now as we go forward."
* Fernandez asked about SG&A leverage threshold. Hare: "particularly above $800 million... you really start seeing some expansion there."

SENTIMENT ANALYSIS

* Analysts expressed a positive tone, focusing on sales gains and operational improvements, with some probing on tariff and expense impacts.
* Management maintained a confident and detailed tone, with Burdette stating, "we feel good about where we're going in the direction we're taking with it, how we're handling it."
* Compared to the previous quarter, both analysts and management exhibited increased optimism, supported by a return to positive comps and robust category performance.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for SG&A expenses increased this quarter, while gross margin guidance was slightly raised.
* Strategic focus shifted to accelerating marketing spend and explicitly targeting store growth in 2026.
* Analysts shifted from concerns over negative comps in Q2 to questions about sustainability and leverage on improved sales trends in Q3.
* Management tone moved from cautious optimism in Q2 to stronger confidence in Q3, emphasizing execution on tariffs, pricing, and marketing.
* Key metrics saw strong improvement: sales growth accelerated from 1.3% in Q2 to 10.6% in Q3, and written and delivered comp sales turned positive.

RISKS AND CONCERNS

* Management cited ongoing challenges: "High interest rates and rising home prices continue hurting the housing market. Tariffs remain an issue, geopolitical tensions persist, consumer confidence is falling and the government shutdown is now heading into week 5."
* The impact of new tariffs is being managed with "strategic price changes" and vendor collaboration, but LIFO expense is expected to increase.
* Analysts questioned the sustainability of expense increases and the ability to leverage SG&A at higher sales volumes.

FINAL TAKEAWAY

Haverty delivered notable sales growth in Q3 2025, driven by targeted category performance, increased marketing investment, and rapid price adjustments in response to new tariffs. Management reaffirmed its confidence in returning to $1 billion-plus sales without major distribution investments, highlighted strong cash and inventory positions, and signaled readiness for further store expansion in 2026. While macroeconomic risks persist, the company’s operational discipline and proactive pricing strategies position it to navigate industry headwinds and pursue further growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/hvt/earnings/transcripts]

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