Tariff strategy top-of-mind in Havertys’ Q1 call

ATLANTA — Top 100 retailer Havertys outlined how it’s planning for and dealing with import tariffs during its first quarter conference call with investors on May 1.

The day after it released its Q1 earnings report, President and CEO Steve Burdette told investors that, looking at the current landscape, most tariff-related impacts for the Atlanta-based retailer look to be minimal, but that remains subject to change.

“What will happen after the 90 days expires in early July is a guessing game right now, making supply chain planning very difficult,” Burdette said. “We need the administration to provide clarity around these tariffs to prevent further disruption for the consumer.”

Burdette said Havertys has been working with its supply partners to address the issue, which has helped keep inventory flowing smoothly.

While supply has been moving, Burdette said he’s forecasting price increases on products from Vietnam, Cambodia, India, Indonesia and Europe, but he said they should be minimal. Some domestic upholstery suppliers will have price increases due to parts and fabrics coming from China. Most products Havertys imports from Mexico are exempt, as they fall under the 2020 USMCA agreement.

“If the tariffs stay where they are, I don’t see much impact to the consumer, and we will navigate it just fine,” Burdette said. “If they go back to 40% to 50% like they were before, that’s a different story.”

Burdette said Havertys has halted most of its direct shipments from China, as the 145% tariff is too much to bear.

“We expect this to cause some temporary supply disruptions for these suppliers as they look to move production to Vietnam, Cambodia or Mexico,” he said. “Currently, approximately 15% of our total purchases come directly out of China, mainly in motion and stationary leather.”

In the first quarter, Burdette said Havertys’ supply chain team began executing a strategy to increase inventories of best-selling products to better serve customers. To date, he said those inventories have risen by about $5 million over the end of 2024, and he expects another $3 million to $5 million to be in hand by the end of the second quarter.

“Our initial expectation of increased inventory was focused on providing faster service to customers as we felt we became too dependent on just-in-time inventory with our suppliers,” Burdette said. “However, we inadvertently pushed the impact of tariffs out until the latter part of Q2 or early Q3 because most of this inventory increase will be tariff-free.”

Also on the call, Burdette talked about Havertys’ store presence, and the company’s aim to open five new stores per year. The relocation of its Daytona, Fla., store into a former Bed Bath & Beyond will be completed on May 2, while a third store in the Houston market in Valley Ranch is slated to open in the late third quarter. Meanwhile, stores in Atlanta’s Buckhead neighborhood and in Waco, Texas, will close this year.

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