ATLANTA — While sales were down year-over-year for Top 100 retailer Havertys in the third quarter of fiscal year 2024, leaders saw late signs that things could be shifting for the better and said as much in their call with investors on Oct. 31.
As the three-month period, which ended Sept. 30, came to a close, the Atlanta-based retailer saw its traffic deficit continue to shrink. And while it’s too soon to draw any conclusions, its officials are optimistic.
“I think it’s too early, but it is improved. We’re seeing better traffic, and recently we’ve seen some improvements,” said Clarence Smith, chairman and CEO. “We’re encouraged with the recent feel of customers coming in and the interest in our product.”
Added President Steve Burdette, “The customer is still cautious with the election and high interest rates but (traffic) is improving.”
The change in traffic was one of a few takeaways from the call. Here are three others:
Hurricanes impacted business
The impacts of Hurricane Helene and Hurricane Milton are already well-documented, and while Havertys doesn’t ordinarily include weather impacts in its calls, Burdette felt it was important in this instance. Most importantly, Burdette said, all team members were accounted for and safe.
When Helene swept through Florida and into the Carolinas, six markets and 11 stores had closures from one to four days in the quarter. However, Havertys’ Asheville, N.C., store was closed 19 days and reopened on Oct. 16.
Milton affected five markets, 20 stores and one distribution center in early October. Most stores and the warehouse were back open after two to five days, with three stores closed seven to 10 days.
“With these types of events of this magnitude, it’s not only the days you’re closed but the distraction caused from the storm getting prepared and afterward with the cleanup from the storm,” Burdette said. “It’s a tremendous burden on team members and customers. Havertys is thankful and appreciative of our team members in Florida, Georgia and the Carolinas for their unwavering commitment to their families, our customers and Havertys.”
Later, a question was asked about potential post-storm demand. Burdette said there would be some, but it will likely be three to six months out before any is felt. He said Havertys expects to see post-storm demand in the Milton-affected areas first, because the heavier devastation in some of the Carolinas markets will take longer to clear.
“We definitely expect a lift from it,” he said.
Design driving upholstery, décor and higher tickets
Burdette said from a merchandising standpoint, Havertys’ décor and upholstery categories are the best-performing and driven by its design business. He said bedding continues to perform within company averages while bedroom and dining room are slightly below.
“Those customers who are buying are spending more as our average ticket continues to rise over 3% from last year to almost $3,500,” Burdette said. “Our design business continues to thrive, by growing over 19% in the quarter as a percentage of business.”
Burdette said the average ticket is the driver of the design business, and it showed a 5% increase in the quarter to approximately $7,300. Special order was 36% of Havertys’ upholstery business, which was up 10% over last year.
Smith said recent additions to the merchandising team should further boost the company’s offerings. He noted that the team had just completed the High Point Market, and he felt good about their efforts.
“We feel very good about where we currently are with the talent and energy we have coming in. It’s a significant enhancement to our team, and we’re encouraged by it,” Smith said.
Houston growth a priority
In its first quarter earnings call earlier this year, Smith said Havertys had its eyes on Houston, the largest market in its distribution footprint in which it didn’t have stores. He said Havertys expects to open its first store in the market in 43 years during the fourth quarter with a showroom in The Woodlands area in December.
Beyond that, Smith said a second store, in the Baybrook area, is planned for January 2025 with several more potential locations the company is pursuing, and he added that stores in that market would be served by an expanded distribution center in Dallas.
“Houston, the seventh-largest market in the country, is our top priority over the next two years,” Smith said. “We’re committed to having a significant position in the greater Houston market.”
Later in the call, a question was asked about how many Havertys stores the market could hold.
“I think we would like to have five stores in the marketplace,” Smith said. “We’re going to the outer perimeter, mainly, and positioning where the growth areas are. It’s a big market.”
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