Havertys (HVT) Q2 Revenue Rises 1.3% | The Motley Fool

Haverty Furniture Companies (HVT -1.15%), a regional furniture retailer with a deep footprint in the Southern and Midwest United States, reported its second-quarter 2025 results on July 30, 2025. The most notable news was a year-over-year return to GAAP revenue growth, reaching $181.0 million compared to $172.8 million in Q2 2024, surpassing consensus GAAP expectations of $176.9 million. Earnings per share (GAAP) were $0.16, modestly above the $0.14 GAAP estimate. However, profits remain below year-ago levels on a GAAP basis, and underlying comparable store sales are still negative. Overall, Gross profit margin improved to 60.8% from 60.4%, but persistent headwinds in the form of weaker profit conversion and cost pressures.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Recent Strategic Focus

Haverty Furniture Companies runs a network of 129 furniture stores in 17 states. Its brand is synonymous with quality, value, and tailored customer service, and it mainly targets middle to upper-middle income families. It aims to distinguish itself with durable furniture, custom upholstery offerings, and a seamless experience in both in-store and online channels.

Recently, Havertys has concentrated on expanding its store footprint in existing markets, optimizing its supply chain, and growing its digital presence. These efforts focus on driving customer traffic, improving conversion, and reinforcing its strong brand recognition in core markets. Key success factors include store network optimization, marketing effectiveness, and efficient supply chain management.

Quarterly Developments and Financial Performance

Revenue (GAAP) grew 1.3% to $181.0 million, marking the first year-over-year increase in GAAP sales since Q4 2022. However, Underlying comparable store sales, which measure performance at stores open over the past year, fell 2.3%. This suggests that new store openings—not stronger existing-store performance—drove the top-line growth. Management stated, “We delivered year-over-year sales growth for the first time since the fourth quarter of 2022.” Total written business (including orders not yet delivered) rose 0.4% year over year, indicating a slight improvement but continued softness in core operations.

Gross profit margin (GAAP) improved to 60.8% from 60.4%. Havertys credited its “effectiveness of our new marketing and promotional strategies” and noted increased investment in advertising, particularly in digital and TV channels. Design consultants’ share of total written business dipped to 33.4% from 36.0%.

Selling, general, and administrative (SG&A) expenses increased to 59.3% of sales from 57.7% in the prior-year quarter (GAAP). The main drivers were higher administrative costs and occupancy expenses related to new store openings. While variable SG&A—expenses more closely tied to sales volume, like commissions and warehouse costs—declined as a share of sales, Fixed costs rose 2.6 percentage points year over year. This shift puts pressure on profits when sales growth is muted.

Net income (GAAP) dropped to $2.7 million, a 39.4% decline year over year. Despite this, the company’s cash position remained healthy, with $113.8 million in cash and no debt outstanding. The company generated $13.4 million in operating cash flow (GAAP) during the first six months of 2025, though this fell from $17.5 million in operating cash flow for the six months ended June 30, 2024, due to increased inventory in anticipation of potential tariff hikes.

Management highlighted ongoing supply chain uncertainties related to tariffs on imported goods, especially from China and Southeast Asia. Inventories increased as the company sped up shipments ahead of possible new tariffs. This inventory strategy helped Havertys avoid short-term disruptions but may reduce cash flow until these items are sold. Management explained, “Our 2025 guidance includes tariffs currently in effect as of July 30, 2025, but excludes the effects of additional proposed tariffs.” Potential additional tariffs, if enacted, could affect the cost structure and product availability later in 2025 or 2026.

Expansion continues, with new store openings in Houston and other markets. The board declared a quarterly dividend for common stock of $0.32 per share, up from $0.30 a year ago, and demonstrates ongoing capital returns to shareholders. Share repurchases totaled $2.0 million in the first half of 2025.

On the product side, Havertys’ main categories include living room and bedroom furniture, mattresses, and home accents. Its custom upholstery program allows customers to design their own sofas and sectionals with a range of fabrics and finishes, and the company also sells well-known mattress brands.

Looking Ahead

The company maintained its prior guidance for gross profit margins, expecting the rate to stay in the 60.0–60.5% range for FY2025 (GAAP). Guidance for overall SG&A expenses and capital spending also remains unchanged, with $24.0 million earmarked for capital expenditures in 2025, much of it for new store openings and relocations. Management did not provide revenue or earnings targets for the coming quarters and stated that current guidance does not include possible new tariffs. If trade policies shift, management expects that would materially affect its cost structure and margins.

Looking forward, Fixed costs have risen, which means stronger internal growth will be needed to boost profitability. Investors should watch for updates on comp-store trends, expense management, further expansion in Houston and other target markets, and the company’s ability to respond to changes in international trade policy. Tariffs, inventory strategy, and digital sales growth remain key variables for the back half of the year.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.